Personal Finance

Finance expert Clark Howard says these are the people most likely burn a hole in their pocket

John Seetoo

Published: January 28, 2025 1:32 pm

The cliche, “Be Careful What You Wish For” very likely came about as a result of people recounting their feast and famine stories, i.e. getting it all and then losing it. Time and time again, regardless of race, gender, or domicile, history has shown that people who are unprepared for a windfall stand at least a 1 in 3 chance of winding up worse off after they receive and subsequently blow one. For example:

• A NJ woman won the lottery twice: once in 1985, and then again in 1986. The publicity she received led to a deluge of requests for financial assistance from total strangers, and Adams wound up recklessly gambling it all away in Atlantic City.
• A Home Depot stock boy won a $31 million Texas lottery. Financial mismanagement, an overly generous kind heart with the inability to say no, and overspending on homes and cars left him broke and depressed when he committed suicide.
• A couple who hit a $13 million Florida jackpot spent heavily on luxury travel, but overspending led them to file fake bankruptcy and fake gambling losses. They were subsequently left destitute, owing $2.5 million to the IRS after the husband died and the wife had served 2 years in jail.
• A Pennsylvania lottery winner won over $16 million but was in debt for over $1 million in less than a year. An ex-girlfriend successfully sued him for one-third of his winnings, and his own brother hired a hitman to kill him in a scheme to inherit upon the winner’s demise. The former winner wound up living on welfare and food stamps until his death. 

All of these horror stories share a common theme: lack of a prudent money management plan and the discipline to stick with it can turn a potential retirement nest egg into an “easy come, easy go” momentary thrill with sometimes irreparable consequences.

Save More, Spend Less, Avoid Getting Ripped Off

Atlanta-based author, TV/radio host, and now podcaster Clark Howard is best known for his slogan, “Save More, Spend Less, Avoid Getting Ripped Off”. After creating, operating, and selling a successful travel business, Howard began giving guest commentaries about travel and consumer protection advice on WSB radio and WSB-TV in Atlanta. At his peak, Howard’s show was carried by over 200 radio stations and on the Westwood One syndication network. Health reasons stemming from a cancer diagnosis led to Clark Howard shelving his 2-hour radio show in favor of a shorter podcast format, although he still appears regularly on WSB-TV. 

Howard has also authored a number of books, including Get Clark Smart, which reached #6 on the NY Times’ Best Seller nonfiction “How-To” book list, and Big Book of Bargains, which reached #7 on the NY Times’ Best Seller “Business Books” list. 

A YouTube video from Clark Howard’s channel addressed the sudden windfall syndrome with a very simple tip: 

1. Take 10% of the windfall and (legally) spend it on whatever you want.
2. Put the other 90% into savings and investments, such as a high-yield savings account, a certificate of deposit, or even in other assets, like a mutual fund or ETF. 

The rationale behind this strategy is to both satisfy the instant gratification thrill and enjoyment of the windfall, which is momentary, while prudently protecting the funds from being wasted and in a form that is accessible, yet less liquid when sudden temptations might arise. 

Additional Insights

While Clark Howard’s simple advice is definitely applicable and easy to deploy, other related tips might also be worth one’s consideration if they become a sudden windfall beneficiary, once they have segregated the 90%, as per Howard’s advice::

• Plan out the general long-term goals, i.e., retirement plans, children’s education, medical care, charitable donations, insurance, etc.
• Limit publicity, i.e., restrict any disclosures on social media to avoid unwanted handout requests, as well as expose the family to a possible kidnapping. 
• Structure a budget that also accounts for expenses, etc. – professional advice might be advisable, depending on one’s financial knowledge background.
• Depending on the size of the windfall, establishing a trust to shield assets from frivolous lawsuits and other unforeseen future hazards may be warranted.