I have a confession to make. I’ve purchased a Powerball lottery ticket. Maybe it was the hype of the Powerball jackpot that filled my Facebook wall, Twitter tweets and every other media outlet. I felt pressured. Okay, I was swept up in the dream.
The problem with lottery tickets is that it promotes an unhealthy money mindset. It reinforces a belief that comfort and financial freedom can be bought and based purely on luck. The self-made millionaires know best.
Winning the lottery conjures up a glamorous lifestyle of sipping margaritas on the beach, traveling the world in style, buying that dream home and paying off all your debt along with your family and friends’ debt as well.
Imagine never having to worry about money. Of course, when you do have money, you still worry about it. Except your worries go from not having enough to pay bills to worrying about how to lower taxes and get higher investment returns.
I like that the lottery inspires people to dream but the negative side of the lottery is its ability to distort people’s retirement reality. Buying lottery tickets is a belief that one is taking control of one’s future. You can proudly say you did something. You took action and it only cost a dollar.
The truth is…the lottery is not your path to retirement.
A few years ago, a financial educator stated that “80% of people believe the lottery was their path to retirement.” I wanted to see if there was any truth to this statistic. I decided to see how many people I came in contact with who believed in the “luck of the draw” as the best way to retirement. I found that 70% of people (100 random people surveyed) believed the lottery was the only way they could retire with any comfort.
The reality is that you would have better “luck” with these odds than winning the lottery:
Spending a dollar or two to win the lottery doesn’t seem like a budget buster. We’ve heard the Starbucks coffee example of how spending on little things do add up. That example is similar to lottery spending. If you spend $10 per week on lottery tickets, that is $520 a year and $5,200 in 10 years without interest. However, I do know people who spend $20 per week on the lottery. That’s about $1,040 in a year and $10,400 in ten years.
I’m not going to rail anyone on spending a few dollars if it gives them hope for a better tomorrow. But, instead of igniting the dream to only win the lottery, I hope it starts the conversation about savings and retirement.
Just like you took the time to get into your car, drive the mile to the 7-11, wait in line and buy a lottery ticket. I hope you take the time to write up your dream lifestyle, analyze your spending, create a budget, start saving for emergencies and other dream purchases. If you purchased a ticket with your coworkers, it’s a good time to start thinking and using the many benefits offered by your employer.
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Remember “a dollar and a dream” sounds hopeful but “a dollar and a savings plan” is hope. You can save your dollar and invest in your future not on chance.
But, like many of you, I used to purchases tickets often. In fact, when I sold my car in California in 2011, I found $200 worth of lottery tickets that I never even bothered to check. I had $200 littered in my car.
So what can you do when you have the itch to play the lottery?
First, buying more tickets doesn’t necessarily increase the likelihood of winning. If you think spending $100 might increase your odds, think about what expenses you could be paying or what debt you could pay down instead.
Second, go ahead and play but create that budget. Analyze your income and expenses and allow for “fun” discretionary items. If you have a budget, keep the lottery spending within the discretionary buckets. Don’t spend money on lottery tickets you’ve allocated to other dreams.
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Last but certainly not least, have fun dreaming about the life you could have but start taking action on what you can do to achieve that lifestyle. The lottery ticket is a symbol of the possibility of financial bliss. It’s seen as a piece of paper that can save us from our financial stresses. It is a visual representation and so is a budget.
I will argue that the lottery ticket can be a visual representation of your lifestyle and financial goals. A symbol to make you think of the reality of your situation and creating a plan to get closer to that dream lifestyle.
What you can do with your lottery ticket?
You’ve purchased that lottery ticket.That ticket represents what you hope to remedy and gain. You’re dreaming of the wonderful financially stress-free lifestyle. The first step in managing money is to acknowledge your true financial situation and if you’re holding on to lottery dreams than it’s time to assess your finances.
Write down your lifestyle goal. Take that lottery ticket and hold it. Imagine the life you want to live.
Write down your financial goals. Financial goals are things and experiences tied to money such as a home, vacation, debt repayment, etc. This is the process of outlining goals that are important to you.
Use the lottery ticket to help you acknowledge your true income, expenses and debt. You are now completing the first part of budgeting. Budgeting is the other set of numbers that can help you achieve your goals.
I will go out on a limb and state there is nothing wrong with buying lottery tickets and there is nothing wrong with buying $3 coffees. However, if these small purchases are not affordable in your situation or causing you to hold onto an unhealthy money mindset, it’s time to make some drastic changes.
So have you bought a lottery ticket lately?
Resources: Read more on playing the lottery responsibly.
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