t2

Wednesday, November 15, 2017

Frugality and Playing the Lottery



I've never been into the lottery, to be honest. But I am a believer in a higher power. I believe that the money I have and get can come to me in the "natural" way, and even then, what I make depends on how often I have clients, which isn't entirely up to me. In my culture/religion, we have a story about someone who prayed and prayed to win the lottery and when he died, he said "Why did I never win the lottery?" and the answer he got was that he never bought a lottery ticket. I do believe that if a higher power wanted to send me money, it can be by means of a lottery ticket, and that by buying one, I'm opening myself up to receiving abundance, if the higher power wants to send it my way. So in my life, I've bought 3 or 4 cheap lottery tickets, and that's all.
I know some other people, though, that really enjoy the lottery. They have a set amount that they spend each month, and they have won smaller amounts on a regular basis, and put that money back in to their lottery fund, so it doesn't come out of their pocket.
For those of you that do enjoy playing the lottery, here is a post by a reader, about some thoughts to consider, about how to do it frugally.

Parents trying to live a frugal lifestyle will go to many lengths to cut corners and eliminate otherwise unnecessary costs, making their own canned goods, for example, or sewing Halloween costumes for their kids. It’s definitely a great way of life, but every now and again it’s fun to partake in guilty pleasures. One of those lovely guilty pleasures is playing the lottery, with its promises of high drama and unlimited wealth. It’s fun to daydream about the yachts we’d buy, the houses we’d flip, the trips around the world we’d take, but it’s actually not that simple: even when you win the lottery, you still need to be frugal.


First of all, there’s buying the lottery tickets. Make sure that you set aside money in the budget at the beginning of every month – you can categorize your tickets under “Fun and Games”, or “Entertainment”, checking to see the price of a Powerball ticket online, deciding how many you want to buy a month, and then calculating the cost. As far as Powerball goes, there are fairly good odds that you’ll win a small prize (if you hit even just the Powerball number, you win something), and while it would be tempting to add it to the budget for lottery tickets, use it against the monthly cost of tickets, or put it toward another category in the budget that you feel could use it. Some people might say that playing the lottery is a waste of money, but even budgeting guru Dave Ramsey says its important for people to have “blow money”, money just to spend on fun. And if playing the lottery is your version of fun, and you budget for it each month, there’s no problem with that from a frugality perspective.

That’s for the small wins. If you’re one of the lucky ones and go online on Wednesday or Saturday night to see if you won the Powerball lottery this time, and you find out that you did win, there’s going to be a huge temptation to uproot your life, throw money around and quit your job. This has proven time and time again to be the wrong way to go about winning the lottery, and as a frugal parent you know that even in times of great windfall, it still pays to be considerate of where and how you spend money.
Most people who end up winning the lottery, surveys have shown, end up in financial problems after winning the lottery, because they don’t spend the money wisely and become irresponsible, and have high expectations of their new lifestyle, that even their lottery winnings can’t cover.


If you win the Powerball lottery, you’re given a choice: you can either take the money as one lump sum, or you can get it as an annuity. The lump sum is pretty self-explanatory: you get all the money all at once. This is the less frugal approach for a few reasons. Number one is, as written above, if you get a large windfall in one go, its hard not to change your lifestyle dramatically to reflect that, but then the money runs out.
However, with the annuity, you get the money in roughly 30 installments over 29 years. This also allows it to work more like a higher income, money you can rely on regularly, but not as extreme amounts,. This way your lifestyle change is more gradual and doable, and you aren’t tempted to throw frugality out the window, but just rework your idea of frugality, to be spending the money you have in a way that reflects what you truly desire and not just impulsively spending then regretting. Additionally, with annuities vs getting the lump some at once, the difference between the two is most acutely felt in the way in which they’re taxed, with a lump sum being effectively taxed twice (once when you receive the sum, and annually on your investments), whereas the annuity is already invested by Powerball before you receive it, so you’re off the hook for the money that that money makes.
In short (it’s sort of confusing), if you win the lottery, consider taking the money in annuitized payments.

As you can see, there’s even a frugal way of playing and winning the lottery, which just goes to show that being smart with money is something universal. It’s easy to romanticize the ultra-rich as being as carefree as butterflies on a spring day, but the fact of the matter is that everyone needs frugality, everyone needs to be considerate and moderate with their money (although moderate to one person may seem excessive to another – it’s all relative). As long as you budget for your tickets, put your smaller winnings into paying off those tickets, and don’t succumb to the whole “spend the entire lump sum on 50 yachts” syndrome if you win the jackpot, you’ll be just fine!

See my disclaimer.

Share This