4 Money Lessons to Avoid Losing $100 Million

These four money lessons are true for everyone from millionaires to those just dreaming about the millionaire-lifestyle

NBA All-Star Antoine Walker recently appeared on CNBC to talk about how he lost over $100 million and the money lessons he learned. The interview was fairly short but brought out a few money rules that everyone can follow.

Over his 12-year career, Walker earned more than $108 million playing basketball but lost it all within two years of retiring. From a mega-lifestyle to gambling losses and bad real estate investments, he filed bankruptcy in 2010 with $12 million in debt.

He now works for Morgan Stanley helping to educate college and professional athletes about money.

Money Lessons from a Millionaire

Antoine doesn’t go into much detail in the interview on how he lost his millions or what he tells other athletes to protect their money. The rags-to-riches and back to rags story is a familiar one though and the same three money lessons usually end up coming into play.

The 6’9” power forward says you have, “Got to have No in your vocabulary,” when it comes to spending money on yourself and others. His attempt to keep up with spending by other players wasted tens of millions on cars, clothes and the lifestyle.

The money lesson is a hard one for everyone, not just people that come into a lot of money. One of the biggest money lessons I learned in the Marine Corps was that it doesn’t matter how much you make, you’ll never have enough if don’t set limits and make saving a priority. I’ve seen people dodging poverty save huge amounts by retirement because they put at least a little money away each month.

  • Don’t try to keep up with the ‘Joneses’. Buy the things that make you happy and don’t over-spend on a lavish lifestyle that isn’t important to you.
  • Make saving and meeting your future goals a priority. It’s important to be happy now but don’t forget that someday you’ll need to depend on savings for living expenses.

money lessons millionaireWhile he doesn’t say anything about his real estate losses, we all know what happened. It’s the same thing that happens in stocks and caused the average investor to see annualized returns of just 2.6% over the decade to 2013, despite the fact that the stock market averaged over 7% on an annualized basis.

Mr. Walker probably bought into the fever that was real estate investing. He panicked when the market crashed and had to sell investments to meet spending needs.

There’s really two investing lessons here, both of which we talk about on our sister site My Stock Market Basics about how to start investing. Your investments need to be in a mix of asset classes from stocks to bonds, real estate and alternative assets. If one asset crashes, it won’t take your entire portfolio with it and you won’t freak out.

Your investing plan also needs to account for your spending needs. Older investors that need money from their portfolios should hold more in bonds and other safe assets so they don’t have to be selling stocks when prices are crumbling.

  • Diversify your investments across the major asset classes; stocks, bonds, real estate, and alternative investments so no single asset can destroy your wealth.
  • Invest according to your needs for cash and risk tolerance. Create a personal investment plan that adjusts as you get older and your needs change.

One of the easiest ways to invest is to let someone else do it for you. Betterment offers one of the few truly hands-off approaches to meeting your financial goals with its robo-investing platform. Just set up how much you need and how much you can invest each month and let Betterment do the rest for you.

Click to see how Betterment sets your investments on automatic to meet your goals

Personal finances don’t have to end up like a Greek tragedy. Despite the sensational stories we read about and see on TV, managing your money isn’t that difficult. Follow simple money lessons for saving and investing to meet your own financial goals.

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