There are two ways to improve your financial situation – you can either increase your income or decrease your expenses or both. However, many Filipinos believe there is a third way to make their financial situation better – to win the lottery!
Surprisingly, the best strategy to “win” the lottery is to not play at all. But before you exit this page, hear me out.
Winning the lottery is a tempting dream to get rich quick. You don’t need to make sacrifices by reducing your spending or working more hours to increase your income. The only problem is that by waiting or hoping to get rich instantly, you just might be waiting forever. If you want to be rich and have enough money to live the good life, don’t rely on the lottery to make it happen!
Here’s why you shouldn’t play…
On this post, I will be focusing on the Grand Lotto 6/55, one of the largest lottery games in the Philippines. The Grand Lotto 6/55 has a jackpot of at least Php 30,000,000 and has drawings three times a week. The 6 winning number combination is drawn from one set of 55 numerical balls. Players can either choose their own six numbers or have the computer terminal randomly pick numbers for them (Lucky Pick or LP). Players win the jackpot if their ticket matches all six (6) numbers drawn in any order. There are also smaller prizes if you only have some of the correct numbers. Each ticket costs Php 20 to play.
This lottery game holds the record for the largest jackpot won in the Philippines: ₱741,176,323 (US $16,721,406) by a single bettor from Luzon on November 29, 2010.
What are the odds of buying a jackpot-winnig lottery ticket?
The odds to win are at 1 in 28,989,675. Ouch!
Despite the obvious odds, why do a lot of people still play? The chance of hope, however small, of winning at least Php 30-Million.
The Cost of Playing the Lottery
Many people do not like wasting money, but there are still Filipinos who will spend a small fortune on lottery tickets in their lifetime.
To illustrate this point, let’s say an average lottery player spends Php 60 per week on lottery tickets. That’s Php 3,120 spent on lottery tickets every year. This person buys lottery tickets every month of every year for 30 years. The amount spent on lottery tickets over a lifetime is Php 93,600, which surely could have been put to better use. While money spent on food is eaten and money spent on clothes is worn; money spent on lottery tickets is gone without a promised return.
Now, what if that Php 3,120 had instead been stashed away every year into an interest-bearing savings account or an investment product, paying a conservative average of 5% per year? How much would that player have earned at the end of the 30-year period? Php 217,650. That’s how much.
By depositing that Php 60 every week into an account earning just 5%, a lottery player could double his or her money in 30 years. Putting that money towards retirement, paying off debt, or furthering your career with an education are all better ways to use your money, and with much better returns.
What to Do If You Win the Lottery
Daydreaming about lottery winnings is fun – even if the chances of winning are incredibly slim. But it’s a good idea to have a plan for how you would handle a sudden, unexpected piece of good fortune, since there are other ways to receive a large sum of money that are much more likely to happen. You could receive an inheritance, life insurance proceeds, winning a competition or funds from selling a business or real estate.
Here’s how to prepare for a financial windfall.
- Keep a low profile. Make sure to keep the information within a handful of trusted individuals or family members. Don’t make lifestyle changes that are too obvious. Control your impulses and emotions and take your time to make thoughtful purchases. Once you are in the spotlight, your relatives and friends may begin bothering you for balato and worse, you might become a target of thieves and people with malicious intent.
- Set aside money as your emergency fund. Make sure the windfall has at a minimum helped you build up your emergency cash reserves. Set aside enough money to cover living expenses for six to twelve months.
- Pay off debt. Immediately pay down or pay off your all debts – high interest rate credit card debts, mortgages, auto loans, salary loans, lending loans, etc.
- Invest and diversify. IF you don’t have any knowledge about investments, look for a financial planner to help you choose the best investments for your financial situation. For starters you may invest in pooled funds such as mutual funds or UITFs (unit investment trust funds). These investments do not require much attention but provide significant return on investment compared to bank savings or time deposits. Don’t place the bulk of your winnings in a single investment basket (i.e., expensive business franchise, high-end condominium, etc.) Diversify your investment properly to reduce risk.
- Share your blessings. Donating a part of your winnings is a generous thing to do. But instead of making one-time, big-time donations on charities, why not invest the money instead and donate the earnings from the interest earnings of your investment? For example, investing P10 million worth of donations that could make P300,000 to P400,000 not just for a year, but for a lifetime.
- Preserve, Protect and Stay Healthy. To help you preserve your assets, buy insurance: medical, life, accident, disability and critical illness. Insurance will protect you from financial damage caused by life’s uncertainties.
Millions of people buy lottery tickets every week and don’t expect to win anything back. Honestly, I even buy a lottery ticket once in a while, just for fun. But I never expect to actually win the jackpot. Anyways, if you really want to place a bet, play only when you have extra money or take it out of your entertainment budget. Don’t play with money you don’t have, or that you will need later on.
Ever bought a lottery ticket? Do you play for fun, or to win it all one day?
photo credit: 41:366:2016 via photopin (license)