Author Topic: What advice to give to a13 year old earning 32k a month?  (Read 6778 times)

pudding

  • Bristles
  • ***
  • Posts: 357
What advice to give to a13 year old earning 32k a month?
« on: March 26, 2017, 01:41:48 AM »
Hey thats a bit of a click bait title because I want to share about my granddaughter. She's a 13 year old actress with some good credits under her belt.

She flies to LA on Tuesday to sign up for a lead role in a tv show. She'll get paid 32 thousand bucks a month! 

What advice would you give to one so young earning so much.. not sure what the future brings in tv and movie acting..

MMMaybe

  • Bristles
  • ***
  • Posts: 388
Re: What advice to give to a13 year old earning 32k a month?
« Reply #1 on: March 26, 2017, 01:54:32 AM »
I would give her the same advice I gave to my brother who was working in a field known for high salaries and early burnout/redundancies.

Save/invest as much as possible because you don't know when it will all end. He did follow this advice and is set for life. However, it helped that he saw plenty of examples of colleagues who did the opposite and ended up with very little to show for it. There are plenty of has-been child actors who you could point to, as an example of what not to do!

pudding

  • Bristles
  • ***
  • Posts: 357
Re: What advice to give to a13 year old earning 32k a month?
« Reply #2 on: March 26, 2017, 02:09:36 AM »
I would give her the same advice I gave to my brother who was working in a field known for high salaries and early burnout/redundancies.

Save/invest as much as possible because you don't know when it will all end. He did follow this advice and is set for life. However, it helped that he saw plenty of examples of colleagues who did the opposite and ended up with very little to show for it. There are plenty of has-been child actors who you could point to, as an example of what not to do!

Yep, sounds about right.

Khan

  • Pencil Stache
  • ****
  • Posts: 616
Re: What advice to give to a13 year old earning 32k a month?
« Reply #3 on: March 26, 2017, 02:33:28 AM »
Make sure as much of it is removed from the chance of poor(er) choices as possible. College fund, retirement starter kit/FI starter kit, and minimize the amount that is just thrown to the wind on living ridiculously.

I mean, enjoy some, sure, but a 13 year old and her family blasting 3k/month of unexpected income is a lot more reasonable than 10k/month. Separating out at least 30-50% of it and just straight locking it up(is that what trust funds are for?) I think would be a smart decision.

Congrats to them on the windfall, hope you, and/or they(parents and the grandkid) can find their ways to the smarter decisions there.

former player

  • Walrus Stache
  • *******
  • Posts: 5501
  • Location: Avalon
Re: What advice to give to a13 year old earning 32k a month?
« Reply #4 on: March 26, 2017, 05:29:23 AM »
A 13 year old probably has limited scope for spending that amount of money.  The immediate worry is that the people looking after the money either do a poor job of it or deliberately line their own pockets from it.  The longer term worry is that when the kid is old enough to start spending they are reckless.

Problem 1 needs careful choosing of who has access to the money and the way it is invested.  Might be worth considering a couple of completely separate management/oversight mechanisms to spread the risk of something going wrong.

Problem 2 is a question of temperament and upbringing being able to overcome temptation in a social milieu which is entirely dedicated to providing and giving way to temptation.  If I had the answer to that one I'd be making a fortune advising people and their kids on it.

use2betrix

  • Handlebar Stache
  • *****
  • Posts: 2055
Re: What advice to give to a13 year old earning 32k a month?
« Reply #5 on: March 26, 2017, 05:59:36 AM »
Well, how are your children (their parents) at handling money? If they don't have a good net worth relative to their income over the years I'd be skeptical. If they've been doing great, I'm sure she'll be fine. One of my closest friends is a CFP in LA and has handled several very popular child celebrity investments.

