In the past few years you may have noticed increasing exposure of celebrities who have either filed for bankruptcy or found themselves in legal trouble over considerable debt problems. It’s hard to imagine how this could happen to individuals with more than abundant incomes, but it happens all too often. After reading numerous articles surrounding this trend, here are some lessons I’ve taken from the stars.
Lesson One – Watch Your Money! I used to think that having my own personal accountant from a large, trusted accounting firm would be great. I would have someone to take care of all my financial paperwork while I sat back with my feet up and enjoyed my money. After reading the many stories about celebrities who had no idea they were running into bankruptcy despite having such accountants, I think differently. The truth is, no matter who you are trusting to take care of your finances and help you make decisions, your financial well-being is your responsibility. It is great to have an accountant, family member or significant other help you with your finances, however you should still be in the know about what is going on. Doing a monthly budget worksheet and monitoring your spending is a simple yet effective way to find out where your money is going. Keeping a steady watch on your finances will help you be alert if things start going downhill, and give you a chance to make changes before it is too late.
Lesson Two – Tomorrow’s income is never promised. One of the biggest reasons the rich and famous seem to suffer with debt problems is a sudden or gradual change in income. One year an icon is making millions, the next year that same star is a washed up has-been. We all like to think that our income will be what it is right now, if not even higher as the years go by. We buy our homes and build our whole lives around this assumption. No one ever likes to think that their salary will go down in the next few years. However all it takes is a lay-off, illness or injury to make this a reality for many people. While we don’t hope for these things, no one’s income is promised forever. The only way one can truly prepare for such a change is to budget, plan and spend less than you can afford now so that you can save for such a rainy day. Of course this is easier said than done for many of us. But it is important to always remember how easily our income can change without any warning.
Lesson Three – Forgive yourself! If a glamorous star can go from owning a multi-million dollar home to filing bankruptcy in just a few years, it is certainly possible for any of us to find ourselves in debt. We need to stop being embarrassed and beating ourselves up over our debt. We’ve all made a mistake or two in the past with our finances. The important thing is to learn from it and move forward. Fortunately there are solutions to help us to deal with our debt. A credit counsellor can tell you more about these options if you are not sure where to start, and possibly even help you develop a plan to pay off of your debt. The important thing is to pick yourself up and move forward, instead of dwelling on what’s already been done. Remember, everyone falls upon hard times and makes mistakes...even the once wealthiest of us.