Why It’s Okay to Buy a Mega Millions Ticket (Even After You’ve Done the Math)

Recently I outed myself as an occasional lottery player and as a person who thinks that lotteries in and of themselves aren't so bad.

I don't think they're good. Rather, I think they're not-too-terrible in the way that potato chips are not-too-terrible. Enjoy a few every so often and you'll likely be okay. Eat nothing but chips? Problem.

A number of readers admitted they sometimes buy in, too. But one responded in this way: “I wish the people who spend more than a dollar or two a year would put their money to a better use, such as donating to a soup kitchen or to the Salvation Army.

“Alternately, I wish they would save their money and put it in their emergency fund. Yes, I have bought a chai latte or two in a year, but at least I receive value for the money spent.” (emphasis added)

Here's what I think about that:

  • What makes you think lottery users don't donate?
  • What makes you think they don't have EFs?
  • What makes you think they don't “receive value for the money spent” in terms of the amusement factor, the daydreams, the laugh with friends?

(I know some people have mega-problems with the Mega Millions, i.e., they have unrealistic expectations. I'll get to that in a bit.)

I have an emergency fund, I continue to save for retirement and I donate to a lot of causes. But I don't save or donate every dollar I earn. Neither does the commenter, apparently; some of his dollars go to things like chai lattes.

It's the same with me: Some of the money I earn I spend on treats. Six or seven times a year, that treat is a pair of $1 lottery tickets — one state Lotto, one Mega Millions.

A preferred form of escapism
Plenty of writers, including J.D., think the lottery is an investment for fools. In that article he cited a couple of disturbing factoids:

  • 30% of people without high-school degrees consider the lottery a wealth-building strategy.
  • Households with income of less than $12,400 per year spend an average of 5% of their earnings on the lottery.

I've got nothing against J.D., even though I thought he'd be taller; the dude signs my paycheck, which I truly appreciate. But when writers use words like “fools” or “stupidity tax” (the latter is from my friend Liz Weston of MSN Money), they're tarring with a highway-wide brush.

Personal finance sites are full of tips on the best ways to use the money you have. You don't see blog posts about why you should never ever ever have any fun until your mortgage has been retired and every student loan is paid in full.

Instead, we tell people to use Groupons to go out to dinner or get a massage, or to dig up a rock-bottom airfare and a house swap for a week away. That's not foolish, it's frugal. That's not stupid, it's a smart use of available funds.

Well, suppose my preferred form of escapism is to buy one lottery ticket a week. If I can afford it, will $52 a year send me to PF purgatory?

Understand: In no way do I advocate overspending on lottery tickets, or on anything else if it breaks your budget. And yes, if you plan to retire on your winnings you are deluding yourself. The folks splitting the $560 billion Mega Millions kitty didn't have to go to work the next day unless they wanted to — but millions of other ticket-buyers did.

A dollar and a dream?
A frequent criticism is that money spent on lottery tickets is “wasted.” To which I reply: Do you expect everything you do to provide some kind of financial return?

Personally, I think that cigars, spray-on tans, wine collections and designer handbags are wastes of money. But I don't get to decide what you buy. If you want those things, then budget for them and enjoy them.

In fact, J.D. did acknowledge that the Mega Millions et al. can be harmless fun for some people. His real beef was with those “who view the lottery as a legitimate path to wealth.”

“Sadly, there are many such people,” he noted.

I agree that a reality check is needed. I feel the same way about young people who won't even consider starting a Roth IRA or contributing to a 401(k) plan. That's something they'll do “later.” They don't know or don't care that compound interest really wants to be their friend right now.

We need better ways to approach finances. Better math skills wouldn't hurt, either.

What we don't need? Divisiveness. Most of us allot money for the things we want: opera tickets, comic books, amateur athletics, daffodil bulbs, power tools, a movie plus refreshments. People tend not to get tight-jawed about new soccer cleats or a summer blockbuster plus Raisinets, though. But suggest a quick-pick or a scratch-off and the Money Police descend and declaim:

  • The lottery is a tax on people who are bad at math.
  • The lottery is a tax on poor people.
  • The lottery is a self-imposed penalty on the stupid.

I think there's a whiff of paternalism/classism in this. Certainly people who believe the lottery is a wealth-builder could do with a clearer idea of what the odds really mean. But if Joe Sixpack can afford to spend $52 a year on the lottery and enjoys doing so, why is that “stupid”?

Put another way: Some people spend a lot of money on rabid sports fandom or on spa treatments that involve molten wax and naughty bits. I personally have no interest in such things, yet I will defend to the death your right to paint team colors on your face or to cultivate a landing strip. (Ow. Even vicariously, that's painful.)

That's because it's your money, not mine. You ought to be able to use some of it to buy a miter saw or attend a genre convention. Or to indulge in a dollar and a dream.

An entertaining fantasy
Incidentally, I didn't win the Mega Millions. But you already knew that, because the odds are crap. If you want to know just how crap they are, check out the Mega Millions Lottery Simulator here on Get Rich Slowly.

Not-winning cost me one-sixth of the amount I might have spent on the first show of the day at a nearby movie theater (sans Raisinets). And I got two kinds of fun out of that dollar:

  • “Somebody has to win. It almost certainly won't be me…But suppose it is?” Segue to….
  • “If I won, I'd consult a lawyer and an investment specialist. Then I'd pay off my relatives' debts, put a new roof on my friend's house, forgive all personal loans, set money aside for my nephews' educations, and give a fecal ton of cash to all the charities and scholarship funds to which I can currently send only $30 at a time.”

Intellectually, I know that I'm not going to win. Psychologically? I smile every time I look at the ticket. I love thinking about what luxury it would be to pay cash for a reliable car for my daughter and son-in-law, or to add a bunch of zeroes to the next charity checks I write.

I have this financial fantasy six or seven times a year. It doesn't affect my day-to-day money practices. But like any other nonessential expenditure — fresh pineapple, a magazine subscription, that box of Raisinets — it adds a small layer of enjoyment to my life. To me, that's worth a dollar.

