Lottery Jackpots are pretty large and very enticing. Even the starting Jackpot for the Power Ball and Mega Millions are quite large. The starting jackpot for both Lottery games is $40 million. Each drawing that no jackpot winner is crowned the jackpot grows. It is really fun and exciting to think about what you would do with that money if you won. The question is are you tossing your money away by playing? The answer is – it depends on how you look at it. Many “experts,” say that you are better off saving that money. The out come of saving it is better than your chances of winning the jackpot. That may be true but the same would be true about saving your money in the morning rather than buying a cup of coffee at a coffee shop.
We will not sugar coat this. Your chances of winning are extremely small. The odds of winning the Power Ball are approximately 1 in 292 million. The odds of winning the Mega Millions are slightly better at 1 in 259 million. So no the odds are not in your favor. How ever you will have no chance of winning if you do not play. So as small as the odds are. If you play there is a chance you could win.
Better chance one of these will happen to you
- Getting hit by lightning according to the Nation Weather service. If you live to be 80 years old your chances of getting hit by lightning are about 1 in 12,000.
- Getting killed by lightning 1 in 10,495.684 – this is averaging the odds across North America. Your actual odds can change based on what state you live in.
- Getting killed by an Asteroid – you have a 1 in 74,817,414 chance. Still small but you do not have to play to have the chance of this happening.
- Getting killed by a shark – you have approximately a 1 in 8,000,000 chance. Small chance so you can still swim in the ocean without much worry
- Going Blind from laser eye surgery – 1 in 5,000,000 chance that you will go blind after getting laser eye surgery. Pretty small so if you need it still worth getting it done
- Winning the $1 Million prize in the McDonalds Monopoly game 1 in 451,822,158 – so we finally found something that your odds of winning the Mega Millions or Power Ball are better than.
Should you save your Money or Buy Lottery Tickets
Even with all those odds out there. Are you truly better off saving the money that you would have spent on the Mega Millions or Power Ball? To figure this out we would have to see how much money you are spending on the lottery. We play the lottery but we usually only play the Mega Millions and usually only get one ticket per drawing. We treat it as cheap entertainment with a really small chance of winning the jackpot.
Two Drawings a week $2 for each drawing comes to $4 a week.
If you do this twice a week for the whole year. That would be $208 a year. Hardly a huge amount of money.
Then let us say you do this for 30 years. That would come to $6,240 over the course of those 30 years. That is the amount you would have if you did not put it into any type of interest-bearing account. Either a CD, Stocks, Savings account, Mutual fund or any other type of account that accrues interest.
Now if you put it into some kind of compound interest bearing account. Lets say it gets 4% interest. After 30 years you would have $12,132.29. Quite a difference from the initial investment of $6,240. This is an account that compounds the interest one time a year.
Now lets say that you played both the Mega Millions and the Power Ball. This would double the amount you spend each week. So instead of $4, you are now spending $8 a week on the lottery. Over the course of a year, you are spending $416. Over the course of the 30 years that would be $12,480. This again would be what you have with no interest from investing it. If you did the same scenario as before an invested it in a compound interest bearing account on just 4%. After the 30 years, you would have $24,264.59.
Buying More does not increase your odds
Okay lets do one more scenario because I am sure that there are people out there that do this. Lets say that you spend $10 a drawing. You justify this by saying that you are increasing your odds of winning because you have 5 plays in each drawing now rather than just one. So now you have 5 chances in the 259 or 292 million. Your odds of winning really have not improved at all. There are other articles out there that talk about how much you would actually have to put into a lottery drawing to truly increase your chances of winning. Lets just say that very few people could afford to do this and those that could have better ways of investing or spending that amount of money.
In the $10 a drawing scenario that would have you spending $40 a week on the lottery. Over the course of a year that would come to $2080 a year. Over the course of the 30 years that would come to $62,400. Using the same 4% compound interest account over 30 years that would come to $121,322.94. You are now talking about some serious money.
Only you can decide
How much is too much to spend on the lottery. That is not for us to decide. But hopefully, you know your limits on what you can lose on a chance. If you are spending $2 a drawing. You can have some fun and dream. It really does not cost you that much. There is a chance you will win. If you are spending $10 a drawing. Your odds of winning don’t really change but the money that is going out is gone. Do you get that much more entertainment from getting 5 tickets rather than 1?
That is up to you. At what price point is it no longer enjoyable for you. What we tend to do it stick to the 1 play per drawing. Play twice a week. Spend that $4 for a chance. No matter how slim it is to win the Jackpot. It would be nice if rather than having one billion dollar winner if there could be 500 two million dollar winners. The research shows that I am on the outside on that one. People are more interested in the big jackpots. In the past few years both of these games have decreased the odds of winning the jackpot and doubled the price to pay. You would think that this would lead to fewer people playing. It has had the effect they were looking for. Larger jackpots and more people playing.
What do you think? Do you play the lottery? If you do have you thought about what you would do when you win? Let us know in the comments.
Have fun and good luck.
