If you’re like most people, you’ve bought a lottery ticket. And while the odds are long, you still feel that little glimmer of hope that one day your numbers will come up and you’ll be rich for the rest of your life. It’s a pretty tempting thought.
But is it really worth it? Khristopher J. Brooks, a reporter for CBS MoneyWatch, takes a closer look at the lottery and its role in our financial lives.
In the immediate post-World War II period, lotteries played a crucial role in state government, allowing states to expand their range of social safety net programs without imposing especially onerous taxes on working people. In addition to the general revenue that they raised, they also financed a variety of public projects, including roads, libraries, churches, canals, bridges, and universities.
But as times have changed, so have attitudes toward the lottery. It’s become much more of a game of chance, where the hope for a big pay-off is the only reward. In fact, the average winning ticket holder only keeps about half of the prize. So why do people continue to play?
One reason may be that the entertainment value of the lottery is high enough for some people. This would outweigh the disutility of losing money and make it a rational decision for them. The other big factor is the irrational belief that the lottery is their last, best, or only chance for a better future. This is a dangerous line of thinking, especially for people who don’t have any other financial opportunities.
Whether or not you play the lottery, be smart about how you spend your money. Don’t buy too many tickets or you’ll end up wasting your money. Instead, think about other ways you can increase your chances of winning.
When you choose your numbers, try to avoid the ones that are commonly picked, such as birthdays or ages, because they have higher chances of being chosen by someone else. This will increase your chances of winning a smaller amount, because you will have to split the jackpot with any other winners who have the same number combination.
If you do win, it’s important to keep track of your ticket and the drawing date and time. And don’t forget to double-check your ticket after the draw! And if you’re considering selling your lottery payments, it’s important to understand how annuities and lump sums differ. An annuity offers a steady stream of payments over the course of several years, while a lump sum payment typically gives you a single, large tax bill.