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Patrick
Patrick
8 years ago

Buying a lottery ticket for $1 gets you a 1:174,000,000 chance to win, or $1/174,000,000 worth of economic value.

However, that dollar also buys you the right to dream about winning (your entertainment value), which might be worth very much more than $1…

SB @One Cent at a Time
SB @One Cent at a Time
8 years ago
Reply to  Patrick

A dream which costs money? I have a better alternative, free of cost dreaming which can benefit you. This is for Donna Freedman as well.

Go jogging in the park dreaming about finding a suitcase filled with cash. Go early morning-every day before any one else have it.

Cost = 0, Benefit = Infinity

bareheadedwoman
bareheadedwoman
8 years ago

prime example of having totally missed the point

Sara
Sara
8 years ago

I actually found a suitcase full of money once. Cash and a gun. Felt kind of funny, so we turned it in to the police. Unregistered gun to boot. So never say never….

Doug
Doug
8 years ago
Reply to  Sara

Huh ? What’s an “unregistered” gun ? Do you live in the Soviet Union or New York City? If you knew how crooked cops really are you would have kept both ! I know..You felt like you were helping solve a crime.. LOL !!.

TB
TB
8 years ago

Well, you did say that households with incomes of less than $12K spend 5% of their income on lottery tickets. So saying that it’s a tax on the poor is a reasonably fair statement. I wouldn’t take away the lottery because I do think it keeps some people going…the dream of a big windfall like that. But, as the aforementioned 5% of income attests, there is a little problem here. And I think the solution to this is education (education is the answer to so many things!). The lottery is fine and can be played by all on occasion because… Read more »

sarah
sarah
8 years ago
Reply to  TB

Most poor people don’t need education to tell them the lottery is a (really) long shot. They’re just desperate and feel like they have no other choice. The lottery is their 3-point attempt from half court at the buzzer because they can’t pay the bills anyway on $8000 a year.

Laura
Laura
8 years ago
Reply to  sarah

The lottery is literally a ticket to dream of the possibility of having wealth; it’s popular with poor people because for many of them, this is the only dream they have. It would be easy here to go off on a largely useless side discussion about whether or not the poor could/would improve their lot by implementing personal finance strategies such as those on GRS, given their limited income and resources (and often, education). My point is simply that the middle class and wealthy not only dream of winning the lottery, but also of paying off the mortgage and retiring… Read more »

Anthony @ EachPesoCounts
Anthony @ EachPesoCounts
8 years ago
Reply to  Laura

I agree with Laura. Especially for GRS readers, we’ve all got our own “unique” budgets and stay on track for our own financial goals. But reading this article struck me like a simple but effective “motivational” tool. Odds surely are not on your favor for every lottery, but just the positive gesture and that “daydreaming” can actually pull you up even more and push you harder in pursuing your goals.

-Anthony

Rosa
Rosa
8 years ago
Reply to  sarah

Or just a social thing, the way more well-to-do people might go out for a $50 dinner with friends every week or two.

Most of the people I know who play, do it in pools of friends or coworkers, or only on big-winnings days when lots of people are buying tickets. Buying for our work pool, every once in a while I’d end up in line next to some poor desperate gambler joking about how it was his retirement money on the line, but even then our work pool (about 25 people) invisibly outnumbered that guy.

Ace
Ace
8 years ago
Reply to  sarah

I don’t buy this explanation for one minute. People at any income level that spend 5% of their income on the lottery aren’t “desperate” with “no other choice,” they’re irresponsible. And don’t forget that anyone who only makes $12,000 per year is only able to afford $600+ in lottery tickets because your tax dollars are likely paying for their food and subsidizing their rent.

Leah
Leah
8 years ago
Reply to  Ace

Don’t forget that folks who work for minimum wage are subsidizing your restaurant meals, clean floors, processed foods, etc. Life in society is a two way street. If we paid folks a living wage such that they wouldn’t need a social safety net, goods and services would be much more expensive.

Andy Long
Andy Long
8 years ago
Reply to  Ace

Quote from Caddyshack: “Danny, This isn’t Russia. Is this Russia? This isn’t Russia is it?” I think it is a little bit of a stretch saying people who work minimum wage subsidize our lifestyle, usually it is a series of choices that leads some to minimum wage jobs (I hope this doesn’t sound too high and mighty). For those reading this blog, playing the lottery probably is some harmless entertainment, but I do have issue with a state run lottery that does seem to hurt many families in poverty. One report showed that some poor families spent 9% of their… Read more »

Andrew
Andrew
8 years ago
Reply to  TB

Education on the pitfalls of the lottery is unlikely to occur in states (such as Masschusetts) where lottery proceeds are specifically earmarked for educational aid to cities and towns. Politicians don’t want to kill this particular golden goose, as it allows them the luxury of not having to take a stand on how to pay for our schools.

That being said, it’s not a tax. It’s a cynical marketing scheme that comes close to being a fraud, but no one is required to participate, no matter what their income level may be.

TB
TB
8 years ago
Reply to  Andrew

Hey Andrew-
Clarification — I agree that it’s not a technical tax because no one is required to participate , that’s why I was careful to put little modifiers by my thoughts on that. I agree with you though, man, I can’t see any state promoting education on the issue, they get way too much revenue from it!

sjw
sjw
8 years ago

I also fantasize, though I haven’t bought a ticket in a while, I used to use lottery tickets to reward myself as follows: – A scratch-off ticket at the time cost $4. A one-way transit ticket was $2. If I walked home from work (50 minutes, with 20 of it up a steep hill) three times a week, I bought a ticket. I never won more than $10, but I did lose 20 lbs. I also think that it’s a good way to think about priorities. If those are the things that I’d do if I had more money, is… Read more »

Dogs or Dollars
Dogs or Dollars
8 years ago
Reply to  sjw

Ditto that. Spending $1 is a cheap way to put yourself through the motions of “If I had a fecal ton, I’d…” . Examining the outcome of that statement should remind you of what your day to day and even lifetime spending priorities are. Things you should align your dollars with even if, excuse me when, your Mega Millions ship doesn’t show up at port.

