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If you go to the National Lottery website, you’ll quickly be reminded of just why so many of us still buy lottery tickets, even though we know we’re statistically hugely unlikely to win anything even vaguely close to the jackpot. All across the site, there are flashes of the latest prize win: ‘Peter Heal won £2.8m playing Lotto Online’ says the news page this week, with a picture of said winner cracking open a bottle of Champagne. It must appeal to some kind of deep psychological instinct, because it’s difficult not to see the site and want to play. Perhaps it’s the reminder that no matter how unlikely the odds, people do win, and it could be you next. Even for the most financially savvy among you, the hugely compelling lottery advertising slogan, ‘You’ve got to be in it to win it’, may just break down your resistance. After all, it’s a fair point, isn’t it?

When you actually look at the numbers though, the money you spend on the lottery could well be better spent elsewhere. Okay, it’s only a pound or two a week, but when you actually start adding that up, it can amount to a fair pot of cash when accumulated over several years. For example, let’s say you spend just £1 a week on the lottery, but do so for 47 years, from the age of 18 to 65. Assuming you don’t go on to win anything, that’s £2,444 you’ve effectively thrown down the drain.  But add to that the interest you would also acquire if you regularly put that money into a savings account – even at a fairly low savings rate of 4.5%, you’d end up with £7,740.65 in your account by the age of 65. And, with savings accounts such as the Alliance & Leicester e-saver account offering 6.5%, you could end up even better off.

A recent article for the BBC, written by American professor Garth Sundem raised an equally interesting proposition. In the article, Sundem supposes that you invest £2 every day at an interest rate of 10%. In 50 years, you would have accumulated £1m. To win the same £1m on the National Lottery, you would on average have to match all the numbers, with odds of 13,983,816-to-1. Even if you spent £2 for 50 years, thereby totaling 36,500 tickets, you would still only have a 1-in-63 chance of winning the £1m. Of course, if you did beat the enormous odds to win £1m on the lottery tomorrow, your interest on the winnings would mean that in 50 years, you’d have far more money than just being sensible and saving you lottery pounds instead. But if you can accept the pretty non-existent likelihood of winning the lottery jackpot any time soon, you might decided instead to put your lottery spend – or spare change generally – into a good savings account.

And there are several great reasons to take this tack now. In recent weeks, banks have been particularly keen to entice savings customers to offset the difficulties they have recently faced in getting loans from other banks, following the credit crunch (see Credit crisis for banks creates opportunities for savers). That means that there are a number of savings deals with interest rates well over the Bank of England base rate. Prime Minister Gordon Brown has also announced that the national minimum wage will rise by 3.8% in October from £5.52 to £5.73 an hour. Even if you still want to try your odds at winning the lottery, you might just consider using your extra wages to save as well. After all, that way you’ll be sure that every penny is making a pound... and so on...