Have you ever found that no
matter how much money you earn, you seem to find a way to spend it? We all seem
to have a way of living up to our means, and, for some of us, a way of living
beyond our means. Spending more than we earn — it’s an affliction that we’ve
seen time and time again. And we see this most notably in the celebrities who
manage to make a fortune, and then, somehow, they lose it all. Just take a look
at five-division world champion Floyd “Money” Mayweather Jr.
Mayweather
came from poverty in Michigan to be named the highest-paid
athlete in
the world. He poured blood, sweat and tears into his career as a professional
boxer, working relentlessly to climb to the top. And now, in the
much-anticipated fight against Manny Pacquiao, Mayweather will make a reported
$180 million — it is the richest fight in history.
It
would seem that Mayweather has more money than he would know what to do with,
but he has certainly put that idea to the test in the past. Notorious for his
exorbitant spending
spreesand reckless financial behavior, Mayweather reportedly
spends up to $75 million a year, a habit which has landed him in
some serious financial trouble in recent years, defaulting on loans and
incurring penalties from the IRS for unpaid taxes.
Make
no mistake, Mayweather is an extraordinarily gifted athlete with a ridiculous
work ethic. He earned every single dollar he made. But his money mentality is
earn and spend. Rapper 50 Cent, Mayweather’s former business partner, has
simplified the boxer’s financial strategy: “It’s fight, get the money, spend
the money, fight. Fight, get the money, spend the money, fight.” If he stops
fighting, the money machine stops, the cash flow stops, his income stops — his
financial world comes to a grinding halt.
If
you think Floyd Mayweather may be an extreme example in the case of frivolous
spending, consider the countless other celebrities whose poor financial
decisions have landed them in financial distress. Consider legendary baseball
pitcher Curt Schilling, who poured his savings into a video game startup that
went belly-up, bringing the pro ball player down with it. Or what about Elton
John, whose frivolous spending habits landed him in bankruptcy. And the list
continues, with stars like Marvin Gaye, Willie Nelson, Kim Basinger, Nicholas
Cage, Francis Ford Coppola and Michael Jackson — all of whom have felt the pain
of a earn-and-spend money mentality.
Sound
ridiculous? Sure, it’s difficult for most people to imagine blowing a fortune.
But unfortunately, we can all relate on some level. We work, we get the money,
we spend the money, we work again. It’s the mistake that millions of Americans
make, no matter what income bracket they find themselves in.
As
Tony notes in this video interview with Entrepreneur, it’s
time to face the facts; it’s difficult to earn our
way to wealth. We think that if we work harder, smarter and longer, we’ll
achieve our financial dreams, but a paycheck alone — no matter how immense — is
not the answer. But what you can do is make a simple, yet powerful change in
strategy and embrace an entirely new mindset.
You
have to make the shift from just working for money to a world where your money
works for you. Tapping the power of compound interest, strategic asset
allocation, annuities and municipal bonds, for example, can help you make the game winnable. Because the goal
is to build a money machine that ultimately can take your place, that can make
money while you sleep and never runs dry. When you achieve that, not only will
you have greater financial security, you’ll have financial freedom, and that Is
something you simply cannot put a price on.
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