Hard Lessons of Financial Literacy

The so-named “King of the One Liners”, Henny Youngman used to joke that his accountant told him that between his earnings and investments, he had enough money to live on comfortably for the rest of his life.

That was provided he died by 5 o’clock that afternoon.

Ba-Dum-Pa.

After covering the accounting profession for nearly 13 years, I’ve read (and written) more than my share of stories about celebrities who, despite making dizzying fortunes, wind up either filing Chapter 11 or getting into deep you-know-what with the IRS - ultimately receiving a tax bill that often ran into seven figures. 

Latest case in point: What would you think about someone who worked in show business for 80 years and when he died, his estate was valued at roughly $18,000? And no, that’s not a misprint. But that’s exactly what Mickey Rooney left to his heirs upon his passing last week at the age of 93.

This from someone who  went on to star in some 13 Andy Hardy movies for MGM, and was making $150,000 per year in 1939 at the age of 19! Index that for inflation and you’d probably equal the GDP of some third world nation.

Rooney claimed to be the victim of elder abuse and financial mismanagement during the latter part of his career and lived with his stepson until his death.

What about a sports figure who between the years 1985 and 2000 made some $425 million in career earnings? Again that’s not a misprint. His monthly cell phone bill alone (that was before smartphones) was $100,000.  Shortly thereafter, he listed debts of $10 million and virtually no assets.

Ladies and gentleman I regale you with the financial wherewithal of former world heavyweight champion Mike Tyson.

Similar horror stories abound with former professional sports and film notables getting their planes, cars and boats repossessed by the banks (including a humiliating episode when a soon-to-be-bankrupt basketball star was in the middle of throwing a party on his yacht).

I was reminded of these financial nightmares after listening to a radio program where the host, a noted investment advisor, asked the audience what they thought was a better way to teach children about handling money – paying them for doing household chores, or enroll them in a financial literacy class. Surprisingly, the former answer came out on top.

I know how I would have answered. I was given a small stipend by my parents for required weekly household jobs (with the emphasis on “small) but it was not until I enrolled in an investment class in college that I actually had a clue about handling money.

Now, that I know how to handle it, I have to work on actually getting some.

Now I realize not everyone’s kids will grow to be 6-foot-10 with a cottony soft jump shot, or become a warehouse-sized offensive tackle, but it’s never too early to teach them about money and investing. There are plenty programs available and many of them are free or carry a minimal charge.

Your children may not make $400 million during their careers and wind up on the cover of Sports Illustrated or Variety, but who knows, they may actually have enough to pay back those hundreds of times they “just needed $5 or $10” to go out with friends.