Many entertainers and athletes have been robbed by their financial advisors and managers. This has occurred for various reasons. Sometimes navigating the waters of fame and fortune for the inexperienced, proves too much, so they rely on others, who sometimes turn out to be untrustworthy and unethical. Entertainers and athletes need to be aware of the pitfalls when choosing representation regarding their finances. There are many sharks in the industry who will take advantage of you if they can.
Beloved Filipino boxer, Manny Pacquiao was ripped off by his accountant/financial advisor. Money was stolen and the boxing star’s taxes not paid, putting him in a difficult predicament. The truth came out when his accountant died of a stroke and all the paperwork he hid from Pacquiao revealed the discrepancies in how the star's finances were improperly handled. Pacquiao has since earned millions more from recent fights.
Superstar singer and gifted musician, Billy Joel, responsible for some of the biggest pop hits of the past 30-years, was robbed by his brother-in-law, who acted as a financial manager. Joel’s brother-in-law stole $15,000,000 the star has not recovered to this day. In speaking about the incident during an interview, one can sense the hurt Joel feels that someone close to him betraying him in this manner.
Well-know comedian and talk show host, Steve Harvey, lost millions of dollars when his financial advisor ripped him off and left him owing a massive amount of money in back taxes to the U.S. Internal Revenue Service. His adviser failed to submit tax payments for years and pilfered Harvey's funds as well. Harvey had to greatly increase his workload for a significant period of time to pay the back taxes owed to the government, in a debt that has now been settled.
Many entertainers and athletes do not have degrees but there are a few basics that can help keep you on the road to financial freedom and economic stability:
Be in control of your finances. Sign your own checks to pay bills and to cover other expenses.
Do not give others credit cards/debit cards on your major bank accounts. It is one thing to have a small household account with money in it to pay utility bills, buy groceries, pay the gardener ect. Assigning a debit/bank card on a small account such as this to a parent or spouse to pay household bills is fine (with a limited overdraft). However, the bulk of your money should be in secured, government backed bank accounts that are not accessible to others.
Buy a house, even a small one, when the financial opportunity presents itself. Buying is better than renting, as that's putting money back into your pocket via home ownership. You can rent a room in the property to someone you know or apply with the local government to add a one bedroom/one bathroom flat/efficiency/in-law quarters in the backyard or onto the home and rent it each month. The rent from a decent flat/efficiency/in-law quarters can pay your mortgage every month over cover 50-70% of it.
Do not overspend. You do not need a million cars and a million pieces of jewelry. You do not need to try to keep up with the Jones or give off a public appearance of great wealth when your bank account reflects otherwise. Live within your means.
Do not overextend yourself. Buying houses, cars and jewelry beyond your financial means and not factoring in additional costs such as real estate taxes, property maintenance and insurance costs can result in foreclosure and property repossession.
Discipline yourself to check the balance on your bank accounts on a regular basis. You can check your balances every few days or weekly. It is your money and financial future. You can take some time out of your day to check what is transpiring with your bank accounts to ensure no identity theft, theft or overpayments have occurred. You'd be surprised how many entertainers and athletes don't know how much money they have and are surprised to find out they are either being robbed, overcharged or taken advantage of.
Go into the bank and talk to them about your finances if there is anything you are unsure of regarding what your accountant and financial advisers are doing in your name.
Learn to save money in government insured savings accounts. You do not have to spend everything you earn every time you get a paycheck. It is inadvisable. Learn to put something aside in a savings account(s).
Put aside money from your paychecks for taxes as well. Speak to a qualified accountant and the government tax collection bureau of your country to find out the tax bracket you fall in regarding the percentage of your income you owe in taxes. Don't hide it from them, as they'll find out anyway. Double check with the government what percent of your income you owe, to verify your accountant is paying the correct amount to the government and not skimming/stealing any of the money, claiming the entire figure went to taxes.
Which brings me to my next point - pay your taxes. World governments will take your possessions and assign penalties in financial fines and interest if you do not remit the money owed. Anyone telling you that you do not have to pay taxes or proposing a tax avoidance scheme to you is sorely misinformed or straight out lying. The government will find out and it will cost you more in financial penalties than you originally owed for trying to dodge paying your taxes in whole or part.
Avoid risky investments. There are risky financial investments that claim you will become rich overnight, but it is often not so. If it was that easy everyone would do it. Think about that. Do your research before you invest. As the phrase goes, if it sounds too good to be true, it probably is.
Watch out for opportunistic people, both men and women, only after you for your fame and burgeoning bank account. You don't have to be mean to them, just make a mental note of what they are truly like and protect your finances and name, not to mention your heart. Some people have been badly betrayed by people they thought they could trust. At the end of the day, you have to shake it off and move on, realizing some people will tell you (and others) anything you want to hear to get money out of you or use you as a stepping stone to fame and fortune. Learn to be a good judge of character. People who truly care about you won’t want anything from you other than your time.
It's not the best idea to let people know exactly how much money you have to your name. Some, not all people, will become envious and start scheming on ways to get it. Some people will even plan robberies or try to blackmail you. Some women will entrap you with pregnancies in trying to ensure a paycheck until the child is an adult. Others will try to borrow large sums of money and take the position that you funds and they don’t need to repay you when promised or at all. You have nothing to prove to anyone in telling the world exactly how much money you have, as in the past it has proven a risk for many people.
Try to start a small business. A good business can support you for the rest of your life, beyond your career in entertainment and sports. Do not spend too much money on this endeavor, especially if it will place you in a financially precarious situation regarding your other financial obligations. Do your research. Seek sound legal and business advice. Compare prices for goods and services that are quoted to you, via online searches and asking around.
When signing contracts, make sure you understand what you are signing. Do not sign your financial life away on any document. If you do not understand something that is written in the contract, do not be afraid to ask, even voicing your question in writing to create a paper trail. So if anyone tries anything in the future or tries to claim something other than what you agreed to, you can present the written statements requesting clarification, necessitating the other party to respond in writing and save their answer for future reference.