Why Save $$ when there are so many other options?

[Galahad]

Save money? Nah, just win the lottery - survey Mon Jan 9, 2:16 PM ET



More than one in five Americans believe the best way to get rich is to win the lottery, while 11 percent say inheriting money is the way to go, a survey showed on Monday.

Asked the most practical way to accumulate "several hundred thousand dollars," 21 percent chose winning the lottery, compared to 55 percent who thought saving something each month for many years was best, according to a survey by the Consumer Federation of America and the Financial Planning Association.

Three percent of those surveyed thought a big insurance settlement was the best way to become wealthy.

The poor were the most likely to say winning the lottery was the most practical way to gain wealth -- with 38 percent of those earning less than $25,000 a year choosing that option compared to just 9 percent of those earning $75,000 or more.

African Americans and those over the age of 65 were also more likely to believe winning the lottery was more practical than saving each month -- at 30 percent and 31 percent, respectively.

Stephen Brobeck, executive director of the Consumer Federation, said it was of "some concern" that so many people thought the lottery was their best chance at wealth.

"It appears that these Americans both greatly overestimate their chances of hitting a lottery jackpot and greatly underestimate their ability to build six-figure wealth by patiently making regular savings contributions over time that benefit from interest compounding," Brobeck said.

The survey of more than 1,000 adults also found only about half of Americans understand the meaning of personal wealth -- which includes financial assets plus home equity and other assets minus consumer debts -- and less than half know how much personal wealth they have.

Brobeck said the typical household had a net wealth of $100,000, mostly in home equity. About 5 percent had net wealth over $1 million, while nearly 1 in 10 households had zero net wealth -- meaning their debt exceeded their assets.

While financial planners believe about half of young Americans could accumulate $1 million over a period of 30 years, fewer than 1 in 10 of Americans believe they could save that much money, the survey showed.

"Planners know that it is easier for individuals to build personal wealth than they realise," said James Barnash, chair of the Financial Planning Association.

The survey has a margin of error of plus or minus 3 percentage points.

 

[cardaway]

Not surprising at all.

 

[Bob Slydell]

I was at the title, but after reading this section, it makes more sense.

The poor were the most likely to say winning the lottery was the most practical way to gain wealth -- with 38 percent of those earning less than $25,000 a year choosing that option compared to just 9 percent of those earning $75,000 or more.

African Americans and those over the age of 65 were also more likely to believe winning the lottery was more practical than saving each month -- at 30 percent and 31 percent, respectively.

Aside from the African American part, the rest of those demographic groups make sense the way they answered. If I was making less than $25,000 a year and was asked how I would accumulate several hundreds of thousands of dollars, I'd probably be thinking lottery as well.

 

[lillygator]

I have yet to see an armored car following a hearse........

 

[dcgrumpy]

I agree it's not really surpriseing. If you're making $25K a year and can't pay your bills saving several hundred thousand dollars is unrealistic. Obviously people that make $75K a year are able to save more money.

 

[Toby'sFriend]

well, I'm certainly not adverse to the options of winning the lottery or inheriting money.

But my numbers never get picked and all my relatives are flat broke.

 

[Galahad]

BTW - it was from a Reuters story on Yahoo.

 

[Miss Jasmine]

I was at the title, but after reading this section, it makes more sense.



Aside from the African American part, the rest of those demographic groups make sense the way they answered. If I was making less than $25,000 a year and was asked how I would accumulate several hundreds of thousands of dollars, I'd probably be thinking lottery as well.

This is why some people refer to the lottery as a tax on the poor, that is who is mostly playing it.

 

[cardaway]

I agree it's not really surpriseing. If you're making $25K a year and can't pay your bills saving several hundred thousand dollars is unrealistic.

Saving six figures, no, but saving is possible.

Many people not making it on 25K are spending like they make 35K, with much of it not being the essentials.

 

[CheshireVal]

Well, I think it's true that if you want to get rich *quick*, the lottery is really the only way that's going to happen for most people.

While many Americans might be able to save hundreds of thousands of dollars in their lifetimes, it's not often immediately gratifying. People want to get rich NOW.... not 40 years from now.

 

[Bob Slydell]

While many Americans might be able to save hundreds of thousands of dollars in their lifetimes, it's not often immediately gratifying. People want to get rich NOW.... not 40 years from now.

Therein lies a lot of the problems with people these days -- the need for immediate gratification.

 

[Crankyshank]

it beats the whole marry a rich old person with no kids, no family, no pets - not even a goldfish, simply because there's less dirty work involved.

I play the lottery, and while I'm fairly certain unless my parents have more money stashed away than I realize or DH finally invents something major it's my only chance of becoming a multimillionaire, I don't think it supercedes the importance of saving your money.

 

[scubamouse]

This is why some people refer to the lottery as a tax on the poor, that is who is mostly playing it.

It's actually a tax on people that are bad at statistics

When I was making $23,000 I was able to save a little. Granted we didn't have kids but as a single person I could pull it off. Then again, at the time I didn't have a DVD player or cell phone.

 

[disykat]

One place in the article said "best" way and the other said "most practical" way. I'm surprised people would answer the lottery being the "most practicial" way - but wouldn't be surprised if they said it was the "best" way or even the "most realistic" way. Some of it coulc be semantics.

 

[dcgrumpy]

Saving six figures, no, but saving is possible.

Many people not making it on 25K are spending like they make 35K, with much of it not being the essentials.

opps sorry

I thought we were talking about the original post, which was "to accumulate several hundred thousand dollars"

 

[Chicago526]

I say hedge your bets. Save some of your income every month, and buy a couple of lottery tickets, and make sure to call great-Aunt Beatrice once a month "just to see how she's feeling".

This way, you're covered for sure!

 

[Bob Slydell]

I say hedge your bets. Save some of your income every month, and buy a couple of lottery tickets, and make sure to call great-Aunt Beatrice once a month "just to see how she's feeling".

This way, you're covered for sure!

Sounds like a plan.

 

[mickeyfan2]

This one of the reasons why we had a negative savings rate in 2005.

BTW I saw a question a year or so ago about how people expected to fund their portion of retirement. The answers were all about equal - saving/investing, win the lotter and inherit it.

 

[Galahad]

It's actually a tax on people that are bad at statistics

LOL!