$650 million. Or, about $16.25 million per year, according to USA Mega.
That’s what you’d take home if you won the Powerball jackpot this week — the second-biggest in history.
If you’re like the average person, who has $37,172 in student loans, that could pay off your loans 437 times over. In a single year. Seems like a no-brainer to buy a ticket, right?
Your chances of winning the Powerball jackpot
Now that you’re awake, I’ll hit you with some more numbers — although you might not like these as much.
First, your odds of winning the Powerball jackpot: about one in 292 million.
Which makes it much less likely than, for example, your odds of:
- Being killed by a shark: one in 3.75 million
- Being struck by lightning: one in 13,500
- Going from high-school football to the NFL: one in 4,233
Or, as these cheeky tweets express:
“Because I understand math.”
— gary leff (@garyleff) August 21, 2017
I’d rather spend the $2 on a soft serve cone, because when you bet on ice cream, you win every time.
— Erin Jackson (@erinjax) August 21, 2017
Married 40 years without a fight.
And the odds of that are like winning the Powerball, 292,201,338 to one.
— Charlie Alzamora (@chalzamora) August 20, 2017
PSA – your odds of winning Powerball are actually less than your odds of flipping 28 heads in a row. Try it. Then maybe just donate your $2.
— Marc Sarge (@MarcSarge4) August 20, 2017
Exactly. So even though it’s incredibly tempting, I wouldn’t advise spending your hard-earned money on Powerball tickets.
Smarter ways to spend that $20
Let’s say you wanted to buy 10 tickets at $2 each. If you could find that $20 today, chances are you could find it next week, too.
And, since good finances are really about habits, why not use the Powerball jackpot as an excuse to create a new one?
“With a one in 292,201,338 chance of hitting the Powerball, I can think of several better options than spending $20 on tickets,” said Matthew Deitel, a research and investment strategist at Dunham & Deitel Wealth Management.
“The one that makes the most sense is putting that $20 a week into a Roth IRA or investment account. Just set it and forget it, and after 30 years you will have a nice bucket for your retirement — from money you thought you could live without at the time.”
1. Fund a retirement account
He’s right: Whether or not you’re investing lottery winnings, you need to be thinking about your future.
With that $20, you might not be able to use a traditional wealth advisor — but you could open a Roth IRA with a robo-advisor such as Betterment.
Do that each week, and you’ll have $1,040 by the end of the year.
Do that each year for the next 40 years, and you’ll have more than $170,000.
As Deitel explained: “Most people think that the amount of money put away each month is most important when saving for retirement — but time is even more powerful.”
2. Make extra payments on your student loans
For many of you, paying off student loans is probably high on your list of “what to do with lottery winnings.”
And though the thought is daydream-worthy, it’d be wiser to use that $20 per week to make extra payments.
If you have $30,000 in loans, for example, and pay $80 extra each month, you’d pay your loans off more than two years early — and save nearly $2,500 in interest.
See how much you could save by checking out our student loan prepayment calculator.
Student Loan Prepayment Calculator
Total Amount Paid
Time to Repayment
Original Prepayment Savings Monthly Payment — — — Interest Paid — — — Total Amount Paid — — — Time to Repayment — — —
Total amount paid
3. Save for your dreams
Think about what you would’ve bought if you’d won the lottery.
A car, a house, a trip?
Now, instead of putting your hopes in an infinitesimal possibility, take active steps to achieve that goal.
Set up an automatic transfer of $20 each week into a savings account. Combine it with an app like Qapital that rounds up and saves your virtual change, and you might have enough for a vacation at this time next year.
After reading all this, are you still tempted to buy a Powerball ticket? Fine, I get that; sometimes it’s fun to dream.
If you do, though, just buy one. Statisticians say buying more doesn’t improve your odds — and then you can still do something smart with the other $18.
Want to get started investing?Here are the top investing options for 2018!
|$4 to $79 a month||$0||Visit Blooom|
|0.5%||$0||Visit Future Advisor|
|0.15% - 0.35%||$0||Visit Betterment|
|0.49% - 0.89%||$25,000||Visit Personal Capital|
Student Loan Hero Advertiser Disclosure
Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print, understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.