Do you know someone who plays the lottery just about as regularly as they brush their teeth? Unfortunately, some people seem to think that the pathway to riches is paved with Scratch-and-Win game slips, Quick Pick numbers or Powerball tickets.

5 Signs of Lottery Riches Syndrome

I know it can be fun to play the lottery. And I readily admit to having played a handful of times myself. However, amid the hooplah and excitement over the prospect of "hitting it big" with the lottery, too many people lose all common sense and become afflicted with what I call "Lottery Riches Syndrome." This is a financially harmful mindset and set of behaviors characterized by five things:

• An habitual practice of purchasing lottery tickets on a regular basis
• A misguided view that the "easiest" or the "only" way to wealth is by picking the "right" lottery numbers (those numbers, of course, are based on your birthday, your child's shoe size, or some other random one or two-digit number that has special relevance for you – and perhaps countless other people)
• An unwavering, yet statistically unsupported belief that you – and you alone – can and will beat lottery odds of at least one in a million
• A failure to recognize the potential investment loss from money spent month after month, and year after year, on lottery tickets
• A host of big dreams but a complete and utter lack of a concrete, written financial plan to meet one's personal and financial goals

As The Lottery Spreads, So Too Does Lottery Fever

Unfortunately, "Lottery Riches Syndrome" is especially prevalent in the black community. And in many urban communities in New Jersey, the state in which I happen to live, I fear it's about to become much more widespread.

You see, New Jersey Lottery officials on Sunday began selling Powerball lottery tickets in New Jersey. As a result, tonight's drawing with be the first Powerball drawing with New Jersey lottery players buying tickets directly from the Garden State.

All told, Powerball tickets can be purchased in 41 states, in addition to Washington, D.C. and the Virgin Islands. Powerball drawings are held each Wednesday and Saturday night. Since Mega Millions has already come to New Jersey, and is held on Tuesday and Friday nights, I can't help wondering how many more New Jersey residents are about to get caught up in the lottery, particularly African Americans.

Already, tonight's Powerball prize is up to an estimated $115 million.

Which makes me think about the "Queen of the Lottery." No, I'm not talking about Yolanda Vega. I'm referring to a well-intentioned but sadly misguided woman – an African-American woman – who pours more money into the lottery each year than most people put into their 401(k) retirement plans.
The Queen of the Lottery

In a December 2005 article about the New Jersey state lottery, the Star Ledger newspaper featured a woman named Pat Howard. Howard, an insurance agent from Newark, NJ, is known locally as the "Queen of the Lottery." By her own estimates, Howard spends between $20 and $30 every day on lottery tickets, the Star Ledger said. Translation: she's doling out $600 to $900 a month, or $7,200 to $10,800 each year, for the remote opportunity to strike it rich. Too bad she doesn't realize that she could be putting all that money to much better use by properly saving and investing for her future. I don't know whether or not Howard still plays the lottery. But chances are she does, if statistics about typical lottery players are to be believed.

Profiles of Typical Lottery Players

Numerous research studies have shown that poor and minorities communities tend to have the highest lottery participation rates. One poll, conducted in late 2007 by the Texas Lottery Commission, found that more than half of all players who bought Pick 3 Night tickets purchased them at least once a week, and a majority of respondents (52%) reported consistently playing that game for more than five years. The same study found that purchasers of Texas Lottery Scratch Off Tickets spent an average of $33 per month on the game; 80% of those polled reported playing for more than five years.

What's the Harm in Playing the Lottery?

Some people say: What's the harm in playing the lottery? Advocates note that people do, in fact, win these jackpots. Plus, a lot of lottery dollars help finance schools nationwide.

Here is my reply to these comments.


First, do big lottery wins happen? Of course they do.

Just last week, one ticket in the January 29 Mega Millions drawing matched all six numbers, for a jackpot estimated at $144 million. (Stay with me now: Unless you bought a ticket in Katy, Texas, where the ticket was purchased, there's no need to run off and check your numbers).

I'm also certainly aware that Lottery proceeds help support education efforts and fund other social services in many states.

Still, in a tough economy with high unemployment, it's fiscally unwise to squander untold amounts of money for the chance – the very, very remote chance – to "get rich." Playing the lottery also becomes a serious problem when a person succumbs to "Lottery Riches Syndrome."

Winning the lottery shouldn't be your financial game plan, or even your "back-up" plan.

You want to become a millionaire? Let me give you a quick action plan – one that doesn't involve buying lottery tickets.

The 7-Step Millionaire Success Formula

Whatever your goals and dreams, rest assured that you can get there if you've got the right road map, and if you follow the right path. Actually, there are seven paths – or what I call seven "universal wealth principles" – that will guide you to millionaire territory. Think of these principles as the fundamental steps you must master in order to navigate your way to millionaire's row. To make it easy for you to remember, each of the seven steps spells out the word M-I-L-L-I-O-N.

M - Make a personal prosperity plan.
• Develop a realistic budget; written goals, and a financial policy statement
• Realize that financial success doesn't happen by luck

I - Invest first, last and always in your reputation.
• Build perfect credit
• Understand how having a stellar name is often better than cash in the bank

L - Live like a lender, not a borrower.
• Eliminate credit card debt
• Decide to collect interest, not pay it, for the rest of your life

L - Leverage the power of property.
• Ramp up with real estate
• Use hard assets and other people's money to build riches

I - Increase your fortune with proven methods not shortcuts.
• Buy stocks, bonds, and alternative investments when prudent
• Avoid fads, scams and all financial long-shots – on Wall Street and Main Street

O - Overcome setbacks and minimize risks to your financial health.
• Make insurance a top asset
• Protect yourself against the Dreaded D's: downsizing, divorce, disability, disease, and death in the family

N - Never forget the next generation.
• Create wills, trusts, and personal and business succession plans
• Establish a wealth legacy

This 7-step "Millionaire Success Formula" will help you eliminate financial obstacles, and achieve substantial, long-lasting riches. It's also an antidote to "Lottery Riches Syndrome." You can learn more about these steps and strategies for building wealth in my book, The Money Coach's Guide to Your First Million.

The Odds of Becoming a Big Lottery Winner

If you're still not convinced that you need a viable financial plan to become a millionaire – as opposed to "getting lucky" and winning the lottery – just look at the cold, hard facts.

According to USA Mega.com, an independent source of information on the two largest lotteries in the U.S., you have about a 1 in 175,000,000 chance of winning the Mega Millions jackpot, and a 1 in 195,000,000 chance of taking home the top prize in the Powerball lottery. I don't know about you; but I don't like those odds.

So no matter what your circumstances, if you're counting on the lottery to end your economic woes, that's poor financial planning, painfully naïve and just plain unrealistic.

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Lynnette Khalfani-Cox, an award-winning financial news journalist and former Wall Street Journal reporter for CNBC, has also been featured in top newspapers including the Washington Post, USA Today, and the New York Times, as well as magazines ranging from Essence and Redbook to Black Enterprise and Smart Money. Check out her New York Times bestseller, 'Zero Debt: The Ultimate Guide to Financial Freedom.'