When you were a kid, did you dream about becoming rich and famous? I know I did. I used to dance around the house (and pretty much everywhere else), thinking I was on my way to becoming the next triple threat Broadway star. Move over Kristin Chenoweth, I’m coming for your spot! Of course, those dreams all came crashing to a halt when I decided I didn’t want to be made fun of for being a dancer anymore and took up soccer instead – during the most formative years in a young dancer’s life.
…not my brightest move…
Well, as they say, it all works out in the end. I still love dance and Broadway, but now I’m happily tip tapping away at my keyboard instead of my tap shoes. Aside from the fact that I love writing more than anything (yes, even more than coffee…), this was potentially a good financial turn out as well. Everyone knows the story of the struggling artist, but even those that hit it big can find themselves in hot water.
You might wonder how that’s possible. I mean, earning millions is pretty much a guarantee for financial success, right? Wrong. Earning more money won’t mean much if you don’t learn how to manage it, as far too many celebrities had to learn the hard way. So what can be learned from their financial missteps? It turns out, quite a lot!
The Benefit of Coming from Humble Beginnings
Reality television leads many of us to believe that most celebrities were born with a silver spoon in their mouths. However, many incredibly wealthy and famous celebrities were born with very little – Shania Twain, Celine Dion, and Sarah Jessica Parker to name a few. So how did they reach their success?
Besides sheer talent, there’s something to be said for the drive that comes from humble beginnings. The drive to build a better life for yourself and your family. The drive to follow your passions so you can focus on something other than the difficulty of daily life. Then there’s the basic necessity to earn money…
Shania Twain, Celine Dion, and Sarah Jessica Parker all started working at a young age. This allowed them to hone their talents, gain necessary experience, and put food on the table for their families. Whether they worked because they wanted to or needed to (or a mix of both), getting started young gave them the maturity and skill to succeed.
We could all learn a lot from stars like this. When you have to work for every meal you have, you’ll inevitably appreciate everything you have. That appreciation can go a long way. That appreciation can prevent the habit of keeping up with the Joneses. It can also lead to a value system of focusing on personal fulfillment rather than material things. And for some, it can lead to a life of frugality fueled by a deep desire to never struggle again.
Bouncing Back from Big Blunders
Of course, not all those who come from humble backgrounds keep their heads on straight when they come into money. MC Hammer’s story is repeated time and time again. Young boy grows up poor, strikes it rich, then spends all of his money and ends up in bankruptcy court.
However, with all that went wrong in MC Hammer’s story, no one seems to focus much on what went right. After MC Hammer went through the financial struggle of a lifetime, he did one very important thing to ensure that he’d never have to struggle again: He changed his lifestyle.
Yes, MC Hammer ended up bankrupt. But bankruptcy can be a second chance – for those who choose to view it that way. He took the opportunity to start over and that he did. He realigned his values and his goals and did some serious deep thinking about the man he had become and who he wanted to be in the future.
Let’s face it, we all make financial blunders. Just like everything else in life, what matters isn’t that you do everything perfectly the first time. Financial blunders don’t make or break you – what you do after does. What matters is the ability to bounce back – to correct your mistakes and move forward. MC Hammer now has his wealth back and his career back and he seems happier than ever (according to interviews that is).
In many ways, these setbacks can be exactly what we need in life to look inward and make sure we’re making choices we can be proud of. Everything is an opportunity – even a financial setback. If you view it this way in your own life, then you can bounce back from anything.
The Dangers of Running Away from Your Bills
Speaking of bouncing back, one guaranteed way not to bounce back is to run away from your problems like so many celebrities do. Between tax evasion and unpaid credit card bills, celebrities from Nicolas Cage to Stephen Baldwin and even to the reigning King of Hip Hop, Jay-Z, have found themselves in hot water.
Bills don’t go away. Bill collectors don’t go away. Whether you’re facing mounting credit card bills, overwhelming student loan debt, or an underwater mortgage, running away will only make things worse. So open that mail. Answer that call from the collector. Talk to your lenders and find a way to dig yourself out of debt. It can be done. It won’t be easy and you won’t reach success overnight, but many lenders are willing to work out payment plans for those facing financial hardship. You’re much more likely to find a solution by facing the problem than turning away from it!
Being Prepared for Emergencies and Unemployment
Celebrities have an interesting financial dilemma: once they make it big, they can earn a lot for their work. But, each job could end at a moment’s notice (ever had your favorite actor killed off a show?) and the jobs can be few and far between. Even the most successful stars can be replaced by the next big thing and they might find themselves without another job for months or years. Quite simply, most celebrities just can’t guarantee their next paychecks.
One celebrity who was born into an extremely wealthy family found herself in trouble because of this: Tori Spelling. Even though she was a star on a hit series and the daughter of a massive Hollywood powerhouse, Spelling ended up deep in credit card debt when 90210 went off the air. She’d been living a lifestyle inflated from a fat paycheck without thinking about the fact that it would come to an end – and that it might not be so easy to get another job.
The story goes that she dug herself out of debt without the help of her wealthy family and has since found work on her own reality series. Here’s hoping she doesn’t fall into the same trap…
…because falling into a trap is what so many of us do. We pay off debt and vow never to struggle again, only to have new debt years later and wonder how it all happened. It goes back to the importance of lifestyle change. You can’t really have a solid financial future until you solidify good financial habits.
But what about when an emergency hits? After the devastating hurricane that ripped apart the Northeast last fall, Hurricane Sandy, Brendan Fraser suffered a back injury that made it difficult for the often physical actor to find work. His job relied on him to be physically fit and the injury kept him out of work and behind on child support.
If he’d had an emergency savings in place, he might not have been in such hot water. However, what Fraser did do that we can all learn from, is face the music and work out a payment plan. It’s not a solution that will work overnight, but it is a way to slowly regain traction.
Why You Should Always Retain Control of Your Money
Finally, one of the most common ways celebrities find themselves in trouble is by entrusting their money to professionals with little oversight. The list of celebrities who lost it all to untrustworthy accountants is long: from Billy Joel to Rihanna and more!
While most of us don’t have high powered accountants managing our money, many entrust our retirement funds we don’t always understand. And those in debt may seek the help of a debt management or debt settlement company or a nonprofit credit counselor. At the end of the day, no one is responsible for your bills but you – so while others can certainly help you and lead you on the right path, you need to do your due diligence before you proceed.
Remember: not everyone is out to help you, even if they say they are. And there are too many companies (yes, even nonprofits) that take advantage of those looking for guidance. Look for red flags like undisclosed fees, things that sound too good to be true, or information that always changes or can’t be backed up. And always trust your gut. If it feels wrong, it probably is. Don’t let yourself be counted among the many who lose their money to those who were supposed to be helping them.
Looking Forward to the Future
These are just a few takeaways to learn from the many financial troubles celebrities can find themselves in. But the most important takeaway is understanding that coming into a lot of money will not solve anyone’s financial problems. If there’s an underlying problem, more money is just a bandaid. And if extra income is all someone needs, it won’t do much good if it’s not managed well. What we all need to do is look forward to a financially savvy future that we work for and develop goals that lead to success and fulfillment – not to dollar signs.