A lottery is a game of chance in which people buy tickets for a small amount of money in order to have a chance to win huge sums of money. Lotteries are run by state and federal governments and are often seen as a form of gambling. This video explains the concept of lottery in a simple way and could be used by kids & teens to learn about lottery or as a resource for teachers and parents to use in a money & personal finance class.
American citizens spend about $100 billion on lottery tickets every year – that’s more than the entire GDP of some countries. But winning the lottery is a very risky proposition. There are tax consequences, and a winner needs to build an emergency fund, invest for the future, and pay off credit card debt before they start spending and handing out the money.
Lottery winners are usually advised to hire a financial team, including a financial planner and attorney for estate planning, a CPA for taxes, and an investment banker to help manage the prize money. It is also recommended to stay anonymous and not announce the win until all taxes have been paid.
Many lottery players choose numbers that are significant to them or that have a positive meaning. For example, a woman who won the Mega Millions in 2016 chose her family members’ birthdays and the number seven. It is important to avoid limiting yourself to one group of numbers and not using repetitive or sequential numbers.