Is Your Financial Life a Thriller?

June 13, 2014

I have heard a lot of people say jokingly that they wish they had the financial resources of a random famous person. Take Michael Jackson. Houses, cars, amusement parks in his backyard, animals galore…he seemingly had it all from a financial wherewithal standpoint.

Yet, Michael Jackson couldn’t get an iPhone in his own name without a $,1500 deposit according to his security guards. That’s right! One of his security guards claims that he had to put iPhones in his name because one of the most famous and high earning people in the history of our country had lousy credit and was deemed too much of a risk by AT&T.

This quote from the article makes me cringe: “The book details how poorly Jackson’s financial situation was handled — at one point, Whitfield says he overheard Jackson say he had no idea where his money was or how much he had — and how both guards weren’t paid for months on end.” Let me repeat one line and add some emphasis where I cringed. “He had NO IDEA where his money was or HOW MUCH he had!”

My first thought was that this is impossible. But then I remember that I’ve worked with famous people before and found that they too were out of the loop with their financial lives. They hired agents, business managers and personal assistants to handle everything and didn’t want to know the details. I can somewhat understand that, but there’s a difference between not knowing the details and not knowing the big picture.

That is where a lot of high net worth people make mistakes. They hire people to do a job for them, but then they don’t oversee the work to ensure that they are not being scammed, robbed or just flat out making bad decisions that could lead to financial ruin. And this isn’t unique to high net worth households!

I meet with a lot of employees of large companies and talk about their financial lives and the vast majority of them have no idea where their money is, how much they have and where it goes on a monthly basis. These are some of the most fundamental elements in our financial lives, yet fewer people than you can imagine have these fundamental building blocks in place. If you’d like to get some basic starting points for your financial life, there are a few things you can do:

Know your basic budget and net worth and update this information at least annually. By knowing where your money goes, you’ll be able to re-direct it to purposes that help move your financial life forward. By knowing your net worth, you’ll be able to track it over time and see the progress you’re making and if there is any kind of suspicious activity going on in your financial life, either through identity theft or an advisor not having your best interests at heart.
Know your credit score! That way, you will know if you’re likely to get approved when you’re ready for your next smartphone. Two ways that I’ve found to track my credit score at no cos are at Credit Karma and Credit Sesame. These are great ways to stay in touch with what is going on in your credit life.
Ordering your credit report from each credit bureau will let you see if there are things on there that could be harming your credit score. If there are discrepancies on your credit report, you can correct them and perhaps increase your credit score along the way.

There are a few financial “to do” items that everyone should do on a frequent basis, and if you do them, there is a 0% likelihood that your financial life gets worse as a result. The more likely scenario is that you build these basics into your life, your financial security becomes a priority, and these building blocks are a great place to start. And, if you do these things, you’ll know more about your financial life than Michael Jackson allegedly did about his.