Ever won the lottery?

Millions of people spend their hard earned money every week for the slimmest of chances to win the lottery. They spend $1-$5 per ticket and their chances to win the grand prize on the major lotteries are 1 in tens of millions, depending on the game. The chances of actually winning are so small that it is hard to even fathom. Nonetheless, people buy those tickets every week, in some cases religiously.

The reason this is relevant to you is because money spent on the lottery, even if it’s just $1 a week is money that could be used for something that has a much higher chance to net you a return, even if it is not as big a lottery jackpot. I was inspired to write this post today after reading an interesting article on the topic by CNN. Two main thoughts struck me as I read the article. The first, as I briefly touched on already, is the opportunity cost of spending money on lottery tickets instead of putting it in to savings or paying down debts. If you have outstanding debts and bills and you spend money on the lottery, then think about the price of your lottery ticket as actually more than the $1 or $2 you think it costs to play. You actually need to factor in the interest rates that you are being charged by the companies to whom you have outstanding debts with. Maybe this will help you make a better decision with your money. I know this probably is not a great feeling to read this post if you happen to have outstanding bills and like to play the lottery, but I am not trying to tell you not to play. If you get enjoyment out of playing, then by all means, everyone needs entertainment, but it is always good to know the true cost of something. If you are up to date with all your bills, then your opportunity cost would be saving this money or investing it (and I do not consider the lottery an investment, but nice try).

The other interesting thought from that article was actually a business opportunity. A Harvard Professor decided to create a savings/lottery program where you put $25 per week in a savings account and for every time you do that, you get a chance to win a $100,000 grand prize. I thought this was an incredible idea, not only to make money for the business person operating the program, but for the participants as well. You can either win the jackpot, which as we all know is unlikely, but even if you don’t win the grand prize, at least you’ve saved some money and allowed it to earn some interest. Even more beneficial is that this type of program can begin to turn people who do not normally save and invest on to the habit of saving and investing which is great.