Spending with the Stars: Learning from Financial Mistakes of Celebrities

Spending with the Stars: Learning from Financial Mistakes of Celebrities - Quicken Loans Zing Blog It’s easy for some to get carried away with celebrity trends and fashions. I’m reminded of this every time I hear “Obama” and “J.Crew” after the inauguration this past Monday. It’s hard not to get swept away when celebrity sites like TMZ are becoming as big as the people they cover. Despite this, I feel like it’s always good to remind people that A-listers are rarely the best people to look up to. Sure there are plenty of philanthropists in the bunch, but more often than not we’re reading of celebrities who ruin their fortunes instead of spreading the wealth.

It’s not hard to find a tabloid story about a star or starlet in financial troubles, just open any tabloid magazine at a grocery checkout and you’re sure to find one right away. In most cases our movie, TV, and music stars have difficult times managing their bank accounts like any other flawed human being. So take these high-profile examples of mismanaging hard-earned funds, and try to deflate them to apply to our humble finances.

Poor Saving Plans

It seems obvious when you have an average income, but stars that are making gobs of cash should be able to save gobs of cash on top of that, right? On paper yes, but it seems overspending (more on that later) and poor savings choices often trump financial logic. A good example can be found back in 2007, when it was revealed during custody battles for her kids, Britney Spears was not saving anything for her two kids despite making around $737,000 a month.

How It Relates to Us “Normal” People…

The lesson here should be as obvious as when auto-tune is used in a song: you should be saving money with every paycheck you get. Whether you have kids or not, we all have goals that need time and financial restraint to achieve, like going on a vacation or buying a home. It’s also important to adjust your budget based on your income. Just because you’ve got that promotion you’ve been pushing for at work doesn’t mean you can run and lease a Porsche. Probably not even a Jaguar.

Choose Your Investments Wisely

Doesn’t matter if it’s a business venture or a gift to treat yourself, be smart about where you’re putting your money. Despite having successful clothing and bar ventures, rapper Jay-Z (AKA Shawn Carter) coughed up $50 million in a failed hotel venture that was going to be called J Hotels. As he’s rapped before though: he’s not a business man, he’s a business, man. He, at the very least, understands entrepreneurial risks at willingly took the leap. This is the opposite of what Kim Basinger did in 1989 after some family members told her it would be a good idea to buy the nearly 1,700 acre town of Braselton, Georgia in hopes to “Sundance” the place up. By 1995 she was selling parts of the town off when faced with financial hardships.

How It Relates to Us “Normal” People…

Don’t let friends and outside factors determine where your investments go. It may be tempting to buy a new TV or re-design the living room when the feeling strikes you, but it’s always good to check yourself and truly ask if this is a necessary and viable spending option at the moment. This “self-check” is easy when using Basinger as an example because buying a town sounds like the pinnacle of excessive spending, especially when a family member is the one to pitch it. In the case of Jay-Z though, us “normal” people can’t afford to take risks of that magnitude. It’s not to say don’t take risks with your money, but be aware of the repercussions of what you’re about to do. Don’t cry for the rapper married to Beyoncé though, he signed a $150 million dollar deal with Live Nation that more than covered his business follies.

Overspending

This is the main offense that celebrities are known to do: make a ton of cash, spend said ton of cash on stuff they can’t really afford, lose prominence or success to pay for stuff they can’t really afford, resulting in the IRS going after them, possible bankruptcy, and a possible reality show. There are tons of stars that have fallen in this tar pit of fame and spending, but my personal favorite is the story of Nicolas Cage. Owing more than $13 million in taxes over many years, Cage has been known for owning (at different points) more than 15 homes, 30 cars, 18 motorcycles, two yachts, numerous exotic pets, and a dinosaur skull that he beat out Leonardo DiCaprio for around a quarter million dollars.

How It Relates to UsNormal” People…

While most of us can’t afford the car we have or a replicated dinosaur skull, the implied lesson should be obvious. If you can’t afford that new iPhone coming out, but you want it just cause, don’t get it! Once you get that phone you can’t afford, you’re going to download apps you can’t afford on top of it. Same goes for a car that you just can’t afford to lease: don’t be enticed by the flashiness of material goods if the price tag doesn’t fit your means. You’re going to pay for it somewhere down the line.

It’s easy to mock celebrities when they reach financial distress because, making so much more than us, it doesn’t make a lick of sense for them to file for bankruptcy. All corny sentiment aside, they’re people just like us and the average person makes plenty of poor financial decisions every day. It’s about making the right choice no matter where your budget lies. Can you think of a time when someone else’s poor spending habits taught you a lesson?

 

Stay Connected How you want, when you want

SUBSCRIBE

See the latest from ZING

, , , , , , , , , ,

No comments yet.

Leave a Reply

Connect with Facebook