Blindsquirrel

  • Pencil Stache
  • ****
  • Posts: 661
  • Age: 2
  • Location: Flyover country
Re: What advice to give to a13 year old earning 32k a month?
« Reply #6 on: March 26, 2017, 08:14:02 AM »
   Buying a delayed annuity with part of that loot might not be a bad idea, just a thought as it would provide an income at some date far in the future to prevent her from ending up a broke former child star doing reality TV shows about "Where are they now?". :)

ltt

  • Pencil Stache
  • ****
  • Posts: 743
Re: What advice to give to a13 year old earning 32k a month?
« Reply #7 on: March 26, 2017, 08:23:03 AM »
I'd be careful.  Remember the Dixie Chicks at the height of their popularity sat down for an interview with, I believe, 60 Minutes.  And said they didn't have $1 million dollars in the bank--even though they had a few hundred million in record sales.  It had something to do with their contract and not being paid what they were supposed to be, but the record label said otherwise.

Also, and I've read this, I think your granddaughter and guardian/parents, need to be very careful.  I understand that the amount of money being paid can dwindle very quickly with stylists, managers, handlers, etc.  So I think it would be very wise to have someone in a position of trust to manage the money.  Also, someone to keep your granddaughter grounded would be good.  I'd be very concerned with the availability of drugs.  Nothing lasts forever.

KBecks

  • Handlebar Stache
  • *****
  • Posts: 2332
Re: What advice to give to a13 year old earning 32k a month?
« Reply #8 on: March 26, 2017, 09:05:56 AM »
Congratulations to your granddaughter.   I would suggest telling her and her parents all the stories of people who had either short and stunted / temporary careers and/or wasted their good fortune.  Make sure she and her parents understand the importance of building a large nest egg that she can fall back on.  I would also suggest that they carefully select a conservative tax advisor and laywer to help them.  Lastly, tell her to learn as much as possible, be kind to everyone, choose her mentors carefully and have fun.

Again congrats to her on this special opportunity!

marty998

  • Walrus Stache
  • *******
  • Posts: 6947
  • Location: Sydney, Oz
Re: What advice to give to a13 year old earning 32k a month?
« Reply #9 on: March 26, 2017, 02:38:39 PM »
- stay away from drugs... cocaine seems to be the poison of choice
- be watchful of directors and producers who ask for 'favours' from little girls in exchange for acting roles. Whole industry seems to be rife with those sort of problems...


pbkmaine

  • Walrus Stache
  • *******
  • Posts: 8328
  • Age: 63
  • Location: The Villages, Florida
Re: What advice to give to a13 year old earning 32k a month?
« Reply #10 on: March 26, 2017, 02:52:15 PM »
If the parents are not good with money, see if there's a way to sock the earnings away in a trust or an annuity.

Chrissy

  • Handlebar Stache
  • *****
  • Posts: 1084
  • Age: 43
  • Location: Chicago
Re: What advice to give to a13 year old earning 32k a month?
« Reply #11 on: March 26, 2017, 08:14:02 PM »
CONGRATULATIONS!  What an amazing opportunity for your granddaughter!

How is the family going to make a living while she's working?  Or, is SHE their living?  It makes a difference in how to advise her.

There will be far less money than anyone would think.  First, she won't work every month.  So, it's $32k/mo, but only for 8mo/yr = $256k. And then...

35% taxes
15% to Coogan Account (required by law)
10% to her agent
10% manager?
10% biz expenses
5% lawyer?

Leaves her about $40k/yr.  She should max her SAG-AFTRA 401k and invest in a total market fund.  (Now she's down to $20k/yr!)  The Coogan Account is essentially her college fund.  She can't contribute to a ROTH.  She'll make too much.

The life of any series is between 1-8 years.  She may or may not have a career when it's over, and should plan for the worst-case scenario.  She must educate herself, take an interest in, and be thoroughly involved with her finances, just as though she were an adult.  Her parents should assist, and indeed INSIST, that she be informed, and have a voice in the decisions.  Nothing should be done without her knowledge.

Now, she might have additional work outside or related to the series... but this is the advice I'd give to start.

