Most celebrities have more money in their bank accounts than many of us will ever see in one lifetime. The thing to remember is that having a lot of money doesn’t mean that you are necessarily financially savvy. In fact, a lot of celebrities are pretty horrible at managing their own money. All too often you read about celebrities who have gone bankrupt or who end up with piles of debt after making poor choices. Many of the bad decisions that they make are ones that anyone could make, but tend to seem more dramatic due to the larger amount of money involved and it all being played out in public. Here are a few money mistakes that celebrities make that you should take the time to learn from so that you can definitely avoid them:
There are a lot of people, especially celebrities, who practically throw away money. Having millions of dollars does not mean that you have to spend it all. Many celebrities like to buy overly expensive houses, cars, clothing, or other items. Or, on a different note, they’ll spend a ridiculous amount of money on everyday items, such as spending thousands of dollars for a specific and rare brand of water or alcohol. Excessive spending might seem feasible if you have a lot of money, but it can easily become a bad habit that drains your entire bank account if your source of income dries up. This is often the case with athletes who have a lot of money coming in during their career, but that money vanishes when they retire, usually at a young(ish) age.
Listening to Bad Financial Advice
Additionally, many celebrities end up listening to bad financial advice. There are certain financial advisors who love to prey on people with money, especially if those people are willing to hand over complete financial control of their assets. If you don’t know much about your finances, you can easily be given financial advice that will ruin you. Such examples include being encouraged to invest in stocks that perform poorly or putting money into projects that are bound to fail.
Loaning Money to Family and Friends
Once you come into money, it suddenly seems like friends and family members are constantly asking to borrow some for personal or professional reasons. Many celebrities often lend money to friends or family only to find that it’s never repaid. It’s always smart to seriously consider before lending money to any friends or family members since you never know if they’ll pay you back or consider you loan as a gift.
Poor Investment Choices
Just as some celebrities are in danger of following bad financial advice, they’re often also in danger of making bad investments. Putting money into projects or businesses that don’t pan out can cause someone to lose tens of thousands of dollars. Many celebrities will sometime invest money without really knowing what they’re putting their money into. If you plan to invest in a company or a friend’s project or business, make sure you know all the particulars and how your money is going to be spent. You always want to make sure that your investment choices are smart instead of rash and under informed.
Living Beyond Your Means
Just as many celebrities have a problem with excess spending, many also live beyond their means. You should always be aware of how much money you have and how much you can spend without causing serious financial problems. For instance, you don’t want to buy a luxury vehicle that you know you can never afford to pay off. Indulging every once in awhile can be nice, but doing it all the time will only cause your financial ruin if you don’t have the money to support your spending habits.
Sometimes people with money tend to buy items they want but don’t necessarily need. Impulse spending can often lead to draining your bank account, especially if you buy something you know you won’t ever use. For instance, why buy a fancy kitchen appliance if you know that you’ll never use it? Or, in the case of many celebrities, why buy 10 cars if you rarely drive?
Buying Luxury Items
You often see many celebrities adorned with luxury clothing or accessories such as $4,000 suits, $3,000 shoes, or $10,000 dresses. Buying such items can put a strain on your bank account, even if you are incredibly wealthy. More often than not, the value of the item decreases after a few months or years. Additionally, buying luxury items might be nice every once in awhile but if you don’t have the money to afford them, you shouldn’t be going out of your way to acquire such items.
There are many celebrities who “forget” to pay their taxes. Avoiding paying your taxes leads to a lot of financial problems and will cause the government to hound you for back taxes, including penalties and fees. Tax evasion is something that no one can get away with regardless of whether or not they’re a celebrity.
Not Managing Your Own Money
One of the biggest money mistakes you can make is not managing your own money. When you trust someone to handle your money, you’re trusting that they’re going to make decisions that are in your best interest. You have to be careful that they don’t end up stealing or defrauding you, something that has happened to many celebrities who choose to have other people manage their investments and bank accounts.
Not Saving Money
Everyone should do their best to save money, so you might be surprised to learn how many celebrities are awful at putting money aside. Even if you only save a tiny bit each week, it’s better than nothing. Don’t be like the many celebrities who spend all their money instead of saving it and end up bankrupt.