Nobody is Too Rich to Go Broke

Paul R. Ruedi, CFP®

Floyd Mayweather is one of the greatest boxers of all time. But he was also a genius when it came to making money from his fights. He mastered the business of promoting his own fights which yielded him significantly more money than a typical fighter of his caliber. He made hundreds of millions to fight, not tens of millions.

Floyd is estimated to have made over $1 billion total over the course of his career. A seemingly endless supply of money. But “Money” Mayweather has been making headlines lately for another money reason: he’s seemingly in financial trouble. 

Floyd is known for his lavish lifestyle. Cars, jets, mansions, jewelry, gambling, his entourage, and everything else equate to millions in spending each month. Though I’d like to suggest I would never spend such a reckless amount, I think it would actually be easy to do. If I was making $200 million each time I fought, I don’t think I’d worry about spending $40 million per year. 

There are several lessons here. There is no amount of money that can guarantee a person will remain wealthy. Wealth is a function of the assets and income you have relative to your spending. Spending can rise enough to wipe out any fortune. The same high income that builds a fortune also tempts the high spending that destroys it.

Some people are very good at making money but are not good at spending it responsibly. This works fine when they are working and producing income to keep up with their lifestyle. But if they run into a situation where the income dries up, it is just a matter of time before they run into trouble. 

At age 49 Floyd Mayweather is not happily enjoying retirement sitting on an endless supply of money; he is actually trying to book fights in search of another payday. If he does, he will likely make millions and get to kick the can of financial responsibility down the road for a little while longer. But most people who retire do not have that option. They have one chance to get it right.

No matter what amount of money you have, if you don’t have a reasonable financial plan to determine how much you can spend, you run the risk of running out of money. If you aren’t sure if you can keep up your level of spending when you are no longer working and producing income, you may want to talk to a retirement planner.

Paul R. Ruedi is a Certified Financial Planner™ professional with Ruedi Wealth Management in Champaign, Illinois.