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 6747
  • Location: BC
Re: What advice to give to a13 year old earning 32k a month?
« Reply #12 on: March 26, 2017, 08:25:08 PM »

Also, and I've read this, I think your granddaughter and guardian/parents, need to be very careful.  I understand that the amount of money being paid can dwindle very quickly with stylists, managers, handlers, etc.  So I think it would be very wise to have someone in a position of trust to manage the money.  Also, someone to keep your granddaughter grounded would be good.  I'd be very concerned with the availability of drugs.  Nothing lasts forever.

This!   Also, if she needs to pay for flights and living accomodations for her and her support persons, (family), that money starts to disappear quickly without careful management and a budget.

Good luck to her!

BlueHouse

  • Magnum Stache
  • ******
  • Posts: 3406
  • Location: WDC
Re: What advice to give to a13 year old earning 32k a month?
« Reply #13 on: March 26, 2017, 08:36:47 PM »
Wow, that's great news for your granddaughter!  I would give the same advice that I give to myself -- don't trust one person to handle all of your finances.  Be open with your income, track expenses, and manage investments wisely.  And for some reason, I trust a bunch of internet strangers to give me better advice (for free) than I would a single person who was getting some profit out of managing my money. 

MrsPete

  • Magnum Stache
  • ******
  • Posts: 3514
Re: What advice to give to a13 year old earning 32k a month?
« Reply #14 on: March 27, 2017, 12:29:48 PM »
- stay away from drugs... cocaine seems to be the poison of choice
- be watchful of directors and producers who ask for 'favours' from little girls in exchange for acting roles. Whole industry seems to be rife with those sort of problems...
Best advice on this thread.  She can always make more money, but she only has one life. 

plainjane

  • Handlebar Stache
  • *****
  • Posts: 1651
Re: What advice to give to a13 year old earning 32k a month?
« Reply #15 on: March 27, 2017, 01:44:05 PM »
I'd get them to identify a couple of different child actors/singers, and map out what they did right & what they did wrong, common themes.  And then what the more "successful" ones have said about what they did right and what they wish they hadn't done.  I wouldn't just do the cautionary stories.

My short list would include Anna Paquin, Wil Wheaton (for a particular type of geek), Mayim Bialik, Drew Barrymore (and greatly shows my age).  Maybe add Ron Howard to the list - I was shocked to discover he was a child star.

iwasjustwondering

  • Bristles
  • ***
  • Posts: 436
Re: What advice to give to a13 year old earning 32k a month?
« Reply #16 on: March 27, 2017, 01:50:53 PM »
- stay away from drugs... cocaine seems to be the poison of choice
- be watchful of directors and producers who ask for 'favours' from little girls in exchange for acting roles. Whole industry seems to be rife with those sort of problems...
Best advice on this thread.  She can always make more money, but she only has one life.

Another ITA.  Forget the money -- I would tell her to focus on her education.  Read. Keep a cellphone on her, with the phone number of someone who can get her out of a bad situation quickly.  Quit the acting gig as soon as possible and get back to school.

marty998

  • Walrus Stache
  • *******
  • Posts: 6947
  • Location: Sydney, Oz
Re: What advice to give to a13 year old earning 32k a month?
« Reply #17 on: March 27, 2017, 02:23:22 PM »
CONGRATULATIONS!  What an amazing opportunity for your granddaughter!

How is the family going to make a living while she's working?  Or, is SHE their living?  It makes a difference in how to advise her.

There will be far less money than anyone would think.  First, she won't work every month.  So, it's $32k/mo, but only for 8mo/yr = $256k. And then...

35% taxes
15% to Coogan Account (required by law)
10% to her agent
10% manager?
10% biz expenses
5% lawyer?


Leaves her about $40k/yr.  She should max her SAG-AFTRA 401k and invest in a total market fund.  (Now she's down to $20k/yr!)  The Coogan Account is essentially her college fund.  She can't contribute to a ROTH.  She'll make too much.

