Do not play the lottery!

Yes people do change their life with the lottery. The huge amount of money changes their lives forever.

I am talking about the average player. Not the big winners.

The average American spends 392$ a year on tickets. This number is not the average player but the average person. About 50% of Americans play the lottery. Most of these just play when the jackpot is big so of those 50% the majority of spending comes only from about 8% of total players. Lets calculate the spending of those regular players.

So we start with 392$. Regular players make up 61% of sales. Using the rule of three we can calculate 392/100*61 which comes out to 239.12$ well round it up for easier calculation 240$. Now to get the number that the 8% spend a year we need to calculator 240*100 to figure out the whole spending of 100% which is 24,000 and divide that by 8.

The average regular lottery player spends about 3,000$ a year on the lottery. Contrary to popular belief about 65% of that money gets payed out to the winners. So assuming wed get back 65% (which is far from the reality as most people lose and only some win) wed come to a figure of 1,050$ spent a year. Ill round again for simplicity.

1,000$ a year wasted. Lets invest instead.

Interest Calculator

Using the Interest Calculator with 0 Starting Capital and 1000$ a year savings we assume you’ll invest into the S&P 500 which has returned an average of 6-7% a year (inflation adjusted). In a timespan of 40 years while only saving 40,000$ well have stock holdings of 115,000-160,000$. After taxes that would be 96,000-130,000$ or a yearly payout of at least 6,000$ for you and your kids for as long as the S&P 500 holds.

By gambling you lose out on 100k Dollars of Retirement Funds.

Sources:

Lottery Statistics and Revenue by State | The Motley Fool

LOW-INCOME PLAYERS FEED LOTTERY CASH COW – The Washington Post [8% of Virginia players play regularly and count for 61% of lottery sales]