Very interesting point about the classicism though. Not something I’d considered. Are we too quick to count the decisions of the poor as ‘stupid’? When we would make those same decisions. Hmmmm…

Betsy
Betsy
8 years ago

Love the idea of reminding yourself of your priorities. Once, I wrote down all of my “if I had a million dollars, I would …” goals. Then, I went through and looked at how many of them I could actually do RIGHT NOW. It turned out about 2/3 of them were either do-able, or I could approximate some version of them, with the money I already have — a modest but decent income. Great point about dismissing the decisions of the poor as ‘stupid’. It certainly is a technique that allows us to feel good about ourselves and not feel… Read more »

Greg
Greg
8 years ago
Reply to  Betsy

Agreed, and I think this is what every lottery player should do, because that’s the ultimate value… it can help you open up your mind to what is possible in the here and now… and in some ways it’s even better because you can get many of those things without the headaches and misfortunes that affect some lottery winners.

Bethany
Bethany
8 years ago

I really enjoyed this article, I think some people do have that knee-jerk reaction when they hear someone spent money on the lottery and feel the need to spout off with the statistics. Thanks for writing this!

Kraig @ Young, Cheap Living
Kraig @ Young, Cheap Living
8 years ago

I think your theory is good, if someone who can afford it only spends $52 per year. The problem is, I don’t think most people who play the lottery can afford it. I also don’t think most people who play the lottery stop at $52 per year. It’s a slippery slope in my opinion and one that leaves you wanting to spend more and more and more until you win. I think it’s more dangerous than you are pointing out. I’ve seen friends who are broke spend a lot of money this way. I’ve also lost a lot of money… Read more »

Kate
Kate
8 years ago

Great post, very unusual for this site, but in a good way. I work in an environment with a lot of extremely educated and high earning people. For years now, when the powerball gets over a certain figure, someone in my office starts a pool, and people chip in $1 to buy group lottery tickets. It palpably changes the atmosphere in the office, gets people laughing and talking, etc. We’re talking about 4 times a year. Occasionally, we win $5 or so, and when that happens, we do, in fact, donate it. That’s pretty cheap fun and socializing in my… Read more »

Megan
Megan
8 years ago
Reply to  Kate

^^This^^ I used to work for a financial services company, where I had many well-educated coworkers (grads from prestigious schools, many who went on to MBAs, etc.). These people probably know more than most about the odds of winning, but guess what? They all pooled in a few bucks to buy some tickets for the BIG Mega Millions. They didn’t win, but it was still fun for everyone involved. I bought three tickets and spent quite a few hours thinking about what I’d do. It was fun escapism – I checked out homes for sale in London, I looked at… Read more »

Josetann
Josetann
8 years ago
Reply to  Megan

Maybe buying a lottery ticket is the easiest way to jump-start that kind of thinking. But it’s certainly not required. I have a huge bucket-list of things I’d like to do one day. I also tend to think of opportunities in terms of “why not?” instead of “why?” Most of the “what-ifs” you can come up with when thinking of winning the lottery, are things you could do now, though perhaps a bit scaled back. Buying a mansion…how about a decent rural house that needs a little TLC? Donate millions to charity…how about $50 and some of your time? Brand… Read more »

BRooks12345
BRooks12345
8 years ago

“30% of people without high-school degrees consider the lottery a wealth-building strategy”

I wasn’t aware high schools issued degrees.

El Nerdo
El Nerdo
8 years ago
Reply to  BRooks12345

I wasn’t aware they don’t issue them, but English isn’t my native language. Does it matter anyway? It’s high school! We all know what that means. 😀

Ron
Ron
8 years ago
Reply to  El Nerdo

Why you reply on behalf of J.D dear?
Donna was referring to the lines written by J.D.

Are you J.D ???

WorkSaveLive
WorkSaveLive
8 years ago

Whew! You’re obviously a little upset about people that bash the lottery. Well, most of those things you mention that people spend money on are tangible items they get to use and enjoy. It’s not some fairy-tale they create in their imagination on what they’re going to be able to do with the money “if” they win. I can make up that same fairy-tale in my head without actually wasting the money to buy the lottery ticket. Odds are, we’re both going to end up in the same spot and I just saved $1! 1 in 21,000,000,000 says all I… Read more »

Cass
Cass
8 years ago
Reply to  WorkSaveLive

It’s funny that you emphasize tangible things, when so often on this and other personal finance sites, the contributors talk about paying for experiences. Sometimes an experience is new climbing shoes that let you go out and climb. Sometimes it’s a ticket to a musical or opera or movie, and after it’s over all you have left are your impressions of the performance. I agree that as any sort of practical or money making strategy, the lottery is painfully stupid, and I do think the author of this piece downplayed the significance of the number of people without high school… Read more »

Sara
Sara
8 years ago
Reply to  Cass

Cass, I think WorkSaveLive’s point is that you can have the same experience of dreaming about what you’d do with a ton of money whether you actually pay to play the lottery or not. Since you are pretty much guaranteed not to win anyway, save the money! This would be akin to other frugal experience advice such as why pay $500 for a hotel when you can pay $250 or couch-surf or whatever. Or why pay $1,000 for your flight when you can cash in points. Etc.

Cass
Cass
8 years ago
Reply to  Sara

If that works for you, it works for you. (It does work for me, apparently; or at least personally I see no reason to gamble or play the lottery and I get my adrenaline elsewhere). But I guess my point is twofold–first, some people might not do that. In theory they could, but they just wouldn’t or wouldn’t take the exercise as seriously that way or get the same thing out of it, in the same way in my example above that just thinking about one of my favorite plays or rereading it, that maybe I’ve already seen performed before,… Read more »

victoria
victoria
8 years ago

I used to buy one a couple times a year when I lived in Georgia. Why? Because I went to college for free on the HOPE scholarship, paid for entirely by lottery funds. It felt like paying it forward, just a tiny bit, with the added bonus that you might win a little.

