Powerball fever swept across America last week, with a record jackpot of $1.5 billion eventually being split by three winners in the January 13 drawing. Millions lined up for lottery tickets, hoping to realize their dreams of being rich, independent, and carefree.1,2
This infinitesimal chance at massive wealth was certainly alluring – to too many, more alluring than the practical steps that can be taken in pursuit of personal wealth and retirement security.
The passion for Powerball defied logic
It may have been a commentary on our wishful thinking, and on the lack of financial literacy in America as well.
As Creighton University professor Brad Klontz remarked to CNBC, “A lot of individuals who are not saving for their retirement are standing in line to buy a Powerball ticket. It’s a lot more seductive than instituting a savings plan.”1
On Jan. 13, a Powerball ticket buyer had a one in 292,000,000 chance to win the big prize. In comparison, the odds of someone being killed by a falling vending machine within the next 365 days are one in 112,000,000 and the odds of a person being struck by both lightning and a meteorite during their lifetime are one in 210,000,000.2
Usually, wealth is not a matter of fate or luck
We can all take practical steps toward financial freedom and even if we do not end up rich, those steps may improve our personal finances and retirement prospects.
1. Spend less than what you make
Size up the money coming into your household per month with the money going out of it per month and set a percentage that you would like to save every month. In effect, you will be paying yourself X dollars a month. Paying yourself, rather than your creditors, is a fundamental move for financial independence.
2. Direct these savings into investment accounts as well as savings accounts
It’s vital to build up savings so that you can have an emergency fund. Another portion of the money can go into retirement savings accounts, preferably to be invested in equities. Yes, 2016 has started poorly on Wall Street, but one bad month (or year) is not the historical norm for the market.
3. Cut down bad debts
There are some “good debts” in life – debts that we take on in pursuit of a worthy outcome, such as a home loan or an education loan. Bad debts outnumber them, and the average credit card statement will note many.
4. Chat with a financial professional to determine your money goals
When will you have enough savings to retire? When should you claim Social Security and how long should you keep working? How much monthly income might you need when you are retired? Most people retire without any answers to these questions, only guesses. It’s important to know not only what you are doing, but also where you are going.
The fantasy of receiving great wealth with no effort inspires people to play the lottery and try other forms of gambling. The reality is that saving for retirement takes planning and commitment. While some may not want to acknowledge this reality, those who do may find themselves making financial strides as others struggle.
For questions regarding investments, contact Bob Skillings at 507-233-5624 or by email at [email protected].
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This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make n representation as to its completeness or accurace. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1 – cnbc.com/2016/01/14/lost-the-powerball-now-its-time-to-really-focus-on-finances.html [1/14/16]
2 – latino.foxnews.com/latino/money/2016/01/13/what-powerball-chances-likelier-hit-both-meteorite/ [1/13/16]
3 – cnet.com/news/can-powerball-end-poverty-lottery-meme-fails-to-check-the-math- [1/12/16]