Are Celebrities Really as Wealthy as We Think?

[TheRealGossipGirl]

Since the devastating fires broke out in LA, with many celebrities losing their homes along with their properties, I've come to realise (or perhaps it was already obvious) that some of these stars aren’t as wealthy as we often think, or as Google might suggest, unless you're someone like Kevin Costner, Brad Pitt, or Taylor Swift.

Take Mandy Moore, for example. Last week, she faced backlash after asking her followers to donate to a GoFundMe page for her brother-in-law, whose family had lost their home in the fires. People criticised her for asking for help, telling her she should be financially supporting him herself because, after all, she's got money. Mandy responded by pointing out that, while she’s helping, people shouldn't assume that just because they see celebrities’ "estimated net worths" online, they can afford to give. She also mentioned that she herself had lost her home or at least part of it in the fire.

At the same time, there's been a push to stream Heidi Montag’s music so she can earn royalties, and now people are doing the same for Leighton Meester. While Leighton hasn’t said anything, Heidi and Spencer are documenting their loss quite publicly on social media.

It seems to me that the celebrity community is caught between a rock and a hard place — they're either criticised for asking for help, or expected to just go out and buy another house because of their perceived wealth. The real discussion here is that many of these celebrities aren’t as rich as they’re made out to be. Sure, they may own a $6 million home, but I think a lot of that is invested in their living space. After all, they live in their homes day in, day out, and many of their other luxuries are either freebies or sponsored items.

Am I off the mark with this? What’s everyone’s take on celebrities asking for support through platforms like GoFundMe?

Surely they have insurance. I would not give them money but rather one of the other many charities that support people living in abject poverty who have children starving to death in Sudan.

Spencer and Heidi posted yesterday that their insurance wouldn’t insure them.

Many insurance companies have pulled out of LA in the last year or so.

A lot of American insurers in the past couple of years have dropped fire from their coverage or have pulled out of California altogether because of the risk of fire. https://www.cbsnews.com/amp/news/fires-california-palisades-fire-homeowners-insurance-state-farm-fair-losses/

It's fine to go on GoFundMe.

You can give or not give, as you please.

I am sure I heard on the news last week that many people affected by the fires hadn't got home insurance because having paid off their mortgage, it was no longer a legal requirement.

All of the celebritys you mentioned haven't had stable or "big" work in years so absolutely not worth loads

Some celebs will have all their wealth tied up in investment accounts & the houses themselves so technically have money but not available

On a whole the wealth in that area could easily afford them to rebuild if they all pitched in but unlikely to the same standard which is what I think the real "loss" is (obviously not including personal belongings) this is definitely not a 'standard' tragedy which is what's so crazy about it for a natural disaster

There seems to be a big misunderstanding regarding insurance - a lot of insurance companies have pulled out in California in the last few years and wont insure. And those that haven't will do their best to try to wangle out of paying. And some will go bankrupt.

Same in Australia but alot of people also simply don't buy the right insurance either actively avoiding flood or fire depending on the area & the likelihood of it happening

It's a gamble that can save thousands while you convince yourself the cost will come down/the risks are minimal

Not quite the same at all, but I remember reading an article last year about Oasis's original drummer and how he isn't mega rich like the other members are and lives in a modest 3 bed semi house etc. I always think of anyone like that as living the life of luxury and clearly it's the same for these celebrities or past media stars who now may not be a wealthy as we think they should be or simply not taken out insurance or couldn't get anyone to insure them. Many end up losing their fortune too over the years as the work dries up.

Agent's fees. High consumption costs to look famous. High tax rates. Poor investment decisions through not having the time/ expertise to look. Dodgy advisers. The slices that cut into performing artists are wide and deep.

In my experience, those with most wealth either have created their own brand products (Gwyneth Paltrow/ George Clooney) or have a passive income (JKR royalties from earlier books, Beckham licences). Rock stars perhaps with the long tail of passive income which can be capitalised through a sale of future rights (Bowie/ Robbie Williams) seem to have the best efficacy. There is one who takes £15m - £20m dividends a year from branded products they created on the back of their original skill.

Years ago I used to read a property column by Fiona Fullerton (actor). She said she got into property because early in her career she was advised to invest her sizeable but very intermittent pay cheques.

