Even celebrities have to manage their money or risk losing it all
Rihanna is saying her accountant Gounis from Berdon LLP screwed her in the following ways:
- Didn’t tell her she was running out of cash (went from $11 million in cash to $2 million at the end of 2009)
- Took a 22% commission to manage her finances
- Didn’t advise her or warn her when her expenses were doubling
- Advised her to buy a $7 million dollar home which she ended up selling at a loss of $2 million
Know what I am gathering from these facts above?
That even celebrities who “only” have $2 million in cash, are just like the rest of us humans.
People, the truth of the matter is that your money doesn’t care how smart or successful you are — you, RiRi and everyone else on the planet are not immune to the basics of money management.
There are plenty of celebrities who have run into money woes in the past, here are the two most notable for me:
- Nicolas Cage owes the IRS $13 million and blew through his $100 million fortune in no time
- Late Michael Jackson was also an extravagant spender
Let me lay it out for you:
NO ONE CARES MORE ABOUT YOUR MONEY THAN YOU DO
Not your wife, husband, best friend, your mother, your uncle, or your dog.
No one should care more about your money than you, because it is YOUR money.
If you let other people do the caring for you, they will certainly look out for #1 …that is, themselves, and that means lining their pockets with your hard earned gold.
I mean 22% as a fee to manage your money!?
I’d have my hackles raised at such an amount being skimmed off my earnings. I agree with paying a professional if you do not have the inclination, interest or time to do all of it yourself, but 22% is just highway robbery.
YOU HAVE TO KEEP AN EAGLE EYE ON YOUR OWN FINANCES
In keeping with the above, you don’t need to micromanage your money the way that I do, but you have to at least have an idea of what you spend as a budget each month, and that only comes about if you track your expenses.
You don’t have to do this yourself — hire someone to go through your credit card receipts and bank statements, then give you a neat little file or summary at the end of each month for you to review.
They could even point out things like: Your spending in restaurants has increased by 25% or X amount of dollars since the last month.
You may not care if you already spend millions, but at least you’ll know if you’re starting to spiral out of control.
I know a guy who inherited a lot of money from his grandparents when they passed, and every month he hands over a shoebox of receipts to a bookkeeper which she goes through, logs everything and sends him a neat little Excel file with charts and a summary.
I have no clue what he pays her, but it must be totally worth it for him to NOT have to do the minutiae of such tasks.
YOU HAVE TO UNDERSTAND WHAT YOU ARE SIGNING
So back to that 22% commission for handling Rihanna’s money, in my eyes, the bottom line is that she signed the papers.
If she didn’t have a trusted advisor there to look over her papers and point out this 22% fee, or to advise her to find another firm, it’s kind of her problem.
It goes back to rule #1 — if you don’t care about your money and let others care about it for you while you stick your fingers in your ear and go “lalalalalalala”, you’re going to run into trouble.
You should read all the papers you are signing, or hire someone impartial and independent to read them for you and give the basics to you in a summary.
With all that money up for grabs, there are people out there who will say and do anything to get their hands on your money, and this doesn’t apply to celebrities like Rihanna, it also applies to commoners like us who do rather silly things like pay banking fees when we don’t have to, ATM withdrawal fees, high management expense ratios for our investments and for services in general that bring absolutely no added value for the money paid.
Let Rihanna’s situation be lesson to us all — even celebrities with tons of money are not immune to making rather ill-informed and careless decisions about their money.
(P.S. she is worth $90 million now, so don’t cry too hard tonight.)