Playing the Lottery and Investing

Do not click off immediately, you will want to read through!

If you are a lottery player, I want to help you.

If you put $50 per month in the lottery over 10 years, you will have spent $6,000.

According to Tara Siegel Bernard in a recent NY Times article, “Win a Lottery? Not Much Chance Of That your chances of hitting the jackpot are 1 in 175 million. That’s about the same chance as getting hit by lightning according to Bernard.

You are not going to win the jackpot! It is so unlikely that it’s not worth considering.

You may win once in awhile, but it’s unlikely you will come out ahead with your $50 per month lottery payment!

Do not click off yet please. I have an alternative for you. Please stick with me here, this will offer you a better likelihood of making money from that $50 per month lottery payment.

Where are the Lottery Players?

win the lottery google images

What’s your chance of winning the lottery?

Lottery players are everywhere. Each one hopes that their ticket holds the million dollar prize.

Last week, while visiting my local drug store, the guys in front of me were so excited. I watched to find out why. They bought a bunch of lottery tickets, and before leaving the store they pulled out their coins to scratch off the winning numbers. These guys brimmed with optimism. It was as if they knew they were going to win. (Find out at the end if they won.)

Every time I head into the supermarket, there is a line at the lottery counter.

Several years ago, my neighbors spent $75.00 per week on the lottery. They bought a gadget that even picked the numbers for them. And they actually won regularly (Just not more than they lost).

What do all of these lottery players have in common? The players believe they have a reasonable chance of hitting it big.

What’s My Chance of Winning the Lottery?

According to a Business Insider article, on average a lottery player wins back $.47 for each dollar played.

Do you want to keep playing a game where you pay $1.00 and win $.47? It doesn’t sound fair does it?

How likely is it that you will ever win the lottery?

If you still don’t believe me, look at your own situation. Keep track of all the money you spend on the lottery and all the money you win. What does your own experience tell you? Overall, have you made more than you lost?

So, if you’re tempted to play the lottery, consider the odds. Are you going to be the one in a million person who hits it big? It’s more likely that you’ll get hit by lightning or be in a car crash than win the lottery.

Why are the Poor More Likely to Play the Lottery Than the Rich?

The rich didn’t get that way by playing a losing game.

The statistics are so clear, that the poor play the lottery more often than the wealthy. And the poor can less afford to play the lottery than those with more money.

How to Win the Lottery

Try this strategy instead of playing the lottery.

1. Get a big jar and drop in the money you spend on the lottery.
2. At the end of the month, put the money in a bank savings account. Do not touch this money for any reason. After all, you didn’t use it before, you spent it on the lottery, didn’t win, and it was gone.
3. Every month, keep putting that lottery money in, no excuses. Do not stop.

I’m going to guess that you spent about $20.00 per week on the lottery. At the end of the year, you’ll have $1,040. At the end of two years, your lottery money will be worth $2,080. And just assume that interest rates go up a bit in year 3 and you start earning 2.5% on your money, at the end of year three, you’ll have $3,103.

You win $3,000 by not playing the lottery. Not a bad guaranteed jackpot! And if you keep it up for 10 years, your winnings from not playing the lottery will grow to $11,031.

“I agree. I have been saving the $6.00 per week that I used to spend for lottery for the past 6 years. I am a winner every week!” J.W.

Answer; The guys at the drug store, lost. Losing the lottery demolished their hopes and stole their cash.

Can’t Get Enough Money and Lottery?

Have you ever played the lottery? What was the outcome?

A version of the article was previously published, some comments remain intact.


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  1. krantcents
    September 10, 2012 | 7:37 pm

    I will only play the lottery when it goes over 50 or 100 million. Then I will only spend a $1 because that is all I am willing to lose. In a whole year I might play once or twice.

  2. Shilpan
    September 10, 2012 | 7:47 pm

    I agree with KC. I spend $1 when it goes to $250 million. That way, I spend no more than $10 a year just for fun. Unfortunately, those who play lottery are the ones who can’t afford to play. Thanks for the mention, Barbara!

  3. Barb
    September 10, 2012 | 8:11 pm

    @Krantcents and Shilpan- I doubt whether your lottery habits will have any negative impact on your finances :). If you guys win, let me know!!!

  4. Roger Wohlner
    September 10, 2012 | 9:19 pm

    I agree and I tell myself that it is a tax on the stupid every time I buy a ticket LOL. My wife and coworkers pooled $90 for one of the bigger jackpots earlier in the year. Their “winnings” were $29.

  5. The College Investor
    September 11, 2012 | 1:16 am

    I like doing the scratcher lottery games. I don’t do them often, but I feel like it is at least a little entertainment for my $1.

  6. Amy @ JobCred CV Builder
    September 11, 2012 | 2:39 am

    Good point. As they say, it’s not bad to dream big. But one must wake up to see the big reality of chance, as you said – 1 out of 3,838,380.

