Americans are saving more. The average savings rate is now more than 6% of post-tax income. In times of economic uncertainly, it is clear that many consumers believe that establishing a savings cushion is important to their financial well-being. Yet there are many other Americans who feel that establishing wealth is beyond their reach.
27% of Americans think that winning the lottery is the most practical way for them to accumulate wealth. Unfortunately for them, the odds of winning the PowerBall jackpot are 1 in 195,249,054. To put that in perspective, the odds of being killed by an asteroid are much more likely—about 1 in 700,000.
For those that do win occasionally, it rarely enough to cover their expenses. The average lottery player only wins $.53 for every dollar they play. The “return” is even less when you factor in the cost of gas to get to the store and the value of the time spent playing. Unfortunately, studies suggest that these losses are most often experienced by people who can least afford them.
According to a 1999 report to the National Gambling Impact Study Commission titled State Lotteries at the Turn of the Century, income has little relationship to lottery play overall up to $50,000, and drops off sharply at higher incomes. This fact suggests that “lottery expenditures represent a much larger burden on the household budget for those with low incomes than for those with high incomes.”
If you enjoy playing the lottery, then you should play for entertainment purposes only and include gambling expenses in your monthly budget. However, if you are playing the lottery because money is tight, you are probably just compounding the problem. Establishing a savings account (even with today’s low interest rates) is a far safer bet.
Do you play the lottery? If so, do you play just for fun or are you hoping for a big win? Are gambling expenses part of your budget?
Budget Planner - Mint.com