This may sound obvious, but if you are fortunate enough to enjoy personal wealth, the easiest way to hang onto it is to be smart about how you manage expenses, investments, taxes, and other pillars of personal finance and money management tips.
However, in many cases, especially when it comes to celebrity culture, this is easier said than done. There are so many distractions and potential financial predators at large that it’s easy for those who live in a bubble to take their eyes off the financial ball.
Still, protecting your portfolio is a must. Here are some tips for the rich and famous, as well as those of us who live on Main Street, for securing and growing your net worth.
Pay your taxes—every year and on time
Are you listening Wesley Snipes? No one escapes the tax collector. Mr. Snipes, star of such iconic movies as “White Men Can’t Jump,” learned this lesson the hard way. He is presently serving a three-year prison sentence for tax evasion, having failed to pay at least $15 million of his share over a period of years.
If you can’t make the annual April 15 personal tax return filing deadline, file for an extension. However if you owe money, you’ll have to remit your best estimate—within 90 percent accuracy—with or without a return, by April 15. The alternative is to confront interest and penalties on any balance due.
Know your business partners
So many members of Hollywood’s elite were taken in by Bernie Madoff’s now infamous Ponzi scheme: Steven Spielberg, Kevin Bacon, and Zsa Zsa Gabor, just to name a few. With the benefit of hindsight, it is now clear that the SEC and investors should have uncovered Madoff’s scam far sooner than they did. Don’t take anyone’s word for anything nor be fooled by charisma and a nice smile. When it comes to your money, know with whom you’re dealing.
Even the rich need a budget
Rapper and entertainer MC Hammer made millions in record sales, endorsements, and concert revenues in the 1990s—then promptly lost it all and had to file for bankruptcy. The biggest factor was plain and simple overspending—on employees, lavish homes, and more.
No matter what your monthly income, there are certain allocation guidelines to which everyone should adhere, like the rule of thumb that housing costs should not exceed 25 percent to 30 percent of your income.
Marry well and draw up a will
Who can forget the long, drawn-out legal saga surrounding Anna Nicole Smith’s estate wanting to secure an inheritance from her deceased, much older husband J. Howard Marshall? We are free to speculate about the reasons why Smith would marry a nearly invalid man 63 years her senior, but the resulting court battle cost everyone involved millions in legal fees and years of their lives.
Marital prenups and solid wills are not just for the rich and privileged anymore, especially given that more than 50 percent of marriages end in divorce. Everyone has something to protect—in marriage and in death. Make sure to consult with an experienced legal professional before taking any major life steps.
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Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate atThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.