Personal Finance Advice

There are a few things that are bad ideas when it comes to your personal finances. Any time you put money toward something where you don’t get something back can be the wrong financial move.  For example, you pay money for food because you need nourishment.  You buy gasoline because you need your car to go.  On the other hand, when you spend money with getting nothing in return - unless, of course, you’re donating to charity - then you’re not making the best financial decisions.

There is a big difference between the different forms of gambling.  Some people gamble once in a while for fun, knowing full well that they probably won’t ever see a return on their money.  A few people gamble as a profession because they have mastered whatever game they indulge in and have learned to accept the risk associated with gambling.

Then there are the other gamblers.  These don’t have to be people throwing dice in dark alleys or meeting up with bookies to bet on a sporting event.  Gamblers can be people who incessantly buy lottery tickets with the hopes of someday hitting it big, or people who go to local casinos quite often using the excuse of indulging in a buffet but instead wind up at the tables spending next week’s paycheck.

Not all people who spend too much money gambling are considered gambling addicts.  Some folks lose a great deal of money in a single bet and then decide to not ever gamble again.  The point is that people need to remember three important things about gambling:

1.  The odds of you actually winning are usually quite slim.

2.  If you don’t have any fun gambling then you’re not getting entertainment from the act, and therefore there is no redeeming value to the purchase.

3.  If you do have a lot of fun gambling, but you spend a substantial amount of money on gambling frequently, then the financial folly has exceeded the benefit of the entertainment.

Look at this example: Bob buys $10 worth of lottery tickets every week.  Once in a while he’ll get a small return on his investment by winning $20 or even $50, but for the most part he’s throwing his money away…especially considering his odds of winning the jackpot are about twenty million to one or more.

If Bob instead puts that same $40 into an interest-bearing savings account every month by the end of the year he’ll have almost $500.  Keep putting the same amount away every month for a total of ten years and with compound interest he’ll have over $6000 sitting in an account.  Double that to twenty years and Bob has a nest egg of almost $20,000. 

$10 a week can be thrown away on lottery tickets, or instead can be used to save for the future or even pay down debt.

Yes, it’s true that people do win the lottery.  Maybe Bob will someday hit it big.  The probability of him making at least the same amount of money from the lottery that he would by putting the money into a savings account, however, is really, really low.