Without taking that good, early advice it would have been very easy to live a 'boom and bust' lifestyle.

I suspect an awful lot of celebrities do this. They live high on the hog in the boom times but aren't left with a lot to cover the lean times.

I was surprised by the people that had homes in these areas, just the day to day running costs must be astronomical.

As for insurance, not only have a lot been uninsurable, those that are insured are usually grossly underinsured. The cost of materials etc has gone up steeply since COVID.

Those that have properties are now going to struggle to sell them even when they are rebuilt.

I feel sorry for them as individuals, but as a collective they are still in a much better situation than much of the world.

There's an interesting column in the Times (think it's in the Saturday Money section) where they interview a celebrity (often a "has-been") about money-related matters. It's surprisingly interesting and a lot of these people made unwise decisions when they were (say) in a boy band that later came home to roost!

Dh is a tradesman in an area with lots of famous people of varying wealth and fame. Some really do not have a great deal, you feel like they really should as you see them on tv or songs on the radio. But they are struggling with bills like a lot of us. It really seems to depend what they did with that first cash injection and who they had around them at the time.

Hmm it’s still out of the league of ordinary people like me earning an average wage (£37k pa in the UK.)

You're right, there's a huge difference between the staggering wealth of some celebrities, and the more precarious wealth of others.

And if most of their wealth went into buying a home, due to the super high LA prices, then they may have lost nearly everything in the fires.

It must be hard to be prudent with money when there is a culture of conspicuous consumption and a pressure to live a life that is what people expect a "celebrity" life to look like

The LA insurance thing happens all round the world, the British version is flooding, but you don't see people internationally being concerned about that. But no, a lot of celebrities are fairly poor aside from their homes.

I earn a lot less than that.

I can still see how someone famous / was famous has managed to keep hold of a fancy house even though their income has dropped off, and is now in the situation of their house and all their belongings having been destroyed in a fire, with no insurance because they couldn't get any, would be pretty financially fucked.

I have been saying to DH, it's not just the houses in this case. It's the contents of the houses. See Mel Gibson detailing what all he has lost. Mel Gibson devastated at loss of LA home in fires, before remembering one key fact - AS USA Irreplaceable stuff like first edition books dating back to the 15th century. He did say all his kids are fine so he was happy and thankful. But, as I said to DH, curators and dealers of all sorts all around the world will be crying into their catalogues at the lists of what has been destroyed. The value of the houses themselves will likely be dwarfed by the asset losses this time.

I think the individuals you've mentioned may not have as much money as people think - but they certainly have a lot more than the average person who lost their home in the fires. So I think setting up go fund me type pleas is awful and takes money and sympathy away from people who need it more

@TheSandgroper That's a very good point you make. The unique art and cultural works lost will be immense. Some might have been saved - there is normally a plan to safely grab the most valuable items that can be carried. But a lot will have been lost.

The insurance situation has been exacerbated by a recent California law (now repealed) which required insurance companies to calculate premiums on the assumption that climate change wasn't a thing and wildfires weren't getting more dangerous. Unsurprisingly a lot of them bailed.

Imagine you're a baker and someone wants to book you to make a big cake for their 50th birthday in 18 months time. They say "I'll pay you a fair rate: the cost of ingredients in the supermarket and the cost of electricity to run your oven plus minimum wage for your time."

But they've calculated the cost of ingredients and the cost of running an oven for an hour based on the average cost over the last 10 years. No amount of argument that there is such a thing as inflation, that 18 months is a long time, and (say) a widely reported bird flu epidemic is probably going to play havoc with the cost of eggs will persuade them to pay more. And they've based the cost of running an oven on gas when your oven is electric. You'd go and sell your cakes to someone else wouldn't you?

There is an insurer of last resort so in theory it should be possible for all Californians to buy fire insurance: at a price, which won't be cheap.

Usually their lifestyle requires an awful lot of money to keep it going. The houses, cars, clothes, etc.

I’m a huge fan of that column. The biggest things I’ve noticed from those interviews that determines wealth are being informally financially educated when they’re growing up, having a passive income, and the people they surround themselves with. Buying a property (or several) many years ago also seems to be a major factor.

In the next ten years, I think things are going to get worse, financially, for celebrities (and everyone else) with the growing use of AI.