Lindsay
Lindsay
8 years ago
Reply to  victoria

Thanks! That is what I point out to folks who say the money is wasted or that it would be better spent somewhere else. I tell them, it already is!

“All Georgia Lottery profits go to pay for specific educational programs including Georgia’s HOPE Scholarship Program and Georgia’s Pre-K Program.”

Source: http://www.megamillions.com/winners/winner.asp?bioID=152602F5-0334-48EE-9044-898504C16B25&startItem=1

Sara
Sara
8 years ago
Reply to  victoria

Donna, the HOPE Scholarship is the primary reason the lottery is sometimes referred to as a “stupidity tax” or “tax on the poor” in Georgia. People who buy lottery tickets tend to be from lower economic classes, and the funds go largely to this scholarship program. They say the program disproportionately benefits students from affluent school districts because they meet the GPA threshhold in greater numbers. (As it is, Georgia public schools (on the whole) are near the worst in the country.) Thus, the money is getting redistributed from typically poorer residents to typically less poor residents. As a separate… Read more »

Donna Freedman
Donna Freedman
8 years ago
Reply to  Sara

You addressed your comment to me but I didn’t bring up the HOPE scholarship. I don’t know enough about the public education system in Georgia to comment on that. What I can say is that if you’re from a lower-income family there could be a whole BUNCH of reasons you drop out or fail. I’d suggest reading “Lives on the Boundary,” by Michael Rose — a former lower-income guy who was fortunate enough to be noticed and mentored by a dedicated teacher. Rose earned scholarships and had the chance to do post-graduate work at Stanford, but ultimately decided to work… Read more »

Sara
Sara
8 years ago
Reply to  Donna Freedman

Sorry, I guess my post wasn’t clear. Donna, I addressed it to you precisely because I thought you had not heard of the HOPE scholarship, and I wanted to shed a bit of light on the issue more specific to Georgia. And it’s not that more than half of poor recipients leave college, it’s that more than half of all recipients leave college before finishing one years’ worth of credits. My second paragraph was not meant to comment on the lottery, but just that the scholarship program in Georgia being funded by it has its own implementation issues. I’m actually… Read more »

PawPrint
PawPrint
8 years ago
Reply to  Donna Freedman

Haven’t read the book, but when my sister was a teacher at a K-12 school near coastal Oregon, she helped get scholarships for kids who were the first in their family to go to college. Most of them went one or two quarters, then returned home. It wasn’t the classes or the work–it was the loneliness, lack of support system, not fitting in, and cultural issues that they couldn’t overcome.

Alan | Life's Too Good
Alan | Life's Too Good
8 years ago

Hey Donna, I agree entirely. My way of looking at it isn’t fun, nor is it a fundamental part of my wealth strategy, but I buy just one ticket, the minimum to be in the draw at all. Then at least I have given myself a chance. It’s not fun. I don’t chase the numbers or watch to see if I’ve won. I automate my involvement (easy to do these days), set it and forget it. Once you start buying more than the absolute minimum to enter, then you are playing the odds and that is what I think is… Read more »

Steve
Steve
8 years ago

That sounds like a bad habit. Every dollar you spend on the lottery comes back to you as less than 50 cents, on average (if you played for a million million years). Without the extra benefit of dreaming, discussing with friends and/or coworkers, etc you are just wasting 50 of your cents every time.

A Cog
A Cog
8 years ago

If someone has money in their entertainment or “fun money” budget to spend, who is anyone else to judge how they spend it? Is my $8 ticket to a movie, which buys me 2 hours of fantasy and escapism and entertainment any better or smarter than someone else’s $8 spent on lottery tickets that provide escapism and fantasy and entertainment to them? One person’s chai latte (why don’t you make your own at home and donate the different, or better yet, drink water and donate even more?) is another’s lottery ticket. If a person is spending money they don’t have… Read more »

Jenna
Jenna
8 years ago
Reply to  A Cog

So well said! People are so quick to judge others when we all, even underearners, are entitled to have some “blow” money. Not every dollar can or should be for necessities or charity alone. A friend of mine and her husband love dining out and probably spend $150+ three times a month doing so. We don’t place high value on dining out but we do go to Vegas sometimes because gambling is fun entertainment for us. To each their own!

Peach
Peach
8 years ago
Reply to  Jenna

I agree. It’s important to do what matters to us individually. I try to make the best decisions for myself and hope others do the same.

sarah
sarah
8 years ago

I agree that spending a dollar on the lottery here and there isn’t a big deal. But I think you could have explained why in about 2 sentences.

Unfortunately a lot of the very poor people I work with (and friends scraping by) end up buying a ticket when they’re in a really dire situation – can’t pay the phone bill, etc. Of course that’s the worst time to do it, but the lottery preys on people’s desperation, that’s why people who make under $12k spend 5% of their income on it.

cc
cc
8 years ago

fun post! i admit i went out and bought three tickets from our change jar/household petty cash when it was up to 640 mil- one with my husbands and my birthdays, one with our wedding date and one random one. it was a very rare expenditure, and we had fun that night talking about what we’d do with all the money. $3 for a nights worth of entertainment in a big city is fine, great even. fwiw we’re doing ok-not-great, husband is gainfully employed, i’m freelancing and things are slow, but we can buy dinner and pay rent at the… Read more »

still working
still working
8 years ago

The difference between a tax (on the poor) and purchasing lottery tickets is choice. The comparison ends there.

Andy Long
Andy Long
8 years ago
Reply to  still working

So would a luxury tax or sin tax on certain items not be a tax because it is an individual’s choice to buy those items?

Megan E.
Megan E.
8 years ago
Reply to  Andy Long

@Andy: My thought is yes and my example is alcohol or cigerettes…you don’t NEED either of them and people who want them should pay more (ie, a tax).