  7. Barbara Friedberg
    September 11, 2012 | 10:56 am

    @Roger, I love your example. That’s exactly the type of “wins” that are so common; less won than spent!
    @College- Great attitude-entertainment. That’s my approach when I gamble a few bucks at Vegas; entertainment.
    @Amy- Great to dream big, and then work to make your dreams come true!!!

  8. AverageJoe
    September 11, 2012 | 4:34 pm

    How about this: if you live in a state with bottle returns, you can get drunk, return the bottles and STILL be head of the lottery. Drinks, fun AND a return. Bonus.

  9. Barbara Friedberg
    September 11, 2012 | 6:53 pm

    @Joe-I like that strategy!!! Much more fun and a win every time.

  10. Veronica @ Pelican on Money
    September 12, 2012 | 12:13 am

    I’m not a lottery player usually just because of the odds, but I have to admit that the last powerball made me buy $10 worth of tickets. I know… I know… hehe.

  11. Hanna Jensen
    September 12, 2012 | 5:32 am

    I also just budget a dollar per month for lottery, for the whole luck thing has never been in my favor. May be someday I will be lucky to win a million bucks!

  12. Barbara Friedberg
    September 12, 2012 | 12:57 pm

    @Veronica-Thanks for being so honest :) I don’t think $10 bucks will sink your financial future.
    @Hanna-Like Veronica, $1 per month isn’t likely to put much of a dent in your long term wealth.

  13. maria@moneyprinciple
    September 12, 2012 | 4:42 pm

    I love this article, Barb; and the three action steps to winning the llotery are real winners – I would recomend these to all. Interestingly, playing the lotery is very class elated – in the UK it is mainly working class people who do it. In effect, loteries around the world can be seen as another form of taxation, I think.

  14. Barb
    September 12, 2012 | 5:38 pm

    @Marie, It disturbs me that it seems as though many of the lottery players are those who can least afford it. I like how you referred to playing the lottery as a tax.

  15. Paula @ Afford Anything
    September 13, 2012 | 2:19 am

    I buy a couple tickets a year — I doubt I’ve ever spent more than $5 a year on tix. If I’m suddenly struck with an intuition that I might win, I’ll buy a ticket. :-)

  16. Barb
    September 13, 2012 | 11:19 am

    @Paula, Okay, so fess up, has your intuition ever been right?

  17. Jackie
    September 13, 2012 | 10:31 pm

    I only play the lottery if there’s a big group going in on it at work. On the VERY off chance that the group won, I’d hate to be the only one not in the pot ;)

  18. Miss T @ Prairie Eco-Thrifter
    September 14, 2012 | 10:07 am

    There is a lottery pool at work that I play in once in a while but that is it. I don’t drop a ton of money every week.

    I have used this very analogy with other things though. Put the money aside like you were spending it. It is amazing how much you realize you have after even just one month. They say this has worked great for smokers and getting them to quit.

  19. femmefrugality
    September 15, 2012 | 11:21 pm

    Love it! I’ve spent very little money on it recreationally. But I guess even those little bits would be spent better somewhere else.

  20. Barb
    September 16, 2012 | 5:17 pm

    @Femme-A few bucks here and there don’t really matter if you enjoy the game or fun of playing the lottery. That’s how I look at gambling a few bucks in Vegas. But thinking you’re going to win… well that’s just unlikely. Thanks so much for the visit.

  21. SB @One Cent at a Time
    September 18, 2012 | 10:20 pm

    oh I like this sure shot way to win a lottery. Simple advice told in an innovative fashion. I don’t buy tix, never.

  22. Barb
    September 19, 2012 | 2:29 pm

    @SB-I really like your determination!!! You are certain to be a winner, by not playing!

  23. Suba
    September 19, 2012 | 3:30 pm

    Luckily I have never been tempted to buy lottery so far. I don’t get any excitement from that. I am thankful for that too, I have enough vices as it is *cough* Starbucks*cough* I don’t need another one.

  24. Barb
    September 20, 2012 | 10:24 am

    @Suba, At least with Starbucks (my vice of choice) you get a lot of pleasure and a nice energy boost.

  25. Jon @ Money Smart Guides
    February 17, 2014 | 9:35 am

    I only play the lottery for fun a couple times per year with the few dollars that I am OK with losing. I think the reason why so many play the lottery instead of invest is because they see the potential. They see the potential $10 million prize (even though that is unlikely). When they look at investing, they see the value of their 401k drop after a bad day. Then they think, why lose money in the stock market? It’s ironic that they have a short-term outlook on investing but a long-term outlook on the lottery. If they could just take that long-term view with investing, they would be much better off.

  26. Barbara Friedberg
    February 17, 2014 | 11:25 am

    @Jon-That is exactly my mission, one person at a time; to teach the long term value of investing! Do you have any other ideas about how to get the value of investing across?

