We look at better uses for your cash than long-odds gambles.
The average Brit spends an incredible £416 a year on lottery tickets and scratchcards.
That’s according to a new poll from VoucherCodesPro.co.uk, which found that just shy of 40% of people who gamble buy at least four tickets or scratchcards a week.
That’s a lot of money when you consider the poor odds of winning. Your chances of winning the Lotto are a whopping one in 14 million, while in the Euromillions those odds jump to a massive one in 116 million.
The poll found that the top reasons for buying lottery tickets and scratchcards was a “determination to win” (63%), while plenty also said that they need the money.
If you have £416 a year to spend on lottery tickets, there are far better ways to use that money, and with much better odds of getting a decent return too.
Regular savings
Regular savings accounts are a great way to build a little savings pot. You have to put a certain amount aside each month, and in return you get an excellent interest rate.
At the moment the top regular saver comes from First Direct, paying a tasty 6% AER. You need to pay in at least £25 a month (capped at £300 a month) during the 12-month term.
If you spend £416 a year on lottery tickets and the like, that works out at a monthly spend of about £35, so perfect for a regular saver. By the end of the year you’ll have £431.43, so a guaranteed profit of £15.
[SPOTLIGHT]There is another hoop to consider though. In order to get the First Direct regular savings account, you must bank with the First Direct 1st Account. That may seem like a pain, but it’s worth noting that not only does the 1st Account win every award going for its fantastic customer service, but you also get a £100 welcome bonus for opening the account. And if you don’t like it and want to leave before you’ve had it a year (but more than six months) you’ll get another £100 as a leaving present. So you could end up £115-£215 better off.
Pay off your mortgage
If you have debt, whether it’s a mortgage or a credit card balance, putting a bit of extra money towards clearing it has two big benefits. Firstly, you’ll be debt-free quicker. And secondly, you’ll actually pay less in interest overall, saving you money.
Let’s take the example of a £150,000 mortgage, at 3%, with 20 years still to run. Currently the mortgage repayments are £832 a month, and in total that debt will cost £199,655 including interest.
But put those £35 a month towards overpaying your mortgage, and you’ll clear the debt in 18 years, and save more than £3,000 in interest.
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Stick it in your pension
A few extra pounds here and there into your pension can make a sizeable difference to your pot when you actually retire, thanks to the magic of compound interest.
Let’s take the example of a 30-year-old man, earning £25,000 a year. He pays 4% of his salary into his pension each month (£83.33) which is matched by his employer. When he retires at 67, assuming growth of 5% and annual management charges of 1.5%, his pension pot will be worth £85,000. If he paid that extra £35 a month into his pension, by the time he gave up work it would be worth a much healthier £103,000.
Figures taken from Hargreaves Lansdown pension calculator
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