Four Money Management Mistakes By Top Celebs That We Can All Learn From
Celebs often hit the tabloid headlines for their hairstyles, dresses, and even scandalous acts. But when it comes to their personal financial management, little is known. Sometimes, we do read a story or two of celebs going bankrupt or of A-listers finding success in a business venture. But most of the time, it seems that some of the rich and famous are not good at money management. These celebs are capable of spending millions of dollars in the time you and I would be able to spend a hundred dollars. Clearly, budgeting, planning, and saving are alien concepts to some of the biggest celebs we know. But just because their financial status is different from ours doesn’t mean we won’t experience the same mistakes they do. So here are four money management mistakes by celebs which you shouldn’t repeat, not if you don’t want to get in big trouble.
As per latest data, bankruptcy filings have increased by leaps and bounds over the past few years. Stephen Baldwin, The Usual Suspects actor, has a much different reality than we’d normally associate with Hollywood stars. In 2009, he and his wife filed for Chapter 11 which revealed that the couple had millions in debt. Baldwin cited $2.3 million in debt and he told the court that the two unsettled mortgages caused this financial predicament. While we perfectly understand that, we are still wondering why a bankrupt family also has a $70,000 credit card debt. He also owes $1 million to the US Government in back taxes. MC Hammer, Tom Petty, and Kim Basinger are some of the other top Hollywood celebs who don’t watch their money too often. To avoid overspending, always set a monthly spending limit and stick to it. Do not underestimate little purchases and always try to use cash instead of credit card.
Trusting Wrong People
While handing over our money to some “professional”, we all exercised diligence. Unfortunately, that is not the case with some top celebs. Often, they trust the wrong people and end up going broke. This is exactly what happened with Hollywood’s living legend Leonardo DiCaprio whose money manager cheated him, along with at least two other top celebs, Matt Damon and Cameron Diaz. In 1999, almost $10 million from the manager’s investment firm vanished. The name of the manager was Dana Giacchetto and the investment firm that he ran was named Cassandra Group. To choose a trustworthy personal finance manager, check to see if their core values and work ethics are in line with your financial goals. A money manager whom you can trust should be ethically and legally obliged to prioritize your interests and should communicate with you on a regular basis.
This is just another aspect of financial management we often overlook. If you can remember, during the recession, many of our friends and distressed relatives used to put a lot of pressure on us to lend them money. However, if there is something that smudges relationships for sure, it is money. If you do not need the money anymore, it’s alright to help a friend or relative. But if you ask Brooklyn born actor Richard Dreyfuss, he would probably advise you against lending money. Poor Richard! He had to file a lawsuit against his dad, who couldn’t repay the $4 million he had once borrowed from Richard. Although Richard later withdrew the lawsuit, lending money to friends and relatives is not a great idea.
Not Paying Taxes On Time
Each and every adult citizen with a steady source of income must pay taxes, and celebrities are no exception. However, many of our favorite celebs are so busy plying their trade that they forget to check with their personal finance managers and simply ignore relaying tax-related information to their money managers. Take the case of Willie Nelson, an American singer-songwriter, who was shocked to discover that he was obligated to pay millions of dollars to the IRS. His personal finance managers allegedly set up invalid tax shelters for him. Nelson was deep in debt as he couldn’t pay the gargantuan bill and ultimately, he had to sell off his assets and even launched an album named The IRS Tapes: Who’ll Buy My Memories? to help pay off his debt. Wesley Snipes’s tax evasion lawsuit is another high-profile tax case in the history of entertainment as he didn’t pay taxes for more than $15 million of his earnings. Snipes’s case was a little different as he thinks that taxation is not constitutional and chose not to pay taxes. However, challenging the norms and the laws of the country is not easy. Hence, you should always pay your taxes on time.
You need to be extra careful when it comes to money management. You don’t want to have the same fate as Willie Nelson or Stephen Baldwin, do you?
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