How Millionaires Go Broke
Celebrity bankruptcies are as common as celebrity divorces, and they're a lot more mystifying. How can professional athletes and silver screen megastars go broke when they're hauling in millions each year?
For one thing, celebrity salaries aren't as reliable as an ordinary professional salary. Lebron James may have pulled in $53 million last year, but injury or age will eventually force this star player into retirement. Only time will tell if the 27 year old has built a strong and smart financial plan to take care of himself and his family decades after he's left the game.
Check out our latest video demonstrating that multi-millionaires go broke for the same reasons the rest of us do: careless spending, unwise investing and family expenses. It's easier to lose a lot of money when you have a lot of money coming in.
Imagine if last year your bank account was infused with $53 million dollars - this fairy tale is a true story for basketball player LeBron James. And yet, history has proven celebrities, athletes, and other people making millions aren't immune from going broke. How could things possibly go wrong with that much cash? Here's just a few ways millionaires lose it all:
- Clueless Spending Habits - Whether you have ten or ten million dollars, if you spend more than is in your bank account, you're going to be in the red. Take AFL linebacker Keith McCants, who admitted to buying sprees that included a yacht, a mansion, cars, and more - all adding up to 7 million dollars, more than he could afford.
- Bad Investments - Entrepreneurs can hit it big when their successful company IPOs, but these investments of any sort don't always yield healthy returns. Even Mark Twain was victim to bad investments in new inventions that didn't pan out, forcing him into bankruptcy.
- Family Matters - Child support and taking on the financial responsibility of family members is a quick way to lose a lot of money. And the problem with these kinds of costs is they last even after the big paychecks stop coming at the end of a career. Boxer Evander Holyfield paid hundreds of thousands each year to support his eleven children from nine different women.
When it comes to money matters - the only way to come out ahead is to spend less then you make, no matter the size of your paycheck.