Is Playing The Lottery Worth It? The Odds Are Against You

woman looking at her phone and crossing her fingers hoping she won the lottery wondering if she should stop playing it

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Many have the idea that the lottery is a golden ticket to riches and unimaginable wealth. As a result, many hang their hopes on the lottery, believing that it’s the answer to all their problems. While it may seem harmless, do not let the numbers fool you. In 2016, half the U.S. population played state lotteries, and very few got to see a jackpot.

The lottery is a trap designed to keep you playing and coming back for more. When you look at it objectively, there are many better ways to use your money.

In this article, we'll discuss why you shouldn't play the lottery and what better alternatives exist.

Is It Worth it to Play the Lottery?

The short answer is no, it’s not worth it to play the lottery. While it may seem like a lottery ticket is cheap compared to the prize it can give, the money spent adds up. In time, many end up paying more on lottery tickets than they realize and never win anything back. Other financial strategies far outweigh buying lottery tickets.

Playing the Lottery is Like Gambling

Lotteries have smaller prize brackets to entice you to keep playing. The way they draw numbers also triggers impulses in our brain, similar to how a slot machine lines up. 

They want to keep you invested by giving a brief high. A small fleeting moment of happiness you know begins associating with the entire act of playing the lottery.

Gambling can be very addictive and destructive. It can lead you to start losing money quickly. Once it starts affecting your lifestyle, it will eat your time and resources. Those with a tendency to get into gambling addiction should avoid the lottery.

Yet, you don’t hear the organizers of these big pools of money stopping you. Why? It’s because the lottery’s design is for gamblers. They want you to keep spending money.

For a lottery to function, they have to earn more than they give away. Five years ago, lottery tickets amounted to sales of over $70 billion. The money invested in trying to get rich quickly has only grown.

You Have Terrible Odds

At the highest echelons of the lottery, the seven-plus-digit jackpot prizes are the coveted ones. However, no one stops to tell you what your odds are for winning such a prize. 

In truth, there is a one in a 292 million chance to win. For you to win essentially requires a miracle. 

Here are some things that have better odds of happening to you compared to winning a lottery, according to the Las Vegas Review Journal:

  • Being crushed by a meteorite (1 in 700,000)
  • Dying in a plane crash (1 in 11,000,000)
  • Becoming the U.S. president (1 in 10,000,000)
  • Becoming an astronaut (1 in 12,100,000)
  • Winning a gold medal in the Olympics (1 in 662,000)

Even becoming a billionaire through investments has a higher likelihood of happening than trying to put your future into a ticket. Financial accessibility and literacy improving around the world have had a positive effect.

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You’ll Still Pay Taxes

When you win the lottery, you won’t get the magic number you see on the board. What you see beside the jackpot are pre-tax dollars. Yes, the government first takes its share of the prize pool through taxes, and you get the rest.

The government taxes lotteries at the highest income bracket, which is at around 37%. That means if you win $100,000,000, the government will take $37,000,000 from it first. Then you get the remaining $63,000,000.

70% of Lottery Winners Go Bankrupt

Here’s something a lot of people don’t tell you. Why is it that most of us don’t hear about lottery winners anymore? 

We don’t hear about people who won two years ago, five years ago, or even longer. Well, there is a good chance that the lottery winner has already gone back to a poor state of living.

Wealth is a mindset and a lifestyle. It takes a different kind of education to maintain and eventually grow money. It’s easy to think about what you can spend when you have hundreds of millions, but then the reality sets in.

Not only that, the money can go by quickly. People often get so caught up in high spending that they apply it to every part of their lives. 

As a result, after one purchase, they end up spending a significant amount of money on things they do not need. It’s what’s referred to as the Diderot effect.

Also, once people close in your life figure out that you’re a lottery winner, you may become objectified. 

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People in your life may see you as a walking bank account that they can ask for money. You may feel tempted to give away money since you feel like you have so much of it.

