Rap artist 50 Cent, NFL quarterback Michael Vick, actor Nicolas Cage and photographer of the stars Annie Leibovitz have at least one thing in common.
They apparently didn’t know how to manage a buck.
50 Cent, aka Curtis Jackson III, is the latest in a long, long line of wealthy personalities who have spent money recklessly.
You may have seen the headline that the talented rapper recently sought Chapter 11 bankruptcy protection from creditors.
Though some speculated it was a calculated move to avoid potential financial repercussions from a lawsuit, 50 Cent’s bankruptcy accounting shows someone in need of fiscal restraint. The rapper owes between $10 million and $50 million and listed assets in about the same range. Those numbers, if perfectly matched, would round out to a net worth of zero.
Based on a few details that have emerged, the rapper must have been carrying a lot of consumer debt given that he lives in a 21-bedroom home in Connecticut that reportedly has a racquetball court, a movie theater and an eight-car garage.
He also had about $20 million in legal fees and court judgments, according to The Wall Street Journal.
“Times are hard out here, for real,” 50 Cent said in a television interview after his bankruptcy filing. For real, indeed.
The news about 50 Cent’s financial hardship also got me thinking: Are there some money takeaways for kids?
For starters, I think it’s fair to say that many of the celebrities, business titans and sports stars who have crashed and burned financially failed to heed one of the most basic rules of personal finance: Never spend beyond your means.
It also goes to show that all the money and celebrity status in the world guarantees nothing. It’s amazing, and alarming, how suddenly wealth can slip through your fingers if you’re not watching your pennies.
Which leads to another lesson for kids: Be an active participant in managing your money. Whether it’s a savings account or stocks, know what you’re investing in. Even if you hire a financial adviser, don’t just hand over the money and walk away from the responsibility of making investment choices and monitoring the results.
What role can parents play?
Here’s what I’ve learned from raising three kids: Take advantage of simple, everyday opportunities to engage your kids in money matters.
For example, take them to the grocery store and put them in charge of the coupons and price comparisons. Or when watching television or playing a video game, talk about the commercial messages they’re seeing.
I’m also big on allowances — it prompts kids to make spending decisions about their own money rather than withdrawing from the Bank of Mom and Dad. This will help your kids learn to balance spending and saving, and wants and needs.
As family money expert Susan Beacham of the Money Savvy Generation said, “It’s all right to buy yourself some happy, but expecting money to buy all your happiness will bankrupt you financially and personally.”