What You Can Learn from Celeb Money Meltdown$
Don’t make the same mistakes as the stars. Our four simple financial lessons will help you become a cash-savvy kid.
Oops! She did it again. Britney Spears may be famous for her top-selling albums, public breakdowns, and stinging criticisms as an X Factor judge, but there’s one thing the pop sensation is definitely not known for: smart financial choices. During her child custody trial in 2007, it was revealed to the world that though she was earning an average of $737,000 per month (yep, you read that correctly), not a penny of that was going toward savings, investments, or education funds for her two sons. Brit isn’t the only star who could benefit from a money makeover. The rich and famous are notorious for their deep debt and fiscal mishaps.
Although your money problems probably aren’t as epic, experts agree that you should learn how to be financially literate now. “If you practice good money habits, it can become second nature,” says Tamsen Butler, author of The Complete Guide to Personal Finance: For Teenagers.
So what can you learn from the VIPs’ spending sprees and financial missteps? We got the lowdown on top celebrity money meltdowns, and the wise ways high school students can avoid similar situations. Don’t worry; we’ll share the wealth.
#1 Money Meltdown: Fighting with Mom and Dad Over Cash
Celeb case: Gossip Girl Leighton Meester had to take her mother to court over their financial feud. Mom thought that she was entitled to a major cut of Leighton’s earnings. Leighton disagreed.
Be smarter than the stars: Although most teens are trying to dig into their parents’ pockets, not the other way around, the fact is that money can be a touchy subject. And it’s not just the kids who are avoiding money talk. Case in point: One poll found that many parents would rather talk with their teens about sex and drugs than about finances. But having a discussion about your family’s ground rules will help end these quarrels before they start, so ask your folks to sit down for a chat. The key is to compromise on points you disagree about. For example, if you’re upset because Mom and Dad put Grandma’s birthday check straight into your college savings account every year when you’d rather hit the mall, suggest that you get to keep 25 percent of the amount, and you’ll let them sign off on what you decide to purchase. It’s a win-win: The ’rents will be happy to know that your school funds are still growing, and you’ll be able to score that pair of jeans you’ve been eyeing.
Money Meltdown #2: Spending Without Saving a Penny
Celeb case: Lindsay Lohan’s extravagant lifestyle caught up with her in 2010, when she reportedly racked up more than half a million dollars of debt.
Be smarter than the stars: Tracking your expenses will help keep your spending in check. “Remember, budgets are there to help you make the most of your money, not to stifle your independence,” says Butler. Here’s how to do it: Figure out how much money you earn each month, whether through allowance or an after-school gig. That’s your income. Then add up expenses, such as lunch, and subtract that number from your income. What’s left over is money you can spend or save. In a notebook, jot down every purchase you make (even that pack of gum) for an entire month, making an effort not to go over your budget. At the end of the month, review. Then set up a plan. For example, if you give up two grande Frappuccinos—at $4.95 each—a week for a year, you could save enough money for a big-ticket item like an iPad or a serious contribution to your college fund.
Money Meltdown #3: Getting Fired from a Good Job
Celeb case: Sorry to rip on Ms. Lohan, but have you noticed she isn’t getting a lot of work these days? Her reputation for bad behavior on the set, showing up late, and skipping meetings is ruining her career.
Be smarter than the stars: Getting a job can be hard. So once you land one, whether it’s babysitting, waiting tables, or walking your neighbor’s dog, it’s important to take it seriously. “Your job is a responsibility where people are counting on you,” says Butler. Monster.com, a career website, says that dressing the part and acting appropriately are key to getting—and staying—hired. Translation: Don’t show up for a job application in your sweatpants. If you do get the gig, arrive on time, don’t complain or use poor language, and save the personal phone calls until you clock out.
Money Meltdown #4: Believing Money = Happiness
Celeb case: Rihanna spends a fortune on her hair, Paris Hilton spent more on her dog’s house than most people spend on their own houses, and LeBron James bought a home that featured a movie theater, a bowling alley, a barbershop, and a six-car garage.
Be smarter than the stars: Having a theater at home is cool, but will it really improve your life? New research suggests that overall happiness in life has more to do with how much you are respected and admired than with how much money is in your bank account.
Sure, it’s fun to buy stuff, but lots of fun can be had for free. Focus on what actually makes you smile—whether it’s playing field hockey, dancing with friends, or painting—and make sure to invest your time, energy, and yes, sometimes money, in those activities instead.