Personally, I think all taxes should be a choice – I don’t have kids (or want them), so I shouldn’t have to pay school taxes. If you rent, you don’t pay homeowner’s taxes, etc.

Andy Long
Andy Long
8 years ago
Reply to  Megan E.

Megan,
Interesting post on taxes. Do you feel like there are any items that are a public good that we should all have to pay taxes for?

Jenny
Jenny
8 years ago
Reply to  Megan E.

If your rent you still pay homeowner’s (property taxes.) Your landlord has to pay them (and around here rental properties are taxed at a higher rate than homestead properties) and your landlord passes the cost of the taxes to you via your rent.

Poor Student
Poor Student
8 years ago

I really enjoy buying lottery tickets, it is probably my largest guilty pleasure. I don’t usually buy the huge jackpot draws though. Ever since I was a kid and the adult family members would let me scratch their tickets I have been a fan of scratch tickets. My purchases of them are rarer now but when I do I still get that excitement, more excitement than I could get from spending the $4 any other way. But I know going in that if I win anything it will probably only cover the cost of the ticket. The problem is when… Read more »

Angela
Angela
8 years ago

Thank you! I am so tired of people’s holier-than-thou attitudes. It’s gotten to the point where I can’t even read comments about frugal weddings (“We grew our own grass and cobbled our own shoes.”). Stop judging others.

Lottery tickets are harmless fun- so are comic books.

spiralingsnails
spiralingsnails
8 years ago
Reply to  Angela

After all, the odds of being bitten by a radioactive spider so you can become a superhero are extremely tiny – but it sure is nice to daydream!

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
8 years ago
Reply to  Angela

I agree. There are a lot of bloggers and commenters who point out how “stupid” other people are when they pay for things like alcohol, vacations, etc. Why pay for a flight and a hotel when you can drive to the beach? It’s all just sand and water! But for me, I like the experience of trying a new wine, or getting on a plane to go somewhere new, or a nice (still frugal) wedding. These are things that I can afford and for which I budget. Does it mean that it will take several more years to be financially… Read more »

Megan
Megan
8 years ago

Agreed! I really don’t like the attitude of some PF blogs, which seems to be “If you do anything fun, then you’re stupid.” As long as people budget for the occasional night out/vacation/whatever floats their boat, who cares?

El Nerdo
El Nerdo
8 years ago
Reply to  Angela

Okay, I agree with most of this except with the “stop judging others” part.

I say let them judge– who cares? People make judgments all the time, it’s part of being human and having the capacity to evaluate things.

And if someone judges you in an annoying or offensive way then it’s just a chance for you to retort with a judgment or insult of your own. Funnn!! 😀

Josh
Josh
8 years ago

I bought a ticket to the latest Mega Millions drawing because the jackpot actually got big enough that the odds were mathematically in my favor to do so. Yes, I realize my chances of winning are still virtually nothing, but the payout was actually big enough to support the risk, which is very rare.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
8 years ago
Reply to  Josh

I’m no mathematician, but when jackpots get that big, there are more players. So, your odds of winning the jackpot alone are smaller, and the chances that you’ll have to split it are greater. I wonder what the optimal jackpot is with that factored in.

Mondo Esteban
Mondo Esteban
8 years ago

Exactly Matt. I wondered this too. It’s the media.

Courtney
Courtney
8 years ago

Read an article written by a statistician that, when the smaller prizes, odds of splitting the jackpot, and taxes are figured in, the Expected Value of a $1 ticket is greater than $1 when the jackpot is above $330M.

Also read that buying a second ticket doesn’t appreciably increase your odds of winning, but buying a second ticket *with the same numbers* means you’d double your share of the prize pool if there were multiple winners with your numbers, and is the smarter move mathematically.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
8 years ago
Reply to  Courtney

Very interesting. That answers it. Never thought of buying the same ticket twice.

Steve
Steve
8 years ago
Reply to  Courtney

Do you have a link to the article with the analysis that shows $330 million or more is a mathematically sound play? I have seen multiple references but not found the article itself.

Paul in cAshburn
Paul in cAshburn
8 years ago
Reply to  Courtney

It would also seem important not to select numbers below 12 (the months) or 31 (the days) since so many people select birthdates that you’d have an increased chance of having to split the prize.
So, since any combo of numbers is equally likely, choose a combo least likely to be duplicated by others (avoid numbers that comprise birthdates).

Well Heeled Blog
Well Heeled Blog
8 years ago

Lotto tickets are an entertainment – the best entertainment, in fact, because what other forms can give you a small-but-real chance of striking it big? 😉 I see it in the same vein as a latte or a piece of chocolate. It won’t break my budget, and it’s fun to enjoy/”consume” the enjoyment for a few hours or days (until I find that that I am, alas, not a lotto winner).

Nicole
Nicole
8 years ago

Up until last year I had never played the lottery before because 1. I was raised that gambling was a sin and 2. I am a professional statistician. Although I no longer thought that it was morally wrong to gamble, I never had any desire to play the lotto. Then one day two of my friends and I were out and they found out I had never purchased a single lotto ticket or scratch off in my life. We proceeded to spend about an hour buying a scratch-off, cashing in the winnings, and using our profit to buy a couple… Read more »

Informationless
Informationless
8 years ago

My coworkers and I have a weekly lottery pool, and it’s all in good fun. We each contribute $2 every week. We’re all aware of the astronomical odds against us one of us even has a stats background), but it does really lighten the mood in the office. It’s fun to joke about the whole department quitting at the drop of a hat, what we’d do with all the money, who we’d take on a vacation with us, etc. It’s pretty cheap fun, as far as I’m concerned.

