Don’t Throw Away Money On Lottery Tickets!

But try telling a loved on that.

A  loved one in the family thinks the lottery may be the way out of a personal financial mess. I disagree, yet this has been a polite ongoing battle of saving money versus lottery tickets.

I personally don’t play the lottery my self. I just don’t get a kick out of giving away my hard earned for such brutal  odds. Loved one see it differently; “If you don’t play, you can’t win” are the words of the loved one.

Absolutely I agree with the statement. Same goes with anything else money related. If you don’t put money away for retirement, you won’t have any when you get there. What’s the difference though? The money I put into my RSP will be there. I am not giving it away to a Lottery Corporation.

Some Lottery History

The North American lottery system is a $70 Billion Dollar industry. This industry alone is bigger than movie tickets, music, and porn combined. Lotteries were used to fund the American colonies and helped bankroll the young nation. In the 18th and 19th centuries, lotteries funded the expansion of Harvard and Yale and allowed the construction of railroads across the continent. Forty-three states and every Canadian province currently run lotteries.

80/20 Rule

I’ve purchased a few lottery tickets in my lifetime. Everyone purchases a lottery ticket at some point or another. In fact, approximately half of Americans buy at least one lottery ticket at some point, but here is the kicker – the vast majority of tickets are purchased by about 20 percent of the population. These high-frequency players tend to be poor and uneducated, which is why critics refer to lotteries as a regressive tax. On average, households that make less than $25,000 a year spend 5 percent of their income on lotteries—a source of hope for just a few bucks a throw.

Reality – True Stories

The same loved one is a great example of  a high frequency player, who makes less than $30,000/year and spends a good chunk of the paycheck between booze, cigarettes and some on lottery. Thankfully, we’re slowly working on it – just recently signed up the loved one for an automatic savings plan. Two hundred dollars gets withdrawn at every paycheck and goes into a separate savings account, which is managed by me.

Another quick true story – Few nights ago as I was pumping gas and while the same gambling loving loved one was sitting in a car, across from us was an older gentleman also pumping gas. His car was at least ten years old, beat up and rusty. We both walked in to pay. One thing I noticed as we were walking into the gas bar, he was carrying $15 in his hand. And up he went to pay, as I stood behind him in line. He pumped $10 worth of gas, only had $15 with him and the remaining $5 he used towards the purchase of two lottery tickets. Sadly, he gambled his last $5 away to the Lottery Corporation. I’m sure that $5 in gas would have gotten him further in gas than gambling it away.

Better Investments

Saving your money is a much better investment, than giving it away on lottery tickets. Even a $100/month is better than nothing. Relying on a lottery for savings and retirement is not a feasible plan, yet there are roughly 20 percent of Canadians who rely on the lottery for retirement. Relying on others, such as the government, lottery, family and friends are good backups to have, but not plans for the future. Everyone has their niche and we all gamble with something or another everyday.

Playing the lottery is not a worthy investment to me. I’d much rather stock my money away in a savings and use it to buy stocks or towards more constructive financial investing such as Financial Spread Betting. And if you’re unsure what Financial Spread Betting is about or looking to get into it, here as some great tips to get you started on Financial Spread Betting. There is no one exact way to save and invest your money, different options work for different people. Find what works for you and stick it, but don’t rely on others and instead be in control of your money.

Eddie