Do even the wealthy have to budget?

Question

So many rich people, private and famous ones, go broke. The stories of rags to riches and back to rags are endless. Like the story of MC Hammer. So does that mean that even the wealthy have to budget? It seems so, would like your opinions. Thanks.

Answer 1

Of course they do. That's what keeps them wealthy.

some have said that "the rich keep getting richer and the poor keep getting poorer"

That is because the rich keep doing the things that make them rich and the poor keep doing the things that make them poor.

It is personal; choices.  choosing to put money in the bank instead of buying the latest video game.  It is reading a how-to book instead of playing that video game.

Answer 2

I know what you mean.  How can you go broke if you make 10 million dollars.  It seems that there is a difference in wealth.  Some people have overnight success and some build it over time.  I think a lot of the people with overnight success don't have any money management skills.  They spend all their money on liabilities, like cars, luxury apartments, hotels... the bling, bling lifestyle.  These people run out of money because they can't afford the lifestyle they are living.

Truly wealth people invest in assests and have their money work for them.  Look at Donald Trump.  He didn't become a billionaire by investing in fancy cars and diamonds.  He invested in real estate.  Now he has a steady income from those assets.  

If you are interested in delving more deeply into this topic, I have a couple of book recommendations. 1) The Millionaire Next Door - this is a book about wealth management.  The title comes from the idea that you could have a millionaire living next door, but would never know it because they have become that way by being frugal and investing well.  2) Rich Dad, Poor Dad - this book traces the ideas of two different people on how to become wealthy.

Answer 3

they become wealthy by doing budgeting... and stays wealthy by taking it a step higher, which is a discipline budgeting...  

Answer 4

The problem is there's a difference between wealth and income, a point that was made in an excellent book titled The Millionaire Next Door, which I have reviewed here:

http://www.btgnow.net/2008/07/btg-book-r...

So while many celebrities and such earn incredibly high incomes, they also need to take a hard look at their expenses.

Celebrity in particular comes with a harsh set of expenses (I'm not saying everyone needs a movie theatre in their house, but when you're brad pitt, it's kind of hard to go down to the local cineplex...). But if you're not brad pitt, and your dad is just Joe Shmoe Hedge Fund Manager, you should definiately be asking yourself wehther the whole family needs luxury cars, or if one shared between the members will do. Sadly, status has a huge impact on purchasing descisions, so in some ways the people with higher incomes are the most vulnerable to poor financial lifestyle choices.

So certainly lifestyle needs to be budgeted for, and having a good financial planner by your side can often make the difference.

But then there's the biggie: TAXES!

When we hears that a baseball player is making 11 million that year, we often fail to take into account the fact that the government will take half, and I'm sure some of the players (and their "planners") fail to take that in as well. So they spend like they have 11 million after tax, but they only have 5 million after Uncle Sam takes his cut.

So taxes also have to be budgeted for!

Answer 5

everyone should budget its the rite way to go about dealing with your money

in hammers case he earns and spends more than he should therefore going broke but then doing new things [songs]and then earns again

it is no way of handling your money cause you need to no your limits or so it is with us commoners    yes no where your money goes and you can budget and save even better bugger what the rest do

                              good luck