As a transactional entertainment attorney, it's my job to help construct a deal that will provide an actor with solid up-front compensation, a healthy profit participation, prominent credit, and approval regarding key creative elements of the production. But that is only the beginning. Once my clients begin generating substantial income, I have another job as well: advising them on how to protect their assets and avoid pitfalls that may deplete their wealth. To that end, let's discuss some tips and traps involving actors and their finances.
Trap: The Stereotype of Actors Being Incapable of Dealing With Money
Josh Brolin is known as a fantastic and courageous actor with a diverse, acclaimed, and ever-expanding body of work. But it is less known that he is an extremely successful investor and trader. I asked him for his thoughts on actors and their finances.
"First and foremost, I think the biggest misnomer is that if you are the creative type, you have no business dealing with your own finances," Brolin says. "It's really too bad, these limits we put on ourselves for absolutely no reason. Money is creative: how to keep it, when to try and make it grow, when to spend it, the discipline around it, when to hold on to it, and mostly our adolescence when we're in the presence of it."
He is absolutely correct. Successfully dealing with money is a creative endeavor. Successful actors are resourceful, innovative, diligent, and indefatigable. These are all important and helpful traits to apply to managing one's finances.
Trap: Not Living Within One's Means
There is a story, which I believe in my showbiz-loving heart to be true, involving a priceless bit of advice given by Humphrey Bogart. A young actor who is beginning to have some success runs into his idol at the studio. He says, "Mr. Bogart, you are my hero. I got into show business because of you. Is there any piece of advice you could give to me as an actor beginning to make his way in the industry?" Bogart pauses and then says, "Buy the smaller house."
Bogart was right. In my experience, overextending oneself is the biggest mistake actors make in the early stages of their careers. When just starting out, they will probably not earn enough from performing to get by. Thus, they have to take another job, with flexible hours to allow them to audition. Breaking into acting is usually a pricey proposition. Acting classes, vocal training, dance lessons, headshots, gym memberships, cosmetics, and the hippest couture are not inexpensive. Early on you must strike a balance between investing in your career and not going broke.
Your acting career is not a sprint; it's a marathon. You have to be able to survive economically for a long period so you can still be in the game when your big break comes.
Tip: Be Knowledgeable About Your Finances, but Have Trustworthy Advisers
To be financially secure, you must become financially literate. Don't be afraid to ask questions. Brolin says, "Learn. Ask a ton of questions of someone you trust, until you understand. And when you forget, ask again."
You are the best advocate for your career and your finances and thus must be intimately aware of your economic situation. However, this does not mean do everything yourself. You need to have a good, reliable team of financial professionals. Depending on where you are in your career, this team may include some combination of an agent, a manager, a business manager, a publicist, an accountant, and—my favorite—an entertainment attorney. Each adviser will be able to provide you with advice, but ultimately you are the CEO. You must make decisions and be comfortable with them.
Tip: Buy Assets, Not Liabilities
When your career grows, what do you do with that extra moolah? Do you buy assets or liabilities? Economically speaking, an asset is something that will, hopefully, become more valuable as time goes on and put money in your pocket. Examples of assets include mutual funds, real estate investment trusts, stocks, bonds, and certificates of deposit. A liability is something that generally decreases in value or results in a net loss of wealth, such as an expensive car, a new wardrobe, or a ski trip to Sun Valley.
If an established actor has spent all of his or her hard-earned money on liabilities instead of saving it by purchasing assets, that actor may need to take a job, any job, to pay for that expensive lifestyle. As Benjamin Franklin said, "Necessity never made a good bargain." This is especially true for actors.
Great examples of a saver and a spender are Cary Grant and Marlon Brando. Grant was famously cheap, even after becoming a highly paid movie star. By the time he passed away in 1986, he had amassed an estate worth an estimated $60 million. Brando, on the other hand, was notorious for spending enormous amounts on his lavish lifestyle and acquired tremendous debt. Not coincidentally, Grant could be selective later in his career and make such classics as "That Touch of Mink," "Charade," and "Father Goose," while Brando's prodigious talent was squandered on films such as "The Island of Dr. Moreau" and "Free Money."
Tip: You're Not Only an Actor, You're an Artist
Expanding what you do as an artist expands your potential creatively and monetarily. Drew Barrymore made far more money producing "Charlie's Angels" than starring in it. Actors have had great success in expanding their careers to include producing, writing, directing, and other artistic endeavors. Of course, this entirely depends upon the skills and interests of the actor, but one should be open to exploring outlets beyond acting. If you can make money as a writer, director, and/or producer, this can increase your earning potential geometrically and greatly expand your influence.
Keeping and managing the money you earn can be intimidating and challenging. However, by harnessing the same drive that propels your acting career and applying it to your finances, it can certainly be achieved. Being an artist is fantastic, but being a starving artist is overrated.