As turbulent economic times continue to influence our financial strategies, you can turn to financial experts such as CNN’s Clark Howard or Suze Orman, or you can do what I do and take a lesson from celebrities!
For a material girl, she sure did make a silly financial blunder. She’s been coined as a marketing genius, keeping her career and her image alive for more than twenty years. Madonna faulted, however, by entering into her marriage with Guy Ritchie without signing a prenuptial agreement. Putting her $500 million dollar fortune at risk, Madonna’s divorce cost her a reported $75 million.
Lesson Learned: Keep your financial assets your own. If you have something you wouldn’t want to give away, sign a prenup’.
Nick Cage has never played the victim in his film career, but in real life, he seems pretty good at it. Especially, when the tax man cometh. In February of 2008, it was widely reported that the actor used his production company, Saturn Productions, to hide some personal extravagance — $3.3 million, in fact.
Lesson Learned: Personal expenses are personal expenses. Keep your taxes on the straight and narrow. Need help? Invest in a personal accountant. It’s worth the time and your fee for services can be deducted off your next year’s tax return.
There’s a competitive desire to win, and then there’s a desire to lose all your money to a friendly game of golf. In 1993, Jordan lost $57,000 to his gambling frenzies, and claims exist from Jordan’s colleagues and friends that he lost more than $1.25 million in one golf game alone.
Lesson Learned: Gambling should be a delightful misadventure of sorts, not an “I need money and have to win” sort of obsession. Keep it fun.
Rest his soul – his death was untimely and unexpected, which is exactly why he should have had an updated will! The Oscar-nominated star of Brokeback Mountain wrote his will leaving everything to his family in 2003. With the birth of his daughter in 2005 he neglected to make an update. When you’re worth an estimated $20 million, it’s advisable to keep your will updated and signed.
Lesson Learned: As lifestyle changes occur and relationships evolve, it’s important to update your will regularly. Set a time once a year to review and update if necessary.
“Heeeeere’s Trouble!” Housing foreclosure is becoming all too common of a term these days and celebrities are no exception to it. There’s an irony that exists in Ed McMahon – the man who delivered oversized checks to lucky winners of the sweepstakes – facing foreclosure. After falling $664,000 in the hole on mortgage payments, McMahon found himself in a mountain of debt.
Lessons Learned: In the words of Ed McMahon himself, “Well, if you spend more money than you make, you know what happens…” Don’t buy a house you can’t afford.
We know he’s Too Legit to Quit, but he should’ve quit spending a while ago. MC Hammer is infamous for his overspending which led him to file for bankruptcy in 1996, with $13 million in debt. With a net worth of $30 million dollars, Hammer spent a majority of his funds paying over 300 people to work for him, to the tune of $500,000 in monthly wages.
Lesson Learned: No matter how popular, how successful, or how business savvy you may find yourself, a lavish lifestyle can only last so long.
You’re young, you’re rich, and you’re spending it all. Britney Spears entered the entertainment world at the ripe age of eight and has been a force to be reckoned with ever since. When you earn $737,000 per month and don’t allocate a penny toward savings or investing, you are not planning for the future particularly well.
Lesson Learned: Plan now for the long-term. Living in the moment is a dangerous trend.
Examples of financial missteps are everywhere, and the celebrities have done a good job of showing us what not to do. From foreclosure and bankruptcy to investments and tax evasion, the examples are endless. Follow these lessons learned to keep your finances from putting you at risk.