Why Celebs Go Bankrupt? While it’s not exactly new, a recent conversation about Johnny Depp’s financial woes has led us down a weird rabbit hole of interns where billionaires go bankrupt. And as we got out into the fresh air, it dawned on us that celebrities are like HENRY™. We are all human and equally vulnerable to becoming victims of lifestyle.

What Is Lifestyle Creep?

The excellent money has probably just started flowing. We are in what financiers call our “accumulation years” in our lives. The payouts are increasing, the bonuses are growing, and the titles are getting fancier. As we develop more experience and skills in our work, we compensate accordingly.

The more we earn, the more we can spend. And we should, but we should also save more. If we continue to live in PTP (Paycheck to Paycheck), we will inevitably become victims of the progressive lifestyle: if our lifestyle grows at the same rate as our income, we will thus become trapped in the PTP cycle.

Other Celebs Who Are Broke

According to a 2009 Sports Illustrated article, 78% of NFL players file for bankruptcy or financial hardship within two years of retiring. Likewise, an estimated 60% of National Basketball Association players file within five years of retiring from their sports bankruptcy.

Ever wonder why Billy Joel plays at Madison Square Garden night after night? For the love of entertainment? He wishes! Our favourite pianist plays because wrong silver moves tickle those ivories for silver. If only it were easy money.

Other famous personalities are MC Hammer, Toni Braxton – 2 times, 50 Cent, Meat Loaf, Francis Ford Coppola (the guy who created The Godfather) – 3 times, and the list goes on.

It’s Not How Much You Earn

By now, it’s probably clear that the amount of money you make has little to do with your ability to save and go bankrupt.

What About Your Trusted Advisers?

If you book a session with a personal trainer and don’t show up, your results could be poor. On the other hand, if you go to the gym and then come home every night and eat cookies, your progress will reflect that.

No one can know for sure if Johnny’s management team did everything they could to help him avoid this situation, so let’s not get into any legal troubles. But his version is that they made several attempts to talk him out of his lavish lifestyle

The Solution

Most people convince themselves that “if I make $10,000 more, $20,000 more, etc., I’ll start saving, investing, travelling [insert destination here], etc. But from what we’ve seen, I will. You probably don’t.

So before you fall into the trap of living a life, you can’t afford, set up automation around your short- and long-term goals.

Short Term

Set up a monthly or bi-monthly automatic debit from your checking account to a savings account NOT with the same bank as your checking account. Keep it “out of sight and out of mind.” is one of the reason why celebs go bankrupt

Long Term

In case you’re not working with a financial professional to help you decide how much to contribute towards retirement, opt for the automatic APR. Most 401(k) plans offer this option, and it’s a great way to increase your savings as your income increases steadily.

At Stash, we rarely say “no”. we reward our clients for taking action and prioritizing their financial lives from the start. So do yourself a favour and start automating your economic life as soon as possible.

Also Read: Five effective methods against hair loss in winter 

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