Financial Lessons From Michael Jackson

Financial Legacy There's much talk about the musical genius of the late Michael Jackson. But in my column today I wanted to discuss the lesson we can learn from how Jackson handled his money. At one point the pop icon was spending about $20 to $30 million above his earnings each year, according to one expert. And he came very close to losing his Neverland ranch to foreclosure. Read about how a sense of entitlement can cost a fortune in Jackson's Money Woes Can Teach Us About the Dangers of Entitlement. Jackson's financial downfall is surprising considering his assets, which include the partial rights to many of the greatest hits by The Beatles and other great artists. But Jackson apparently borrowed heavily against his catalog of songs. He also had some hefty legal bills. Read Legally, Jacksons Face Long & Winding Road (June 30) by Paul Fahri. The Associated Press reported Jackson's net worth at $236.6 million. But according to the news service, "Documents do not show how much money he had coming in that year or how much he was spending, which makes it hard to estimate just how cash-poor he was." Here are some of the latest reports about Jackson's finances: * Battle to control Jackson's fortune begins (June 30) * AP Exclusive: Jackson said net worth $236M in 2007 (June 30) * Jackson's will cuts out ex-wife Debbie Rowe (July 1) What's In the Will? For a time it was unclear whether or not Jackson had left a will. However a will has surfaced. Jackson's mother, Katherine, was named guardian of his children and the will puts his assets in a trust. Here are a few articles that emphasize the necessity of a will: * Property Rights and Responsibilities After a Loved One Dies (May 30) by Benny L. Kass " Parents Can Help Ease the Burden (July 19, 2008) by Mara Lee " A Worthy Read to Get Serious About Estate Planning (Aug. 28, 2008) By Ilyce R. Glink with Samuel J. Tamkin I Need Your Money, Honey Cash strapped families are looking to an untapped resource for help: their own children. Last week's Color of Money Question stemmed from a Kiplinger Q&A in which a reader asked if she and her husband should require their teenage children, who have part-time jobs, to contribute to the family pot. Here are your comments: "Absolutely," said Regina Duell of Lancaster, Pa. "Plus, children will learn to appreciate money, work, what it costs to have the life you want and some of the things their parents do to provide that life." As a nation, she says we're depriving our children "of a financial education." Darlene Register wrote: "We were taught to take care of ourselves very early on. If you had a job or paper route you helped buy your clothes, shoes, supplies, etc." The Fairfax, Va., resident says her parents were savers. "That is why in the hard times, of which there were many, we survived." "The operative word is 'family,' which implies cooperative unit," said Karen Goldsmith-Pestana of Windsor, Conn. "Welcome to the real world, kiddo." Ted Moore of Centreville, Va. wrote, "First, the family should cut all unnecessary expenses. Then if they are still having trouble making ends meet, ask the kids to pitch in. A positive side affect is a stronger family." "It seems like such a burden to ask a child of 16 for rent money if it's not absolutely necessary," wrote Katie Kimani of Brockton, Mass. She said her parents "got by" so she used her earnings for car insurance, school supplies, etc. "I didn't realize until now what a gift that was to be able to use the money as I saw fit." Severn, Md., resident Sheri Wallace wrote: "Having teens contribute to the family budget is teaching them what Uncle Sam does. I would rather teens learn about a budget that includes investing and saving by using their income to provide for a portion of their own personal needs." Sara Solnick of South Burlington, Vt., said that she provides the basics, but extras can be cut. "For example, I pay for my kids' movie tickets, but if our financial situation were to change, those would be things I would cut, and they'd have to use their own money." Rebecca Goldie in Oxford, Pa., wrote, "As long as a parent claims a tax credit for a child, that child is still a dependent and the basic needs are still the parent's responsibility. The key is to give your kids a taste of responsibility - not to overburden them with your debts and obligations." "Years ago when I was a family counselor, I encouraged parents to have their children give them a percentage of each pay," wrote Kay A. Averette of Canton, Ohio. Kids need to know about rent she says. "If the parents still resisted, I told them to take the money and give it back upon graduation. Anyone remember that scene in "Serpico?" "Unless a family is in a desperate situation, I think that children should learn to manage their own money, with guidance from their parents, but not hand it over," said Ellen Mahoney of Jacksonville, Fla. Gordon Berry in Sioux City, Iowa wrote: "I don't think there's one good answer for all, but would suggest if the family is a close and loving one, father and mother can put all their cards (bills) on the table, so the youth can see where he or she is actually making a difference. It would result in growth for everybody." Nancy Zipkin-Dunn of Orinda, Calif., said, "We were lucky enough to be able to pay for our children's college education in its entirety, but part of the reason we were willing to do so was that they did their part as well -- both of them have bought clothes by-the-pound at Goodwill stores or other second-hand resources rather than counting on the Bank of Mom and Dad to pay for everything." Eileen Gonyeau of St. Paul, Minn., said that her grandmother worked in a wallpaper factory at the age of 13. "On Saturday she got her pay envelope and took it home to her dad who gave her back a dime, which bought her a bit of face powder or some other treat. She was proud to contribute to her family." It was the same for Gonyeau's mother who grew up during the depression. "I see nothing wrong with asking younger kids to pitch in to pay for groceries or other necessities when a family is struggling. Kids gain a sense of self worth from knowing that they can help solve problems." The topic of kids and money always sparks commentary and questions. Read Crib? Check. Toys? Check. Don't Forget a Budget, A Will and Insurance. (June 28) by Erin Burt. She names the four financial items that are a must for every new parent. Charity Brown contributed to this e-letter. You are welcome to e-mail comments and questions to singletarym@washpost.com. Please include your name and hometown; your comments may be used in a future column or newsletter unless otherwise requested. -Michelle Singletary

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