The life of any series is between 1-8 years.  She may or may not have a career when it's over, and should plan for the worst-case scenario.  She must educate herself, take an interest in, and be thoroughly involved with her finances, just as though she were an adult.  Her parents should assist, and indeed INSIST, that she be informed, and have a voice in the decisions.  Nothing should be done without her knowledge.

Now, she might have additional work outside or related to the series... but this is the advice I'd give to start.


Would the bolded bits count as work related / business expenses and therefore be deducted before working out taxable income?

Chrissy

  • Handlebar Stache
  • *****
  • Posts: 1084
  • Age: 43
  • Location: Chicago
Re: What advice to give to a13 year old earning 32k a month?
« Reply #18 on: March 27, 2017, 04:50:19 PM »
CONGRATULATIONS!  What an amazing opportunity for your granddaughter!

How is the family going to make a living while she's working?  Or, is SHE their living?  It makes a difference in how to advise her.

There will be far less money than anyone would think.  First, she won't work every month.  So, it's $32k/mo, but only for 8mo/yr = $256k. And then...

35% taxes
15% to Coogan Account (required by law)
10% to her agent
10% manager?
10% biz expenses
5% lawyer?


Leaves her about $40k/yr.  She should max her SAG-AFTRA 401k and invest in a total market fund.  (Now she's down to $20k/yr!)  The Coogan Account is essentially her college fund.  She can't contribute to a ROTH.  She'll make too much.

The life of any series is between 1-8 years.  She may or may not have a career when it's over, and should plan for the worst-case scenario.  She must educate herself, take an interest in, and be thoroughly involved with her finances, just as though she were an adult.  Her parents should assist, and indeed INSIST, that she be informed, and have a voice in the decisions.  Nothing should be done without her knowledge.

Now, she might have additional work outside or related to the series... but this is the advice I'd give to start.


Would the bolded bits count as work related / business expenses and therefore be deducted before working out taxable income?

Only if the child is incorporated.

Bicycle_B

  • Handlebar Stache
  • *****
  • Posts: 1818
  • Mustachian-ish in Live Music Capital of the World
Re: What advice to give to a13 year old earning 32k a month?
« Reply #19 on: March 27, 2017, 05:15:16 PM »
Great advice on this thread!

More ideas:
1) Share or have her identify some example of thrifty actresses to use as role models (Google is full of this topic, replete with glamorous photos)
2) Find a polite phrase for FU money and share with her that having it puts her in charge of her career future
3) For math practice, share a link to MMM's 4% article.
4) Challenge her to calculate her take home pay from the first season, multiply by 4%, and calculate the income she can rely on based on 4%.
5) Challenge her to calculate a living budget for when she's 18, including education, and compare it to her "reliable income" from item 4.  Compare it with her to your budget, and/or some MMM case studies, and/or her parents' budget if she can learn that.
6) Suggest that, for practice, she should consider limiting her current spending to the discretionary portion of her budget - the amount, if any, that isn't needed for living expenses


Invite her parents to view or calculate all of these too?

surfhb

  • Guest
Re: What advice to give to a13 year old earning 32k a month?
« Reply #20 on: March 27, 2017, 05:52:47 PM »
- stay away from drugs... cocaine seems to be the poison of choice
- be watchful of directors and producers who ask for 'favours' from little girls in exchange for acting roles. Whole industry seems to be rife with those sort of problems...

I've been a director and post producer in Los Angeles for the past 25 years and have absolutely no idea what you are referring to? 

I mean, regardless of what the movies tell you, we're not that sleazy.    It's a pretty professional environment out here.....especially on the level this 13 year old is at.   

Never thought I'd be defending the Hollywood ilm business ;)


Sent from my iPhone using Tapatalk

pudding

  • Bristles
  • ***
  • Posts: 357
Re: What advice to give to a13 year old earning 32k a month?
« Reply #21 on: March 28, 2017, 01:14:30 AM »
- stay away from drugs... cocaine seems to be the poison of choice
- be watchful of directors and producers who ask for 'favours' from little girls in exchange for acting roles. Whole industry seems to be rife with those sort of problems...