The Lottery Preys on the Poor

Again, the lottery by design is to keep poor people spending money. Lottery advertisements are found in small neighborhoods, corner shops, or pawn shops.

Many of the shops that sell these tickets exist in low-income neighborhoods because lower-income people are generally more susceptible to what appears to be a solution to their financial issues. If 10,000 people buy a $5 ticket, then the lottery just made $50,000 in cash.

Advertisers know this, so they intentionally do their best to hide the odds and the risk.

Better Alternatives than the Lottery

What’s the first step to building a mindset for wealth? Stop using your money to buy tickets. The math alone means that it’s never worth it to try. Instead, look for strategies that are more proven to build wealth. It may not be instantaneous, but you’ll be surprised at how much these things can help you. Here are some alternatives:

Creating an Emergency Fund

One of the first things you need to establish to create financial security is an emergency fund. It is liquid cash you always have access to that you’ll only use during emergencies. 

Many recommend having at least six months of living expenses ready in a savings account that you use for your emergency fund. That way, when you lose your job, you have six months to cover while you look for a new job.

You can place it in a high-yield online savings account such as at CIT Bank.

CIT Bank offers high-yield savings, money market, CDs, and custodial accounts designed to help you maximize your personal finances.

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Check out this article to get information on how to save $1,000 fast for your emergency fund.

Investing in the Stock Market

The stock market is the go-to place for many new investors. Index funds one popular and relatively predictable investment vehicle.

Investing is a long game, and smart investing is the key to building wealth at any age. One can learn to invest on their own or hire a company to manage their money. Additionally, Robo advisors use algorithms to invest your money for you. This can be a low-cost alternative to hiring an advisor, and many investors use Robo advisors to allocate their money in the stock market for them.

You can also check out M1 Finance.

M1 Finance handles all of your investing needs. You can create personalized portfolios or use premade portfolios that best suit your goals. M1 will also keep your portfolio balanced in any way that you choose.

Also available with M1 are high interest checking accounts, a credit card that has up to 10% cash back, margin loans with some of the lowest available rates out there, and a solid research platform so that you can make informed decisions.

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Here are more ways you can invest with as little as $100.

Funding a Side Hustle

A side hustle will take extra work, but it will lead you to make more money. If you have a good business idea, a hobby, or an interest in exploring hustles, it can be a path for you. 

Most side hustles don’t need a lot of money to begin. It all depends on what type of business you want to engage in.

For example, starting a side hustle where you make money online may not be as expensive because you’ll likely use things you already have, such as your computer, existing internet connection, your phone, and software you use for personal use. 

Buying Real Estate

Real estate is an investment that can make you rich over time. However, the adage, “it takes money to make money,” applies heavily. You can make a lot of money, but you have to put a lot of money in. 

Nowadays, some services allow you to invest in real estate for a fraction of the cost. They use the concept of crowdfunding to help give people accessibility to investments. 

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One popular crowdfunding platform is Fundrise.

Fundrise is the first investment platform to create a simple, low-cost way for anyone to access real estate's historically consistent, exceptional returns. With as little as $10, you can open a Fundrise account and start investing in real estate.

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Peer to Peer Lending

Many online platforms today offer peer-to-peer (P2P) lending services. It connects investors and borrowers directly. As a lender, you gain money through interest paid to you every time someone makes a monthly payment..

P2P lending can become a consistent form of income, but the challenge is lending money to the right people so that you minimize your risk of borrowers defaulting. 

One of the websites we recommend is Prosper. The terms are very friendly to lenders, and it’s highly rated across many different platforms.

Wrapping it Up

With so many options that practically guarantee wealth-building, it’s time to let go of the false dream that is the lottery. From preying on the poor to fueling impulsive decisions, a $5 lottery ticket here and there will ultimately end up costing you far more. 

Instead, take the money you’d use for lottery tickets and put it into something long-term and profitable.

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