Most people don't win the lottery. If you're someone who does, you'd be better served putting all that in a high-yield savings account or investing it. Over the long run, you'll likely get a much higher return.

If you’ve ever bought into the multi-million-dollar jackpot hype when it comes to the lottery you’re not alone. According to a Gallup poll, at least half of Americans play the state lottery each year. In 2016, people spent  $73.5 billion just on lottery tickets!

The lure of instant riches can cause even the wisest among us to ditch our reasoning and put our hard-earned money into an unlikely outcome like winning the lottery.

There are plenty of reasons to forego playing the lottery and create a more intentional plan for your money instead. In the end, you’ll be much better off with the results even if it isn’t millions from the Powerball.

Why the lottery is a waste of money

Actually, there are many reasons that the lottery is a waste of money but here are a few you may or may not have thought of.

The odds are never in your favor

The odds of winning the lottery are pretty low. Going for a billion-dollar Mega Millions jackpot? There’s a one in 300 million chance that you’d win. Even a paltry $600 million or so jackpot has a one in 292 million chance of winning. The idea that you’ll hit it big one day is a fantasy at best and a crap shoot at worst.

Perhaps you’re thinking, “I know of more than a few people who’ve won the lottery. So the odds can’t be that low.” You might know a relative or close acquaintance that’s had some lottery success, even if it’s a small amount when it comes to the lottery.

But anecdotal accounts of lottery winnings don’t take into account the amount of money people pay to win the lottery. Sure, Uncle Joe won $50,000 in the state lottery but how much did he spend on tickets and scratch-offs to finally win?

It could have been much less than $50,000 or it could have been close to $50,000. When factoring in winnings, you have to also factor in expenses of buying tickets. This might make those common “wins” you seem to experience really net losses or very narrow “net” wins at best.

Gambling habits

The lottery is technically gambling and gambling can turn into an addiction. Though it’s not likely that this “gateway” to gambling will turn into a full-blown gambling addiction, you should still be cautious if you find yourself consumed with trying to win the lottery.

If you’ve got an addictive personality or a history of addiction in your family, playing the lottery might not be the best activity to indulge in. After all, you don’t want to become so obsessed with winning that you blow tons of money trying.

Taxes and other obligations

Finally, you should know that when you win the lottery, you may not always get the entire amount of your winnings. For one, you’ll have to pay taxes.

Second, if you have any outstanding obligations some of your winnings could be intercepted.

For example, if you owe back child support or have student loans in default part of your winnings could be intercepted i.e. you won’t get them.

In some states, a portion (or all) of your winnings can be seized if you’ve received public assistance within a certain amount of time of winning the lottery.

So, you might think winning the lottery is a total win, but your pot could really be used to payback other obligations instead!

What to do instead of playing the lottery

If you’re convinced that playing the lottery is not your cup of tea, more power to you. However, you might wonder how you might make extra money if you don’t play the lottery.

The good news is that there are tons of ways to get more money into your life that don’t involve gambling or playing the lottery. Here are a few suggestions that can at least get you started on your extra-income journey:



Albert Einstein was credited with saying that compound interest is the 8th wonder of the world. When you invest your money, it can grow at a surprising rate due to compound interest.

When your initial investment grows that growth is added to the principal balance and that balance continues to grow and the process repeats until you withdraw your money. It’s a powerful phenomenon whose odds are much better than any lottery or gambling you could ever do.

For example, if you put away just $100 a month into, say a collection of stocks, with an annual return of 5%, you’d have over $15,000 after ten years. Your contribution is around $12,000 but compound interest adds another $3,000 to your balance that you didn’t have to work for!

Even if you don’t feel comfortable investing in securities likes stocks or bonds, you can become a confident investor anyway. With new technology like investing apps that double as a robo-advisor, your only job becomes making regular contributions so the algorithm can invest on your behalf.

Here are some investing apps and robo-advisory services to explore:

Real estate

Like the stock market, real estate is another type of investment that generally appreciates over time. It’s also a great investment because you can use leverage (borrowed money) to purchase it. As long as you have proven income prospects and a good credit profile, you can begin to invest in real estate as a homeowner.

Once you build enough equity in your property by making regular payments on your mortgage, you have options like refinancing the mortgage and using the cash for other things like more real estate investing, starting a business, etc. You could also sell the property at a profit if your timing is right.

Open a high-yield savings account

Interest rates have been rising and fortunately, consumers are starting to benefit on the savings side. While the last decade has given us paltry savings rates well under 1%, these days it’s becoming more common to earn 2% or more on your savings balances.

Though you may not get the same kind of returns as investing in stocks, a high-yield savings account still uses compound interest to increase your savings balance but the rate of growth could be substantially less than investing in the stock market.

The other benefit to high-yield savings accounts is that your money is in insured by the FDIC for up to $250,000. In the stock market, however, there are no guarantees. You could lose some or all of your money.

If you’re looking to open a high-yield savings account, here are a few to explore:

Start a side-hustle

The 16th President of the United States of America, Abraham Lincoln, was credited with saying, “The best way to predict the future is to create it.” What better way to create a successful future than be materially involved in it?

Starting a side-hustle or small business is a great way to create and steer wealth in your direction. Though starting a business can be risky, you’d still beat the odds of winning the lottery, so it’s at least worth a try.

Nowadays there are many flexible side hustles you can start with little to no initial investment:

Fortunately, there are many marketplaces and platforms that can connect you to people in need of your services. With just a few clicks, you can create a profile and be on your way to paying clients in a matter of minutes.

With the lottery, it could take years to win and that probably isn’t very likely either. So it’s best to be proactive about your finances so that you control the outcome.


Playing the lottery is, for most folks, a complete waste of money. If you put all the money you put towards the lottery in a high-yield savings account or invest it, you’ll get a much higher return. Plus, you won’t have to be disappointed by a losing lottery ticket.

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