Every few weeks someone from my office makes the rounds to each cubicle to collect $5 for the PowerBall jackpot. Small talk breaks out at this time and everyone starts fantasizing about leaving their job, sailing around the world, buying sports cars, partying with their friends, etc. Everyone gets jittering with optimistic thinking; “it could happen” or “what if we win?” I mean winning the PowerBall could mean hundreds of millions. (By the way, i’m not talking about the $1 scratch offs your aunt gives you for christmas, you shouldn’t play those either, but they are fun once in awhile.)
I don’t play. When they stop at my desk, I politely decline. I don’t want to hand over my $5 of hard earned money. I won’t win. No one wins. Even if your numbers are chosen and you win the grand prize.
Here are some facts that you should remember when you are fantasizing about what type of mega-yacht you are going to buy:
- The odds of winning the grand prize are 1 in 195,249,054. This alone should stop you from buying a ticket. My 5th grade math teacher was right when she used to say “The lottery is just a tax on stupid people”.
- Lottery winnings are taxed like income. When you collect your earnings, you will really only be taking home approximately 1/3 of your stated winnings if you are lucky.
- 70% of lottery winners spend all their winnings and proceed to lose the rest of their money within seven years. Many end up going bankrupt.
- The hype is hard to ignore: I’ve heard it so many times “come on dude why not?” or “you’ll be so pissed if we all win..”, it’s because money adds up. $5 seems small but If you set that 5 dollars you spend on the lottery every month into a money market fund for the next 35 years, you will have an extra $20,000 when you retire.
- The probability of winning is so low that the certainty of having $20,000 at retirement is a much better payoff with almost no risk.
To me, these are great enough arguing points for not wasting my money on such nonsense.
Say you were lucky enough to actually win the lottery. The problem is that most people would have no idea how to conduct themselves. They are not experienced enough to use their winnings properly or correctly. There are so many implications that could cost you many good parts of the life that you live now.
- Spending and excitement would become a drug, when dopamine is depleted and the rush is over depression sets in. Your happiness will have peaked and you might not recover. You will keep spending to achieve that same initial rush.
- You will probably lose friends. People will see you and treat you differently. You will be the rich friend who was just lucky. People will come out of the woodwork to ask you for money. Their personal ATM, “what does he care”. 90% of winners lose good friends.
- There is nothing better than the feeling of earned money. Money that you win is not money that you personally earned and that is the most defining factor. $30,000 is a lot different to a 30 year old than it is to a 12 year old. When you win the lottery you are the 12 year old. You will most likely make decisions with an immature mind set.
- There was a study done that shows that poor households, with annual take-home incomes under $13,000, on average, spend $645 a year on lottery tickets, which comes to about 9% of their yearly income.
- Don’t let this be you. Lottery collections will happen in an office near you, so stop wasting $5!!!