When NPR writes about PowerBall, the country’s gone PowerBall crazy. Me included, though I think it’s a mild case. Given that the odds of winning are apparently 1 in 292 million, I’m not exactly banking our retirement and college planning on one of our few tickets hitting it big. In fact, as I’ve thought about the impact it’d make on our lives, I begin to wonder whether if I won, if I oughta avoid ever turning in the ticket.
A bit of context: I work in the software development field, which pays well. My kids have never known hunger, our budget can be reasonably loose, and we’ve enjoyed the ability to save up for occasional vacations and the like. We aim to give away more than the 10% Biblical tithe. We keep our debt low, including living in a small-ish house to keep the mortgage low, and aim to dry up our debt completely. Most of the above are explicit choices, rather than constraints foisted upon us. Those choices and the thinking behind them are things that I work to express to my children, both in what we say and in how we live.
Now assume we were to win the lottery. The cash payout would be something akin to $558mil. I’m likely to take the cash payout and invest it. The state I live in is one that doesn’t require lottery winners to make their identity public, so suddenly we’re anonymously sitting on half a billion dollars, before taxes. Say $350mil after taxes. Even at the measly interest rates now of 0.75% in our online bank, that’d be $2.5mil per year in interest. A quick check at bankrate.com says I should already be moving our savings account, that we could get 1.1% easily, which would be ~$3.8mil /year. And I gotta think if we’re sitting on $350mil, we can get a better interest rate or financial strategy than putting it in an online bank… What would we do?
I did mention we live in a small-ish house. We could move, but moving impacts things like my son’s ability to run to his best friend’s house, or my daughter’s ability to have her friend stay at our house every afternoon after school. Depending on how far we moved, it might impact my husband’s opportunity to take care of our niece every other week, something which he dearly enjoys. We could renovate (and probably would make some internal upgrades), but there just is only so much it makes sense to put into a property in our neighborhood. And only so much yard space in which to do it…
We would definitely be seeking a good strategy for making impact for good with the money. With that kind of cash, I’m not sure I’d worry too much about making tax-wise contributions. However, we’d still want to keep our anonymity, as well as make wise choices with where to donate money. Flooding a charity with more money than it can handle in any one year probably does about as much good for the average charity as, well, winning the lottery. Since many lottery winners go bankrupt, gotta believe that’s got its downside. Which means that we’re now likely talking about many more gifts to many many more organizations. Or taking the Bill Gates or Zuckerberg route and opening up a foundation that itself pursues a worthy goal or goals. Yikes… and that’s not even considering the challenges of folks figuring out we’d come into money.
Hmmm… how would our kids’ understanding of money be impacted? Mom and Dad would have more than they’d have any reasonable expectation of earning in their lifetime. There’s value in hard work beyond money – how on earth would we help them to learn that on their own?
I’m not going to go so far as to tear up our tickets, particularly given the ridiculously low risk of facing the challenges involved with winning the lottery. But day-dreaming about winning has convinced me that I won’t be buying too many more lottery tickets… NPR’s statistic of $230 as the average per capita spent in America on the lottery is not one I’d like to increase, for fear of winning.