  27. Bryce @ Save and Conquer
    February 17, 2014 | 1:44 pm

    I have never bought a lottery ticket. Like you point out, the odds of winning are too remote. Personally, if I want to gamble, I go to Las Vegas or Reno, play craps until I lose my limit, and then pay to see a few shows.

  28. krantcents
    February 17, 2014 | 5:03 pm

    I think I played about 12 times over the last 25 years. I am only willing to lose a bout the $12 I played with. The funny thing is I won once $5 and immediately played the winnings and lost it.

  29. Little House
    February 18, 2014 | 9:30 am

    I rarely play the lottery because the odds are so bad! I just had my students read a “student-friendly” article about the odds of winning the lottery and most of them came away with the fact that it’s not worth it. Part of the assignment was to draw a picture with a caption. Their pictures made me smile – stick-ish figures with empty pockets and a sad face. :) My work was done for the day!

  30. Joe @ Stacking Benjamins
    February 18, 2014 | 9:53 am

    I’m disappointed. All along I’d hoped you had the magic numbers to help me hit the power ball…..

  31. Barbara Friedberg
    February 18, 2014 | 1:23 pm

    @Bryce, That is my strategy exactly, although I prefer blackjack. (But I used to play the blackjack tables where there were $1 tables to be found-no more :))
    @Krantc-Your small examples points out the typical behavior of regular lottery players. Luckily, you didn’t lose much!
    @Little, That sounds so cute. I’d love to see the pix! Great article idea!
    @Joe, Sorry to disappoint.

  32. Nick | Millionaires Giving Money
    February 19, 2014 | 5:49 am

    This is definitely true. I’ve only played the lottery once in my life and it will probably stay like this forever. I hate playing a losing game.

  33. Barbara Friedberg
    February 19, 2014 | 11:55 am

    I received lottery tix for a gift once, but I’ve never bought one! Like you said, why pay to lose?

  34. Free to Pursue
    February 20, 2014 | 9:15 am

    I have only played the lottery with tickets purchased for me.

    With one exception: I joined a lotto pool at work for a while. But, I joined it for the social implications, not the “potential winnings”. It was the first time that this particular group of employees had invited a manager to join the pool and I considered it an honour that I should not refuse ($1/week seemed a small price to pay).

    If there are social motivations, something that brings people together, I say sure…if it’s less than the price of a cup of coffee.

    $20 – $75 a week?! That’s ridiculous…and unfortunate. The money could be put to much better use, especially with the level of debt the average person is dealing with.

  35. Barbara Friedberg
    February 20, 2014 | 11:44 am

    @Free-I completely agree about the “social implications”. You look at it in the same way as spending a few bucks to go out for drinks with the gang. It’s “entertainment and collaboration” not gambling!

  36. hymie!
    February 20, 2014 | 2:23 pm

    And just assume that interest rates go up a bit in year 3 and you start earning 2.5% on your money

    Ha ha ha ha ha ha ha ha ha ha ha ha ha ha.

    Seriously, though, this is where your plan falls apart. My bank’s promotional rate on a 5 year CD with a $10,000 deposit is 1.1%. For day-to-day savings, if I don’t have $10,000, they’re paying 0.01%.

    The lottery actually has better odds sometimes.

  37. theFIREstarter
    February 20, 2014 | 5:49 pm

    I like it!

    I would never get sucked into playing it regularly… once people pick their numbers they don’t want to give it up in case they come up the following week after they quit.

    You could put the money into the stock market for (historically) much better returns as well of course :)

  38. Bryce @ Save and Conquer
    February 20, 2014 | 6:09 pm

    @hymie! Have you looked at the odds of winning the Lottery? I think your last statement is stretching things a bit. It’s easy to find FDIC insured banks and credit unions that are paying up to 2.25% on 5-year CDs right now. Two are Midfirst Direct with a $1k minimum, and Parsons Credit Union with a $10k minimum. The current rate for a regular savings account at Ally Bank is 0.87%. No minimum deposit to open. No monthly maintenance fees. These are all pretty low rates compared to some years ago, but they sure beat throwing away your money on the Lottery.

  39. Barbara Friedberg
    February 21, 2014 | 6:16 pm

    @Hymie, I’m assuming you are under age 35. With a longer time horizon, you’ll see that cash historically paid about 3% returns with bonds averaging 5%. I’m not certain when, but if rates revert to the mean, you will be surprised at how your CD rates will rise.
    @The Firestarter-Long term, the stock market has averaged almost 9%. Although I expect going out average rates will be a bit lower. Of course, I don’t have a crystal ball and so only time will tell future interest rate levels.

  40. Barbara Friedberg
    February 21, 2014 | 6:17 pm

    @Bryce, Thank you for the fixed savings account rate information. It’s so helpful to seek out higher interest rates, in such a low rate environment!!

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