Jill
Jill
8 years ago

I agree that the lottery is harmless when you can afford it. A few bucks for a little hope and fun is ok. It’s the folks who think of it as a wealth-building strategy that are in trouble. And some people really do think that way! My mom was a foster parent when I was growing up, and there was one little girl who came home from school with a “what do you want to be when you grow up?” assignment. She was planning to collect welfare and play the lottery. Not kidding! If that seems like a legitimate plan… Read more »

John @ Married (with Debt)
John @ Married (with Debt)
8 years ago

I think lotteries are fine, just have a bit of an issue with governments being in the business of gambling.

Our economy is based on gambling, so let the people gamble. I’ve seen data recently that suggests it isn’t mainly poor people doing it.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
8 years ago

I agree about the government running the lottery. It’s nails on a chalkboard when people say casinos will bring in money for the state: money from where? From people that would have either saved that money or spent it on something else! So, either the banks have less capital to lend out (higher interest rates), or other businesses lose revenue, because instead of buying his nephew the new Xbox, Uncle Joe blew his money at JackFox Casino! Then Uncle Joe needs help from the state to pay his bills, etc. In sum, government-run gambling is bad for the economy. It… Read more »

Marsha
Marsha
8 years ago

I’m not judging what anyone spends their money on, but I’ve never understood the “entertainment” value of lottery tickets. Isn’t the fun of dreaming what you’d do if you won cancelled out by the disappointment when you don’t? Yes, realistically you know you’re not going to win, but I guess the fun is supposed to be the slight hope that you will. Dashed hopes doesn’t sound like fun to me. But it’s your money, do what you want.

(I’ve never bought a lottery ticket but I’ve been given a few as gifts.)

Mondo Esteban
Mondo Esteban
8 years ago
Reply to  Marsha

Its commented on later. Having the “what if” conversations I would consider entertainment. If you don’t have a lottery ticket, then its not nearly as fun because with a lottery ticket you are buying the dream.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
8 years ago
Reply to  Marsha

I lose a dollar. My disappointment is minimal.

Mondo Esteban
Mondo Esteban
8 years ago

Maybe, but who gets more enjoyment? A person who can smile and dream about living on a paradise beach for the rest of their lives or a person who says “well, I saved a dollar”.

Marsha
Marsha
8 years ago

The way I see it, since you were dreaming about winning big, you’ve really lost millions when you don’t win. Okay, maybe that’s a big exaggeration, but I still don’t see paying anything just to be disappointed.

Donna Freedman
Donna Freedman
8 years ago
Reply to  Marsha

True. But I still enjoy the fantasy. I can watch a movie about heroes and daydream about doing something truly heroic. I may never get the chance. If I don’t? I can stand up under the disappointment.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
8 years ago
Reply to  Marsha

If you feel like you lost millions when you don’t win the lottery, then you definitely shouldn’t be playing the lottery.

Jenna
Jenna
8 years ago
Reply to  Marsha

I find it more annoying to pay for something that I am disappointed with but had real expectations of enjoying. Wasted plenty of money on lousy movies, meals, haircuts, etc. I have a hard time believing that most lottery players actually believe they will win and suffer true disappointment when they don’t.

Ely
Ely
8 years ago

When I saw that today’s post was by Donna Freedman, I lit up a little bit; hers have been my favorites of late.

The landing strip comment cemented it. I’m going to be laughing all day. Thanks Donna! 🙂

Amy
Amy
8 years ago
Reply to  Ely

That line provided my first smile of the day, too!

Donna Freedman
Donna Freedman
8 years ago
Reply to  Amy

@Ely and @Amy: You’re welcome.

partgypsy
partgypsy
8 years ago

Everything in moderation. There is a lot of judgment of how other people spend their money. The people I know who buy tickets do it for the entertainment/daydream factor, and it’s typically less than a latte or a pair of shoes or a movie.
the problem is when people who can’t afford it use it as a form of sanctioned gambling. Maybe some of the lottery money can be used for personal finance classes or addiction counseling for those adversely impacted? But who is going to make that call?

Monika
Monika
8 years ago
Reply to  partgypsy

Some of the proceeds are used for gambling addictions. The Lotto also has a help-line available for those struggling with the addiction that leads them to these services.

Adam P
Adam P
8 years ago

The only time I play the lottery is when some clown in my department at work does a group buy on. Because if I don’t buy, these jerks will be the ones that win and I’ll be stuck behind as life has it out for me. And then I’d have to kill myself (or them) knowing they all retired as millionaires and I’m stuck doing the work of 10 people because I was too cheap to put in a dollar that week. So I guess it’s sort of life insurance for me. Fortunately, this extortion costs less than $20 a… Read more »

JK
JK
8 years ago

Thank you for putting into words what I have felt about this all along. I do have an EF, I do have an IRA and a 401k, I am paying off my debt and donating each month. This is a once every few months form of entertainment. We were at my parents for dinner the Thursday before the draw and we each had pitched in a dollar for a ticket. The conversation about what we would do, how we would do it and who would want to be part of our joy lasted for a over an hour and then… Read more »

Mondo Esteban
Mondo Esteban
8 years ago

Eh – I am ok with someone buying a lottery ticket. One thing someone with a lottery ticket has vs. someone who doesn’t, is the ability to dream of what they would do with the millions of dollars they have .00001% of winning. The guy without the lottery ticket can’t have that dream. So dream on dreamers. One thing I find funny is how people go nuts and buy a ton of tickets if the payout is beyond say 100 million or so vs when its under that. Its like “eh, 20 million dollars isn’t life changing, but 100 million..… Read more »

Rosa
Rosa
8 years ago
Reply to  Mondo Esteban

You know someone is a personal finance nerd when they’ve figured out the future value of their current income vs. the net winnings after taxes & the minimum shared amount to prevent family feuds, and only play when it gets above that number.

My boyfriend has a minimum number to win before he’d quit his job, so I used to buy him a ticket when the jackpot hit that number. But they raised the ticket price to $2 recently and it turns out that’s above my entertainment value price point.

