Hollywood's Unsung Get a Financial Close-up
HOLLYWOOD, Calif. (TheStreet) -- Hollywood is a land of dreams, celebrities and glamour.
But behind the cameras and outside the trailers, thousands of Tinseltown's lesser-known figures toil. There are assistant directors, electricians, hairdressers and extras, all of whom make the stars shine.
Behind the cameras and outside the trailers of Hollywood are workers who, working with the stars but without their massive paychecks, get into some rare financial problems. |
But unlike celebrities, these workers don't pull in the massive paychecks ensured by boffo box office. The money isn't necessarily meager, but the work is unsteady.
"People think that these folks make a lot of money -- and if they were working 12 months of the year, that would be an accurate statement," says
, a financial adviser based in Santa Monica, Calif. "But now, it is about getting one or two jobs that last eight to 12 weeks, followed by six months of nothing."
Many of Greene's clients come to her for advice on how to best manage erratic finances, meet expenses and still provide for their retirement. Their predicament is all too familiar to the scores of U.S. workers who are freelancers or face seasonal employment -- except that here you worry about money while fixing Natalie Portman's makeup or tailoring George Clooney's wardrobe.
She says her Hollywood clients typically fall into two camps.
One group is fully aware of the threat posed by the variability of their income stream and carry a real anxiety.
"Their radar is up, and when they get a gig and bring in some money, they slam it away and they put it into cash," Greene says. "It is very hard to get them to move out of low-risk, low-return investments because they are always thinking that they are going to need that money when their jobs dry up. At least when they hit a dry spell they've got that stash that they work off of. They may be stressed about it, but they are not necessarily worried about their next mortgage payment."
The other half "live in the moment and don't really want to think too far in the future," Greene says. "They do throw a little in the pot when they have a fairly consistent job, but when that dries up they just suck up everything they had put away. They just empty the tanks."
This group is particularly vulnerable to buying into the perceived Hollywood lifestyle. Sitting on set for 10 to 12 hours a day, dealing with talent than earns upward of $1 million per TV episode, can give them an unrealistic view of money.
"In their minds they should be living that fantasy life," Greene says.
Developing a proper financial plan is a distinct challenge for both groups.
"I don't think people really appreciate the insecurity and how difficult it is to manage cash flow," Greene says. "They really don't have any idea just exactly when that next job is going to come up. They don't know whether to save for three months, six months or a year. It is really nice to map out a strategy on paper, but applying it to real-time situations is much more of a challenge."
Most of Hollywood's behind-the-scenes workers belong to various guilds and unions, which should supply pensions after retirement or disability. Some workers are lulled into thinking these stipends will be enough to live off, but the pensions "are not good ones," Greene says. "As a result, they are not doing what they need to be doing to build up some other bucket of retirement money."
Getting this unique segment of the work force to make the right financial moves can take a bit of psychology. For the risk averse with some amount of savings to invest, Greene persuades them to start moving small amounts at a time out of CDs and money market funds and into instruments that offer higher returns but are still relatively conservative. This gradually allows them to realize better returns and accept that "stepping out of the bank doesn't mean walking into the casino."
Her other advice is applicable to anyone whose income stream is unpredictable.
"Focus on building up an emergency reserve in a cash or money market position," she advises. "If I can get them to accomplish that, it is a huge step. Then they will have a bucket that they can look to to tide them over between jobs.
She also advises building out an IRA or Roth IRA.
"People do hold off tapping their IRA money unless they really don't have any other option," she says. An IRA makes more sense, because of this, than a regular investment account where pulling out your investments is both easier and ill-advised, given a buy-and-hold strategy.
-- Written by Joe Mont in Boston.
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