Figure 2

As presumptuous as it is to count on your income to be there always, I find it even more presumptuous to trust others to tend to your financial future. How many times have you read about athletes, actors, musicians, and businesspeople filing for bankruptcy? The fact is that people tend to spend money in direct proportion to the amount they earn, and any extra money that comes along (gifts or bonuses) is earmarked for consumption before it ever arrives in their bank accounts. It seems strange, but a high income doesn't necessarily translate to financial wealth.

One of the most startling examples I can think of is the story of former heavyweight boxing champion Mike Tyson. Over a period of 20 years, Tyson reportedly earned over $400 million.1 Despite that, records reveal that he filed for bankruptcy in 2003 after falling $23 million into debt through extravagant spending habits and by allowing others to watch over his money. Not only did he not manage his money well, it appears

1 As reported in the August 5, 2003, edition of The New York Times.

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