The Lottery Won’t Save You, But Smart Money Management Can

create your monthly budgetWorrying about money is a major stressor. Financial problems can wreak havoc on your physical and emotional health, your relationships, and virtually every aspect of your life. It is little wonder, then, that many folks who are struggling with their finances nurture dreams of a miraculous save, a deus ex machina such as a huge lottery or sweepstakes win. Accordingly many people spend more money than they should on lottery tickets and scratch-off games, with low-income people being among the most vulnerable to the (mostly) false hope that money will fall into their hands if they spend half of their paycheck on the next Mega-Millions game.

Don’t let your big dreams blind you to reality

Don’t misunderstand us. There’s nothing wrong with buying an occasional lottery ticket, or even daydreaming about what you would do if you won, but don’t pin all of your hopes and dreams on a big win. If you are truly struggling financially you’re far better off looking for more realistic solutions to your problems.

Setting and living within a budget that covers your expenses and allows you to have a decent quality of life, while still managing to contribute to your savings on a regular basis, is essential. While this can be a lot more difficult to do than to say, it is doable for most people.

One area where too many people get off that track is in accumulating more debt than they can handle on a regular basis. It is essential that you avoid debt unless it is necessary or will actually improve your financial condition. If you decide that you do need to take on a debt, you need to really know what that debt is going to cost you, and to shop around for the best source of credit.

Comparison sites for example provide you with a side-by-side comparison of the terms and costs of different lenders’ offerings on many types of loans The site also has tools such as financial calculators, and advice on how to best manage your household finances, so you don’t find yourself struggling and wishing for a windfall.

Most people know at some level that they could be smarter about managing their money. Nevertheless the siren song of the lotto calls to millions of people.

A tax on the poor?

Unfortunately, some of the most financially vulnerable, who can least afford to spend money for things that have virtually no chance of benefitting them, are the most likely to heed that call, to their detriment. It is not too difficult to understand the appeal, especially when someone who can barely afford the basic necessities has the promise of a $1 billion-plus jackpot dangled before them, such as has been the case with the American Powerball lottery. Visions of acquiring previously unimaginable wealth can be profoundly seductive when you barely have enough money to buy groceries for the week. And the tantalizing suggestion that somebody is going to win, so I have as good a chance as anyone, makes it exceedingly easy to part with a couple of dollars for a ticket, or even to cut back a bit on the groceries to buy more tickets, thus improving your chances.

What is not emphasized in the commercials is the fact that the jackpot is bigger because more people are buying tickets, diminishing your virtually nonexistent likelihood of winning even further. Add to that the fact that late in 2015, the table of available Powerball numbers from which to choose the winning five grew from 59 to 69, further reducing dramatically the chances that anyone will win. The pot gets bigger, and people’s fantasies are whetted to the point where they end up spending more of the money they really need for other things. It’s no wonder that some financial experts consider the Powerball lottery a state-sanctioned swindle. Other countries, including the UK, have similar games in place for one reason – they are a tremendous source of fast and easy revenue.

In 2009, the UK newspaper the Telegraph reported about a study by a think tank that showed people on low incomes spent disproportionate amounts on money on the National Lottery, adding credence to widespread claims that it is a tax on the poor. And the same phenomena can be seen in other countries that sponsor lotteries and sweepstakes.

Your chances of winning are slim, and it won’t solve all of your problems anyway

Aside from the fact that you’re more likely to be hit by a comet or be killed in a wreck on the drive to the store to buy your tickets, actually winning the lottery has proved to be as much a curse as a blessing for too many people. A 2010 study conducted by the National Endowment for Financial Education (NEFE) found that even if you win the big prize, there is a 70% likelihood that you’ll be broke again within five years. Those money problems you had before you won? They will likely be there, only greatly multiplied, because most people adapt quickly to the dramatic change in scale, only to find themselves with a crushing burden of debt and tax payments after the cash runs out. And we won’t even get into the pressure from friends, acquaintances, and long-lost relatives who seem to magically appear, hands out, when they discover you’ve come into a pot of gold.

The bottom line is that the lottery won’t save you, but wise money management can save you from a world of stress, and money management is something that anyone can learn. Besides, if you learn to be smart about the money you have now, you’ll be far more likely to be smart if you ever do come into a fortune.

 

More about money:

Leave a Reply

Your email address will not be published. Required fields are marked *