Tuesday, 22 September 2009

Not a LOTTO chance of winning?

The Herald reported last week that more than a quarter of British people are pinning all hopes of improving their financial situation on winning the National Lottery.

Only one in 20 plans to seek professional help with their finances, according to a YouGov survey commissioned for Financial Planning Week, which ends today. Four out of 10 respondents, however, said they needed to save more and reduce debt.

Nick Cann, chief executive of the Institute of Financial Planning, which commissioned the survey, said: “There seems to be a myth that financial ¬planning is just for the wealthy or that professional help is expensive. We are aiming to change perceptions of ¬financial planning by providing tips, tools and guidance to help people at all stages of life via our website (www.financialplanningweek.org.uk), -showing how applying just a few simple steps can make a huge difference.”

He added: “The results of our 2009 survey reflect the fact that many continue to bury their head in the sand by ignoring financial problems in the hope that they go away.”

Only 68% claimed they had identified their financial priorities and goals and were making appropriate plans to achieve them, compared with 85% in the 2008 survey. Almost 90% of the 30 to 44 age group said they had no financial plan which was regularly reviewed.

On top of all the other worrying statistics, I was reading this and wondering if it can really be true that over 25% of people believe they can win the lottery and all their money troubles will be over – it seems a little crazy? I looked up statistics online and the odds of winning the UK Lotto jackpot are approx 1 in 14million – not really great.

Furthermore, in a recent survey, 21% of people thought that if they put the same numbers on to the lottery for the rest of their lives that they would have a chance of winning. The reality is they would have to put the same numbers on for 135000 years before they would have an evens chance of winning – again not a help for paying the mortgage off or retiring rich this lifetime for most.

Maybe then if generation after generation should pass their numbers on there would eventually be reasonable odds? However, at two draws a week, every year for 135000 years you would spend over £14 million (at £1 per draw) so there’s not really much point.

So, why do a huge amount of people play and intently watch for their six numbers to be drawn?

Psychologist, Mark Griffiths investigated why people are attracted to lotteries and I suppose a lot of his findings were common sense; people are drawn in by the low stake and possibility of a huge prize and the ‘someone must win attitude’ coupled with human nature showing that people underestimate the odds of a negative event happening to them and overestimate their chances of something good occurring.

He went on to say:
“If I tell you the chance of your toe operation going wrong is 6%, are you worried? Sounds pretty low doesn't it. If I tell you that the odds of failure are 1 in 16, how does that affect your perception of the risk involved. In actual fact, these figures both mean that you have a 94% chance of success. Maths helps to get everything in perspective, to assess risk logically.”

Makes sense I suppose but if I passed this information on to my mum who has played the same six numbers since the day the lottery started in the UK I don’t think it would stop her – I think the possibility of not putting the numbers on and them coming up would worry her more than anything – I can hear the “It would be just my luck” response already.

So is it a good idea? I would say it’s almost crazy considering the statistics to think of the lottery as a way of getting out of your money worries and it proves there definitely needs to be some changes in the way that people view debt and overspend.

However on a lighter note, as the saying goes, ‘only gamble what you can afford to lose’ – if the £1 per draw isn’t going to bankrupt you then fingers crossed you are that lucky 1 in 14 million. I know myself that when Euro Millions jackpots are up at £85 million like last week, I can’t resist on the off-chance of winning - shelling out a whole £1.50 for a ticket doesn’t seem so crazy.

As the English proverb goes then, “Hope for the best, but prepare for the worst.”

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