Amy
Amy
8 years ago

I’ve never bought a lottery ticket, but I did spend a year buying virtual points for virtual items on a virtual games site, and my husband buys guns and ammo to go shoot at bottles for hours on end, and my sister buys every Disney movie on DVD even though she knows it will be obsolete some day, so I completely understand that what is entertainment to one person is a waste of money to others. I loved having the “what if” conversations with my husband, with my sister, with my coworkers, with my friends on Facebook. It’s a great… Read more »

Mondo Esteban
Mondo Esteban
8 years ago
Reply to  Amy

Having the “what if” conversations could even be considered entertainment. So maybe a lottery ticket purchase can be considered entertainment?

Amy
Amy
8 years ago
Reply to  Mondo Esteban

Yes, that’s essentially what I was saying. But personally, I didn’t have to “pay to play” because I got entertainment value without buying any tickets, just being swept up in lotto fever along with the rest of the nation. I didn’t even want to win, as I don’t think that much money would bring me happiness. You know what they say… mo’ money, mo’ problems!

Dee
Dee
8 years ago
Reply to  Amy

Sarcasm alert: I have a great idea for a new blog – Get Rich Quickly. In today’s society, everyone is entitled to their opinions. (Note – opinions – not actions than can hurt others.) Now, it may be a tad unethical if it was assumed that the site would encourage what some people consider rash behavior but it might also be a refreshing change to hear about people’s dreams that aren’t all so logical.

WWII Kid
WWII Kid
8 years ago

Donna – How come the previous comments from this post don’t carry over?

Donna Freedman
Donna Freedman
8 years ago
Reply to  WWII Kid

Not sure what you mean by “carrying over” — ???? Maybe it didn’t post right away? Try refreshing the page.

Matt at Healthy N' Wealthy
Matt at Healthy N' Wealthy
8 years ago

I agree whole-heartedly with everything in this article. The lottery should be seen as an expense for entertainment. I only buy when the jackpots get over $100 million, and I don’t buy for every drawing after that. That way, I’m only “allowed” to buy a few times a year. It’s fun, exciting, completely illogical, and worth every penny! Hey, maybe I’ll even win!

Nicki
Nicki
8 years ago

In our office, we had played the lottery as a group for years (and is the only way that I play). Our firm recently merged with another firm which also had a local office. The new group moved to our offices and there was a lot of suspicion and hostility on their part to begin with. We invited whoever wanted to join our weekly lotto to do so and started to pave the way to good will. Priceless!

Meghan
Meghan
8 years ago

If the odds of winning the lottery are next to impossible, then can’t I just daydream that I bought the ticket, and then daydream what I would do if I won, and still have the same little bit of entertainment? Then I would still have the money in my pocket. I’ve always thought that winning the lottery, while it may be a dream come true, might also be somewhat of a curse. I imagine that you would also have to deal with a lot of crap, in the form of people trying to take advantage of you, pressures from family,… Read more »

partgypsy
partgypsy
8 years ago
Reply to  Meghan

Actually some of those conversations are useful, because then can see what you value (living in same neighborhood, safety of children, being “anonymous” to walk around, do what you want) might have to give up if you have too much money, and also makes one appreciate the activities and relationships that you value that don’t require money at all! so it makes me come to the conclusion it would give me more financial security, but might not affect my overall happiness level.

Carla
Carla
8 years ago

How we spend our money will always be a hot button topic on PF blogs. You like to go out for coffee? Make it at home, silly! Like to eat out occasionally? Buy a crock pot and make fabulous meals that way! Live in a high cost of living/rent area? Move to a cheaper location (ignore the fact you might live near your job, family, have a high walk score, good schools for your kids, etc). Have or need a car? Get rid of it or buy the cheapest junker you can find. Remember oil changes every 5000 miles is… Read more »

Donna Freedman
Donna Freedman
8 years ago
Reply to  Carla

Yep, that.

Lucille
Lucille
8 years ago

Lotteries are wealth building for the organisations behind them; I have no problem with that. Lottery winners spend their money on goods and services so money is circulating – that’s healthy. I have nothing against the lottery though I seldom buy a ticket….you’ve got to be in it to win it!!

Amanda
Amanda
8 years ago

I only buy a ticket when the jackpot is over $250 million. That way I only buy one or two a year and it is really fun to talk about how you would spend that much money. But as far as odds, you are more likely to be struck by lightning a couple of times than win.

Sean
Sean
8 years ago

It’s interesting. The logic is essentially:
-yes, it appears, statistically, to have a negative impact on the poor.
-yes, there are people who abuse it in ways that are harmful to their lives.
-but I don’t abuse it, and I get some enjoyment out of it.
-and the same applies for most people who do it.

Do you realize you just made an argument for drug legalization? 😉

Laura
Laura
8 years ago
Reply to  Sean

Same logic applies to alcohol.

Katie
Katie
8 years ago
Reply to  Sean

And plenty of people make those arguments, so I’m not sure why that’s surprising.

But it doesn’t necessarily follow, because it’s quite easy to argue that the pleasure to harm ratio is different for drugs than the lottery (or for some drugs but not others) and that that justifies making them illegal.

Jajanise
Jajanise
8 years ago

Great article!! I enjoyed it (for free, lol)…and I play when the pot is over 100 million…escapism is truly fun every once in a while.

tboofy
tboofy
8 years ago

What right do we have to judge them? Well, if they’re making under $12k a year, they’re likely getting government assistance. So we’re all supporting their habit when they take their money and blow it on lottery tickets. The key thing here is IF THEY CAN AFFORD IT. I have no problem with people blowing their money however they want if they have it. But if they’re on government assistance for their food, housing, etc., and blowing 5% on lottery tickets, they’ve got issues. What happens the day the lottery is announced and they don’t win? Deep depression? After all,… Read more »

jim
jim
8 years ago
Reply to  tboofy

How dare they take “MY TAX DOLLARS” and then give it back to the government $1 at a time via lotto ticket purchases!?!
/sarcasm

Sara
Sara
8 years ago
Reply to  tboofy

Did y’all read about the woman in Michigan who won $1 million in the lottery last fall, yet continues to collect welfare? You’ve got to watch her interview: http://articles.latimes.com/2012/mar/07/nation/la-nn-na-lottery-winner-collects-welfare-20120307

She thinks she still deserves the welfare because she has “no income” and is “struggling.” After all, she says, her $1 million winning dropped to $700,000 by taking a lump sum, and then after taxes amounts to just over half a million. Unbelievable!

