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While we may sometimes envy the lifestyles of the rich and famous, their abundant wealth does not always translate into better money managers. In fact, financial mistakes made by celebrities are not isolated to them; the average person can make the same bad money moves.
Bravo celebrity Buffy Purcell, who has had a successful career as a tax accountant and business manager for professional athletes, entertainers, reality TV stars and entrepreneurs, spoke with Select about the overlap between the money mistakes she sees celebrities make and the common financial pitfalls of everyday life. man is capable.
“I witnessed one commonality over and over again,” Purselle says. “That commonality is a bad relationship with money. If you have a bad relationship with money before you start making a lot of money, those same bad habits will carry over.”
Below, Select takes a closer look at the top three financial mistakes Purselle sees celebrities make, and what the everyday person can learn from them.
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1. ‘Bubble’ when they receive lump sums of money
You’ve probably come across the slang phrase “balls out” as another way of saying that you’re shelling out a lot of cash when you get it. Purcell explains that she sees celebrities splurge on things for instant gratification instead of choosing a smarter way to spend their money, such as putting their money to good use in the marketplace. For high earners, this move could lead to poor spending planning, such as a large tax bill they may have to pay.
“It also happens to regular people when they get their annual bonuses and change their withholdings to maximize the amount of cash they get,” Purselle adds. “It creates a financial nightmare when tax season comes around.”
Instead, whenever your income changes, write down a plan to maximize that extra cash before you commit to anything. For example, a raise or bonus can help pay off high-interest debt or boost your savings.
Credit card debt, which often has the highest interest rate, can be paid off with a balance transfer credit card that offers introductory 0% interest periods to give you more time to pay off credit card balances while avoiding accruing any additional interest.
The US Bank Visa® Platinum Card has 20 billing cycles, 0% interest on balance transfers and purchases (at 16.74% to 26.74% variable APR; balances must be transferred within 60 days of account opening), and no annual fee.
If you want to add to your savings, open a high-yield savings account that earns more interest than a traditional savings account. Goldman Sachs High Yield Online Savings Marcus offers free and convenient mobile access.
2. Don’t say “no”
Purcell has noticed that if you are a celebrity and people can easily search for you on Google net worth, you suddenly have a lot more family and friends than you realized.
“Everyone in your orbit suddenly needs a loan or some kind of financial help,” she says, explaining that many celebrities cite caring for friends and family as the main reason for their financial demise. “MC Hammer famously had 200 employees and $500,000 in monthly salaries for friends and family who really didn’t do anything for the money,” Purselle adds.
Perhaps on a much smaller scale, this can also happen to everyday people. You may find yourself in situations like paying bills for family members. Although small at first, they can quickly add up and put you in a bad financial situation.
“The lesson is just to say ‘no,'” Purselle says. “You can empathize and support loved ones in more ways than by becoming a human ATM.”
3. Wearing your assets
Celebrities are often who many people look to for the latest fashion trends, and this puts a lot of financial pressure on them.
Purselle says she’s noticed celebrities often spend money on high-end brands they only wear once or twice. Only then do they realize that their biggest assets are clothes, shoes and jewelry when they stop getting calls for concerts.
“Erica Girardi [now Erika Jayne] of “The Real Housewives of Beverly Hills” recently found herself in this predicament and had to Sell her clothes for a fraction of what she bought them to survive,” Purselle says.
Buying clothes or accessories that exceed the budget is also something that people do on a daily basis. Purselle points out that a designer bag or pair of shoes can easily reach a paycheck or two and is often bought just to make others think they have more money than they really do.
“The lesson is to stop trying to keep up with the rich Joneses on Instagram,” Purselle says. “They don’t have any money either.”
First, a good way to avoid temptation is to get off social media, where users are bombarded with marketing and images of people flaunting their latest purchases. Spending more on consumer goods will not make you happier in the long run. Instead, focus on social connections, experiences, and giving back whenever possible.
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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are solely those of Select editorial staff and have not been reviewed, approved or otherwise approved by any third party.