Why Celebrities Run Into Money Trouble
The rich and famous often face financial challenges the rest of us can only dream about
On the surface, celebrities appear to have little to worry about in the finance department: They command massive paychecks, after all, and can often tap into impressive endorsement deals on the side. So why do so many of them run into major money problems?
It turns out that celebrities often face extra hurdles, despite (and in some cases because of) their big paychecks. Not only do they have luxe lifestyles (and images) to maintain, but friends and family frequently rely on them for cash, their income is often unpredictable, and cash flow can quickly peter out when they're past their prime.
In fact, it can be the celebrity lifestyle itself that trips up superstars.
Olympic swimming sensation
Here are five of the most common causes of celebrity financial troubles:
The tax man.
Salaman also urges his clients to develop prenuptial agreements before marriage, because divorce law can be so "murky." Says Salaman, "In all the states I know about, if you get divorced, then the property you bring into marriage is still your own separate property, but marital property, which is the earnings after the date of the marriage, can be split up to fifty-fifty."
Celebrity lifestyles often come with private jets, designer clothes, and jewelry to match.
The most common mistake that celebrities, and especially professional athletes, make is ridiculously high spending in their newfound financial success, says
Real estate mistakes.
Optimism has no place in plans for the future, at least when it comes to finances, says Maurer, because people -- famous or not -- need to be prepared for the worst-case scenario, such as disability or sudden loss of income. He says celebrities should estimate the expected duration of their career and life, then predict income levels during working and nonworking periods. Next, they should calculate the average income during the entire span and live off that amount. The rest should be saved.
Do you have a money tip for your favorite celebrity? Please share it below.
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Personal Finance - Why Celebrities Run Into Money Trouble
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