Peach
Peach
8 years ago
Reply to  Sara

I heard about that a month ago and I also heard she had mental issues. Most people would NOT want to stay on the public rolls OR keep their job after winning the lottery.

Sara
Sara
8 years ago
Reply to  Peach

Update: Apparently Michigan pulled her benefits about a month ago after outcry by Michigan residents. State law required her to report change in assets or income within 10 days, but she failed to do so.

I have not seen any reference to mental illness in any articles or blog posts about her, but that doesn’t mean it’s not possible. (Though her benefits were based on income, not mental health.)

Dom
Dom
8 years ago

I went to Vegas a few weeks ago for a work conference…and I didn’t spend a penny at any of the casinos (at least in the gambling sense). I’m not a gambler by any means..but I did buy a mega millions ticket….but that was only because I considered the $2 I spent “found money”. I had lent a coworker $2 several weeks back and then she showed up and paid me back…but I had fogotten about the $2 by then…so it was no loss for me to play for the “kitty” – considering I wasn’t missing the $2 before then… Read more »

tboofy
tboofy
8 years ago

Don’t studies show that most lottery winners end up broke within 5 years? So even if they DO win, it doesn’t solve all their problems. Those reading this blog likely aren’t the kind who are spending 5% of their income on lottery tickets in hopes of getting “saved” from their poverty, so most of us readers can afford a lottery ticket or two if that’s how we choose to spend our money. We’re not the target market for the “lottery is evil” lectures.

jim
jim
8 years ago
Reply to  tboofy

I’ve not seen any such study. There are common news reports about lottery winners who go broke. I think those stories over hype the problem. But then news stories about rich people who don’t go broke are less interesting headlines. “Rich guy is still rich” News at 11!

Frugal Portland
Frugal Portland
8 years ago

If it’s okay to tax hope, it’s okay to have hope!

adriano
adriano
8 years ago

playing a lottery is a form of charity. I know i will not win, but i also know that someone will win. That someone more likely than not has little money. it is a good thing to enable someone to become rich. also, whoever wins, it is theyre money, no need to give it away, just because you won it.

Steve
Steve
8 years ago
Reply to  adriano

On the other hand, if you did win, then you just accepted a bunch of money from people who couldn’t afford it!

Jessica
Jessica
8 years ago

You are right, we are all very quick to judge (myself included) what other people do. Great article!

Marianne
Marianne
8 years ago

I feel similarly about buying lottery tickets and such. Personally, we don’t get a tonne of enjoyment out of them so we very rarely buy them but if our work is doing a lottery pool (a couple times a year) we join in and every once in awhile my husband will pick up a scratch ticket if he happens to go into a variety store (though the last time we did this was probably a couple of years ago). It isn’t our thing- that doesn’t mean that it isn’t someone elses’ and if they can afford it why shouldn’t they… Read more »

J Marie
J Marie
8 years ago

I agree, it is worth the $1 to be able to dream about winning the big jackpot. Interesting point – the woman from Newport RI that recently won big is being investigated by the state because she was on public assistance when she bought the ticket. I guess you are not supposed to gable with public assistance money!!

jim
jim
8 years ago

I agree with everything Donna said.

The lottery is just a form of entertainment.

Most Americans gamble and I don’t see how the lottery is any worse than playing blackjack in Vegas or pumping money into slot machines at the local Indian casino. The odds are different but the house always wins in the end.
At least with the lottery the proceeds help the state rather than padding profits for a casino.

Some people don’t understand the odds of the lottery and thats unfortunate. But then most people think they can win at blackjack too..

Gerri Detweiler
Gerri Detweiler
8 years ago

Donna –

As always you made me laugh – and think. I loved your other post on this subject too:

“Here’s what I don’t get: Apps. Candy bars. Lunch out three times a week. Music downloads. Cell-phone upgrades. Manicures. Online gaming community memberships. Auto detailing. Spray tanning. And so on. I bet some people spend more on a single waxing than I spend on lottery tickets all year.”

As they say, priceless.

Donna Freedman
Donna Freedman
8 years ago

Thanks, Gerri…And have that triple-pump latte whatever-it-was if that’s what you want. You of course know that a reasonable budget includes room for treats.

Ashley
Ashley
8 years ago

Thank you, I love this article. I think people often forget that while your odds at winning the Jackpot is high the odds are greater you’ll win a small amount. I once asked my Mother why she buys lottery tickets occasionally instead of just saving the money and she says once every 1-2 years she wins 50$ or 100$ so she’s actually not losing money on the tickets. She’s never won over 250$ but if you’re breaking even and having fun I don’t see a problem with it.

Jared
Jared
8 years ago
Reply to  Ashley

The problem with that is that people are not breaking even. If people are breking even, where does all of the revenue from the lottery come from?

cathleen
cathleen
8 years ago

My husband’s childhood next door neighbor, at 80 years old, won the lottery worth $35 million. (Wealthy man prior to lottery, one of the nicest neighborhoods n California)

He died 2 years later and left everything to his kids….so….my advice? Get your parents to buy lottery tickets 🙂

MARIA
MARIA
8 years ago
Reply to  cathleen

Too funny! and it hit home. My father who is low income and retired plays the Lotto WAY to much.. about $25 a week, while I pay for his phone, home insurance, and purchased the mobile home he lives in located in a nice Florida retirement village. I have my fingers crossed twice he (we!) will hit it big one day. If not oh well, the money I donated to him is not holding me back financially and he enjoys playing. NOte: he always worked low paying jobs, never had any major vices and NEVER and will NEVER except Welfare,… Read more »

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