Note: This story has been updated since its original publish date of August 21, 2017.
$995 million. Winning the Powerball and Mega Millions jackpots would result in the second-biggest payout in lotto history, with today’s jackpots totaling $550 million ($347.9 million lump-sum) and $445 million ($277 million lump-sum), respectively.
If you’re like the average person, who has $37,172 in student loans, that could pay off your loans 21,330 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 alone: 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
Exactly. So even though it’s incredibly tempting, I wouldn’t advise spending your hard-earned money on Powerball or Mego Million 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 lotto jackpots 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.
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.
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