I've been a director and post producer in Los Angeles for the past 25 years and have absolutely no idea what you are referring to? 

I mean, regardless of what the movies tell you, we're not that sleazy.    It's a pretty professional environment out here.....especially on the level this 13 year old is at.   

Never thought I'd be defending the Hollywood ilm business ;)


Sent from my iPhone using Tapatalk

Agreed.. she has a top agent and a chaperone and personal tutor, she's signing up in LA tomorrow but the show is shooting in Toronto where she lives. 

Also although she's still just a kid its something that has been built on over about 4 years and not like she just had some head shots taken and then got this good gig. She did a movie, some ads, tv shows,  kid clothes modelling etc..  sometimes you're just young and you kind of know what you want to do.



« Last Edit: March 28, 2017, 01:18:00 AM by pudding »

2Cent

  • Pencil Stache
  • ****
  • Posts: 678
Re: What advice to give to a13 year old earning 32k a month?
« Reply #22 on: March 28, 2017, 04:33:04 AM »
The main worry for me would be stress of having to perform. I would advice the parents to not pile on with advice and expectations, but leave that to the professionals. Instead make sure she also has fun acting and stays grounded. Build a network of positive acting or modeling friends she can look up to and be inspired by.

I see many parents of kids who do sports at a high level. The ones who go far are the ones who enjoy what they do and are internally motivated. The ones who are constantly pressured by everyone often burn out.

For the money, I would say be careful she doesn't get accustomed to a lavish lifestyle. Maybe divide the money into spending, saving and investing in acting. Spending should be there because she should keep up with peers there at least a little and not be outcast. Saving to have something to show if this show is all there is in her career. And investing in acting lessons and such based on how much desire and opportunity there is for an adult acting career. That is an easy system that she will understand.

BlueHouse

  • Magnum Stache
  • ******
  • Posts: 3406
  • Location: WDC
Re: What advice to give to a13 year old earning 32k a month?
« Reply #23 on: March 28, 2017, 11:43:19 AM »
The main worry for me would be stress of having to perform. I would advice the parents to not pile on with advice and expectations, but leave that to the professionals. Instead make sure she also has fun acting and stays grounded. Build a network of positive acting or modeling friends she can look up to and be inspired by.

I see many parents of kids who do sports at a high level. The ones who go far are the ones who enjoy what they do and are internally motivated. The ones who are constantly pressured by everyone often burn out.

For the money, I would say be careful she doesn't get accustomed to a lavish lifestyle. Maybe divide the money into spending, saving and investing in acting. Spending should be there because she should keep up with peers there at least a little and not be outcast. Saving to have something to show if this show is all there is in her career. And investing in acting lessons and such based on how much desire and opportunity there is for an adult acting career. That is an easy system that she will understand.

I'd add on to this by finding some written articles about rejection -- how it's not always about being tall enough, thin enough, good enough, strong enough, pretty enough, blue-eyed enough, etc.  Sometimes they're just looking for something else, and if you're not that something, then it's nothing negative about you. 

RobFIRE

  • Bristles
  • ***
  • Posts: 277
  • Age: 36
  • Location: UK
  • Projected FIRE May 2020
Re: What advice to give to a13 year old earning 32k a month?
« Reply #24 on: March 29, 2017, 03:33:54 AM »
I'm assuming the granddaughter is a sensible kid with sensible parents, in which case I expect she'll be fine, and what a great opportunity to have.

As a minimum, if the TV show does a season and nothing much works out after that, she'll be able to get through college without having to work (and instead being able to choose further valuable work/experiences rather than simply paid work), or if her acting continues going well she'll only have to worry about other people trying to spend her money!

I suppose what will be useful for her is some role models of actors/actresses who also started young and took a responsible attitude to managing themselves (not just their money, but their time, public profile etc.) who she can contact for some informal mentoring. Perhaps her agent/manager can arrange a bit of that.