I don’t know too many professional athletes. Just one, and he is practically broke.

You hear these stories over and over about how professional athletes piss away their money. A friend of a friend played pro basketball. He said that his teammates would go out and get a suit custom-made for every day they were on the road. 41 road games a year, 41 suits. They would wear the suits once, and each one costs several thousand dollars. Multiply that times shopping times dinners times strip clubs, and the millions of dollars disappear.

Then you hear the stories about the people who win $1 million on a scratch-off lottery ticket, and it’s gone within the span of a few months.

I have a rule about windfalls: You can spend 10% of them. If you win a million dollars, you can spend $100,000. Gotta have some fun. Then save the rest or pay down debt. There were some people on Wall Street who could have used this advice. They thought that the money would last forever… and the money did not last forever.

The foregoing also applies to lawsuits and jackpot justice. If you get rear-ended and call all nines and win $300,000 in a civil judgment, spend $30,000 and save the rest or pay down debt. Put yourself in an unassailable financial position. I will admit to buying lottery tickets from time to time. If I win the lottery, I am paying off my mortgage. The whole thing. Then I will play around with the rest.

Some people are just not wired this way. Some people want to PARTY. Or gamble. Money is a tool, and it can be used for good or for ill.

Here’s an even better idea: Donate 10% of it.

Knuckleheads

More commonly, you’ll fall ass-backward into money in the financial markets. It happens sometimes. I’ve made a lot of money on gold, and I’ve been using it to pay down debt. True story. I had to borrow a small amount to pay for the new house, and with some gains in the markets, I recently paid off all the debt. I hate debt. I hate debt with a burning passion. I don’t want any more debt than is necessary. 

Or you can pay for your kid’s college. Win $100,000 in the markets, that’s a college education at a state school.

In other words, don’t be a knucklehead.

Can you teach people not to be knuckleheads? Look, I just wrote a book about how not to be a knucklehead, and I get the impression that only the non-knuckleheads read it. The knuckleheads don’t want to read that kind of book. So, the smart get smarter, and the dumb get dumber.

That’s my feeling about personal finance classes as well—you can give people the tools, you can give them the knowledge, but ultimately, it is up to them and their good habits or their crappy habits. I don’t think making every high school senior in the country take a personal finance class is going to make people any better with money. I really don’t. They might be a little smarter, but they won’t be better. They’ll still make the same terrible decisions. I have made some mistakes in my life, but I’ll tell you something—I have never repeated them.

Clarinet

I’ll tell you a story.

I won about $800 in a spelling bee at my high school. Then I won another $800 in the spelling bee a year later.

Then I made some money in a summer job and as a church organist.

I spent all the money on two things:

1. A fancy clarinet

2. A stereo system

I was a pretty good clarinet player, and I thought I would upgrade from the POS instrument I got when I was in fourth grade. But then I went to the Coast Guard Academy, and they switched me to drums. Never played the clarinet ever again.

The stereo system, on the other hand, got maximum use. I played that thing for years, up until about 2010. I got my money’s worth—it was fully depreciated.

I’m a bit shocked that I blew the cash in such a fashion. I wasn’t rich. I had a few thousand dollars saved up, and I drained all my savings in two purchases. I got religious about saving and investing once I graduated from college. But until then, I was a knucklehead.

Speaking of which, I am going to have about 100 Daily Dirtnap subscribers in Pawleys Island, South Carolina this week for my annual investor conference. It’s going to be a hoot. 

By the way, this conference typically sells out in a matter of minutes. But you have to be a subscriber to go. If you’re interested in signing up for The Daily Dirtnap, go here.

After that, starting next week, my good friend John Mauldin is hosting the 20th Annual Strategic Investment Conference from April 22 to May 1. I’m honored to be one of the speakers—my session is scheduled for Monday, April 29 at 2:50 pm Eastern.

The conference is 100% virtual and easy to watch from the comfort of your own home or office. It could change how you look at money and investing forever. Click here to get the full details on this conference.