3 Financial Mistakes Celebrities Make and What You Can Learn From Them

While we may sometimes envy the lifestyles of the rich and famous, their abundant wealth does not always mean they are better money managers. In fact, the financial mistakes of celebrities are not just isolated to them; the common man can also make the same bad money.

Bravo celebrity Buffy Purcell – who has had a successful career as a tax accountant and business manager for professional athletes, entertainers, reality TV stars and entrepreneurs – spoke to Select about the overlap between the money mistakes she sees celebrities make and the common financial flaws in everyday life a person is capable of.

“Over and over I witnessed one thing in common,” says Purcell. “That common trait is a poor relationship with money. If you have a bad relationship with money before you start making a lot of money, those same bad habits will carry over.”

Below, Select takes a closer look at the top three financial mistakes Purselle sees celebrities make and what the average person can learn from them.

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1. “Ball” when they receive lump sums of money

You’ve probably come across the slang phrase “ball out” before as another way of saying you spend a lot of money when you get it. Purcell explains that he sees celebrities spending money on things for instant gratification instead of choosing a smarter way to use that money, such as putting their money to work for them in the market. For high earners, the move could lead to poor spending planning, such as a large tax bill they may have to pay.

“It also happens to ordinary people when they get annual bonuses and change their tax withholding to maximize the amount of money they get,” adds Purcell. “It creates a financial nightmare when tax season rolls around.”

Instead, when your income changes, write a plan for how to maximize that extra cash before you commit to anything. For example, a raise or bonus can help pay off high-interest debt or boost your savings.

Credit card debt, which often has the highest interest rate, can be paid off with a balance transfer credit card offering introductory 0% interest periods so you have more time to pay off your credit card balances while avoiding accruing extra interest.

The US Bank Platinum Visa® Card comes with 18 billing cycles with 0% interest on balance transfers and purchases (then 17.49% – 27.49% variable APR; balances must be transferred within 60 days of account opening), plus no annual fee.

When you want to add to your savings, open a high-yield savings account that earns you more interest than a traditional savings account. Goldman Sachs Marcus High Yield Online Savings offers no fees and easy mobile access.

2. Don’t Say No

3. Carrying their assets

Celebrities are often the ones many people look to for the latest fashion trends and this puts a lot of financial pressure on them.

Purcell says she’s noticed that celebrities often spend money on high-end brands they only wear once or twice. When the calls for gigs stop coming, only then do they truly realize that their greatest assets are their clothes, shoes and jewelry.

“Erica Girardi [now Erika Jayne] of The Real Housewives of Beverly Hills recently found herself in this predicament, and she had to to sell her clothes for a fraction of what she bought to survive,” says Purcell.

Buying clothes or accessories that are over the budget is also something that ordinary people do. Purselle points out that a designer bag or pair of shoes can easily be worth a salary or two, and this is often bought just to make others think they have more money than they actually have.

“The lesson is to stop trying to keep up with the Instagram-rich Joneses,” Purcell says. “They don’t have money either.”

A good way to avoid temptation in the first place is to get off social media, where users are bombarded with marketing as well as images of people flaunting their latest purchases. Spending more on consumer products won’t make you happier in the long run. Instead, focus on social connections, experiences, and giving back when you can.

Check out Select’s in-depth coverage on personal finance, technique and tools, wellness and more, and follow us Facebook, Instagram and Twitter to keep up with the times.

Editorial Note: The opinions, analysis, reviews, or recommendations expressed in this article are solely those of the editorial staff of Select and have not been reviewed, endorsed, or otherwise endorsed by any third party.

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