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Mayweather and money
Legal Disclosure: Tony Robbins is the Chief of Investor Psychology at Creative Planning, Inc., an SEC Registered Investment Advisor (RIA) with wealth managers serving all 50 states. Mr. Robbins receives compensation for serving in this capacity based on increased business derived by Creative Planning from his services. Accordingly, Mr. Robbins has a financial incentive to refer investors to Creative Planning.
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 sprees and 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 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.