Why rich people can end up broke

Johnny Depp is broke. So is Lisa-Marie Presley.

Mr. Depp is reported to have spent $30,000 a month on wine!

In the case of Johnny Depp, his reported spending got him in difficulty. But according to Mr. Depp, his financial advisers are the cause of his money problems. In the case of Ms. Presley, her estranged husband is the cause of hers.

Famous people that earn lots of money run into the same set of problems that affect everybody else; it’s just the scale of their problems are much bigger when compared.

Take the case of Mr. Depp.

According to various media reports, he likes to spend, a lot!

$30,000 a month on wine.

$3 Million on a canon to shoot the remains of one Hunter Thompson into space.

Not to mention the marriages and divorces.

In other words, Mr. Depp go caught by the very same issues that impact people that earn far less!

Ms. Presley was caught in a similar financial squeeze that was not that dissimilar; great financial expectation snared in the reality of limited financial means.

On the opposite end of the same scale are those financial wizards that manage to grow their money, no matter how limited their financial resources.

Charles A. Jaffe, a Belorussian-American chess master once stated that, “It’s not your salary that makes you rich, it’s your spending habits.”

Microsoft founder Bill Gates arrives to play table tennis during the Berkshire Hathaway annual meeting weekend in Omaha, Nebraska, May 7, 2017.

Bill Gates washes the dishes

Bill Gates’s doesn’t do ‘statement wealth’, that is the wealth some people choose to wear, drive and live in. He does do statement modesty; he  wears a $10 watch. He still likes to wash the dishes. This is probably part money driven and part environmental. Dishwashers use electricity. Who knows, maybe the tea leaves provide Mr. Gates with some of his endless inspiration. For Mr. Gates, his approach to money has helped make him one of the world’s wealthiest people.

Broadly, those that end up broke, whether they are leaders of highly successful organisations or pensioners that left millions in their Wills, they have a deep respect for the value of money. Those that don’t, don’t.

Change for success

Pennies really can make a lot of difference when it comes to protecting and growing personal wealth.

A big starting point is when it comes to spending. Having awareness, visibility of spending habits is critical to ensuring spending is controlled. And creating this visibility is easier than most people might assume, even if it can be a little demanding in the first few months if one is not used to managing their money in a structured way. It is this part of the overall wealth creation process that MoneyWhizz works most closely with clients as it helps them to build a stable financial foundation.

But guiding adults back to financial stability is a poor cousin of financial education.

Thorough and meaningful financial education can support children learn about money and as they grow into adults, support them in making better financial decisions. This is not a panacea for ’emotional’ spending but it can provide them with more knowledge about how the money system works.

Frank Conway is founder of MoneyWhizz.org, the financial education initiative.

 

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