The "Lotto" Factor

[scfr]

In the August 2008 issue of Money magazine ("The Bottom Line: The Call to Make America Thrifty Again," p.148) a Peter Tufano of Harvard Business School was quoted saying:

"The average household spends $514 a year on lotteries."

I was shocked. That's almost $10 a week. I have no idea what the average household spends on lattes, but it seems likely there is a bigger "lotto factor" than "latte factor" in America.

If anyone reading this buys lottery tickets but is also in debt and wondering how to get out, here's an idea: Immediately stop buying those tickets. Send what you would normally spend on lotto to the credit card company each week. Keep doing that until you are out of debt. Once you are out of debt, start putting what you would normally have spent on lottery tickets in to the bank to build an emergency fund. And if that feels good (and it will), once you have the EF built up, start putting the lottery money in to a retirement account.

You may not strike it rich overnight, but you will end up rich.

[maat55]

I second that, no lotto's or latte's for me.

[cschin4]

We all fritter away money on all kinds of things. I play the lottery a couple of times a year. Usually when it gets up to the 10 million+ range. There is nothing wrong with spending on things you enjoy. And, they found that people who didn't buy their lattes or lotto instead of saving the money would spend it in other ways such as getting extra toppings on their pizza, etc.
Yes, there are many ways to cut back and looking at mindless spending is a good place to start. But, I don't know anyone who wants to live in a tent, eat nothing but gruel and hitch hike to work either.

[maat55]

We all fritter away money on all kinds of things. I play the lottery a couple of times a year. Usually when it gets up to the 10 million+ range. There is nothing wrong with spending on things you enjoy. And, they found that people who didn't buy their lattes or lotto instead of saving the money would spend it in other ways such as getting extra toppings on their pizza, etc.
Yes, there are many ways to cut back and looking at mindless spending is a good place to start. But, I don't know anyone who wants to live in a tent, eat nothing but gruel and hitch hike to work either.

Your right, I and many others waste a dollar here or there sometimes. I'm mentally resistant to lotto's and latte's, but weak to other things.

[jIM_Ohio]

For the below average family, playing the lotto is the most financial planning they ever do.

why?

because they say "here is what I would do if I won..."

even happens to wife and me (we discuss what we would do if we won the 2-3X each year we buy tickets).

[disneysteve]

"The average household spends $514 a year on lotteries."

You'd be more shocked if you saw the real numbers. That average is very misleading. Lots of people never buy a lottery ticket, or perhaps buy a couple when the jackpot is sky high. So most households don't spend anywhere near $514/year. I'd say I might spend $10 a year, $20 tops. So if you got the average of households who regularly play the lottery, I'm sure the number would be far higher than $514. The sad part is that lottery ticket sales are highest, by far, among the poor. I have many patients who spend $5 or more per day on lottery tickets. These are folks earning under $30,000/year for the most part. Many are on public assistance. Lots are seniors living on SS and not much more. Lottery tickets take a proportionally big bite out of their incomes.

I'm certainly not one to knock gambling in general as you all know that I frequent the casinos, but I agree that state lotteries represent a tax on people who are bad at math.

[LivingAlmostLarge]

I've bought it like 2 with coworkers when it was super high. Never bought by myself.

[aida2003]

I'm glad I'm not a coffee drinker nor do I believe in gambling/lotteries.
My spouse buys a big can of cheap coffee but adds a seed of cardigan (?? spelling) and a piece of vanilla stick and he's VERY happy . Sure he drinks better coffee when we vacation (as a treat).

[Ima saver]

Well I have nothing against lotteries but we never play it. The funny thing is, all of our workers play the lottery. Our head framer makes the exact dollar amount per hour that my husband makes, but has absolutely nothing to show for it. I do feel like they have wasted a lot of money.

[SnoopyCool]

In my teenage and early college years, I worked a service counter (complete with lottery tickets) at a grocery store. I cannot tell you the people that came into that joint and spent $100+ a week on the lottery, who were also on food stamps!

[MonkeyMama]

I've never bought a lottery ticket or a latte.

[PrincessPerky]

having never bought a lotto or latte, I might not be the best one to comment. but the thing I find irritating is the number of folk frittering away their money when they don't have it to waste.

Sure I have a chocolate addiction, I fritter tons of money into that, I really don't want to know how much a year! but I have it to waste..no food stamps needed. Might not be the financial decisions another would make (I am not rich, nor do I even have my car paid for) but it is one I am comfortable with, and one I doubt will ever leave me needing help to pay the bills. (never have before)

[saversaba08]

......My spouse buys a big can of cheap coffee but adds a seed of cardigan (?? spelling) ..........

My guess he adds "cardamom"

[disneysteve]

Sure I have a chocolate addiction, I fritter tons of money into that, I really don't want to know how much a year! but I have it to waste

Exactly. As we often say, it is priorities that matter. If you are buying lottery tickets but have no retirement savings, that's a problem. If you are buying a $5 latte every morning but don't have an emergency fund, that's a problem.

Some of us are fortunate to be able to cover all of our needs and still have money remaining to spend on luxuries and non-necessities. If you really enjoy buying lottery tickets and all of your financial responsibilities are covered, go right ahead. I'd be the last one to stop you seeing how much I spend at the casino. We'll be there on Saturday as we have tickets to see a show at one casino and will certainly do some gambling while we're there. But 19% of my income and 50% of my wife's income goes to savings. We have no debt except our home. We live well within our means and really enjoy the time we spend in Atlantic City.

[Ima saver]

When the lottery first came out, I would buy one $2 ticket a week, but I always forget to find out what the winning numbers are, so I stopped. I have never had a latte, but I don't drink coffee or tea.