Reply to Are most celebrities (particularly actors) good with their finances?

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[quote=Anonymous][quote=Anonymous]From what I've heard, no!  For a variety of reasons:

1) they are creative people and are uninterested in the details of finance.

2) their pay arrangements are pretty complex and not just your average annual salary.  If they write a song, they earn money through royalties.  For other things, it's all individually negotiated contracts where pay arrangements may vary widely.  You have to be pretty good at understanding contracts to understand how you're getting paid and and what.  You may end up responsible for certain expenses that you weren't aware of.  You have to give cuts to your agent or manager and other people and that adds up.

3) you can hire people to manage your finances but there are a lot vultures out there looking to swindle rich celebrities.  Heard lots of stories of celebrities thinking they had a lot because their financial manager said they did and they spent wildly and it turns out their financial manager was terrible at managing it and lost it all.[/quote]

Good summary. See, also, professional athletes (who also generally have a very short earnings window).

There are exceptions. Jimmy Buffett decided early on that his music career wasn’t going to last, so he started to build his “Margaritaville” business.  He’s now worth anywhere from $600 to $900 million (depending on which source you believe). Roger Staubach is the richest former NFL player, but he made all of his $600 million in the real estate business (interestingly he got his start in the late ‘80’s recession). They are the exceptions because they focused on managing their own finances and didn’t just depend on their original source of income. [/quote]

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