UK Markets close in 2 hrs 34 mins

Author who studied millionaires for 5 years: Don't play the lottery if you want to retire rich

Tom Corley, Contributor
Powerball and Mega Millions lottery tickets are displayed. 

Nearly half of Americans love to play the lottery — and even if they don't win, they love to hear stories about the winners.

According to research from The Washington Post, total spending on state level lotteries increased from $29.8 billion in 1995 to $72.7 billion in 2016. That's a whole lot of money down the drain.

As I learned from my five-year study of the rich and the poor, successful people don't have a lottery mindset. A lottery mindset is the idea that there's a shortcut to instant wealth by virtue of random luck.

But it's not just about the lottery. It's about embracing uneducated risks and speculating with your money. People who gamble frequently or invest in startups they know very little about also have a lottery mindset.

Unfortunately, very few realize that the lottery mindset, for the most part, is a fantasy.

The psychology of lottery gambling

Imagine how much money you could have 10, 20 or 30 years from now if you choose to invest a few dollars a week into your IRA or 401(k). By saving the money you would have spent on lottery tickets, your chances of retiring as a millionaire would be much higher.

Take a look at previous lottery winners and you'll notice that hardly any of them are wealthy CEOs, entrepreneurs, senior executives or established professionals.

According to a 2016 report from Vox, lottery games were more likely to be played in neighborhoods where the household income was between $25,000 to $80,000, while areas with incomes of $200,000 and above barely played at all. Part of that may be because most lottery tickets are sold in urban areas that have more package stores.

However, the author makes a good argument that even in states like Connecticut, "where there are plenty of poor neighborhoods in the suburbs and wealthy ones in the cities, it's the poorer areas that produce the most winning tickets — and whose residents, therefore, are playing most often."

Another study, from The Insured Retirement Institute and Center for Generational Kinetics, found that 15% of millennials considered the lottery as part of their retirement plan.

Sure, it may sound funny at first, but it's also a serious indication of just how overwhelming the prospect of retirement really is for millennials. This type of anxiety can lead them to approach saving for retirement by making risky decisions that don't pay off.

Be wiser about how you spend your time and money

All of this is to say that you can become successful and rich, not by winning lotteries, but by forging habits that eventually lead to wealth and success.

According to my study, here are some of the most common habits of self-made millionaires:

  1. They dedicate at least 15 minutes a day to just thinking. Spend time thinking about your career, finances, family, health, problems and business. Ask yourself questions like, "What can I do to grow my money? Am I happy with my current job? How can I improve myself today?"
  2. They seek feedback. Learn what's working and what isn't working. Without feedback, you won't know if you're on the right track or how to improve yourself.
  3. They are goal-oriented. Goals are the construction crew self-made millionaires use to build their financial empires. Create goals around your dreams and commit to pursuing them.
  4. They exercise. The self-made millionaires in my study always prioritized their health, and it helped them stay sharp, solve problems, be creative and overcome obstacles.

Tom Corley is an accountant, financial planner and author of "Rich Kids: How to Raise Our Children to Be Happy and Successful in Life" and "Rich Habits: The Daily Success Habits of Wealthy Individuals."

Like this story? Subscribe to CNBC Make It on YouTube!

Don't miss:

  • This 30-year Harvard study found the 5 simple habits that may prolong your life by a decade or more
  • 7 money mistakes millionaires like Warren Buffett and Bill Gates never, ever make—that average people do all the time