Winning the lottery is the ultimate dream of most people who plod along in their jobs and get excited when the Powerball lottery hits $200 million.  Like them, I used to buy lottery tickets in a pool with my co-workers, dreaming of the day that I could leave work and utter that famous Johnny Paycheck line “take this job and shove it.”  However, I stopped shelling out the dollars after my Uncle Bill, the real estate tycoon, advised me that I shouldn’t do it because “buying lottery tickets is for poor people.”  He didn’t elaborate, but I interpreted his comment to mean that instead of relying on an impossible windfall, I needed to work for my money.  Upon further reflection, I puzzled over why so many of my colleagues, who are well-paid, educated professionals, play the lottery.  All of these people have a roof over their heads and plenty of food.  There’s nothing so dire in their lives that it requires $100 million to fix.

What is the appeal of the lottery?  To pay off those college loans?  How about a cushion for unexpected medical expenses?  Hardly not.  When was the last time you saw a lottery winner on TV say “I’m going to put aside the cash for my retirement or unexpected health care costs or my grandchildren’s college tuition fund.”  It’s usually more like ”I’m getting a Hummer and she’s getting a Mercedes, and then we’re going to buy mansions for our 12 grandchildren.”  Lottery winners are like kids in a candy store and the candy is FREE.  The problem is that you end up eating way too much candy.  The lottery winner usually overspends on yachts, jets, homes, leacherous relatives and friends, and winds up even more broke (or broken) than before he or she won (Bankrate.com’s Unlucky lottery winners who lost their money).  Being independently wealthy when winning the lottery doesn’t seem to help.  Look at Jack Whittaker, a West Virginia businessman who was the winner of what was then the biggest Powerball jackpot in history.  Whittaker, already wealthy, took home $113 million in a lump sum payment in 2002, but since then has been plagued with personal problems arising from that lottery win, including the death of his granddaughter, numerous lawsuits, and marital difficulties.

Not all windfalls are bad karma.  Depending on the source of the windfall, you might spend it differently.  Look at the bonus you receive from work.  Would you spend it in the same manner as lottery winnings?  Because that bonus is your hard-earned cash, you might not burn through it as quickly.  Instead of putting a down payment on a gold-plated hummer, you might fund your IRA, pay off some credit card debt, and splurge by going out for a nice dinner.

So, before you go out and buy 50 lottery tickets, think about why you’re buying these tickets.  Is it because you want to become the classic overconsumer that many lottery winners have become?  Do you want to run from greedy relatives and friends who want a piece of the lottery pie?  Or was taking a match and burning up the cash instead not an option?  What I’m doing now is taking that money and investing it in an S&P index fund.  That investment may not reach $100 million by the time I’m 65, but it’ll be worth more than some shredded lottery tickets.