Celebrities’ lavish spending is nothing new, but according to several recent articles, the amount of spending is. Where stars used to bank money away - knowing that their careers could always take a nosedive - these days they seem to spend until it has all dried up. Last month court papers were made public that revealed Britney Spears takes home an average of $737,000 every month. Yet the records also show that she doesn’t have any savings or investments. That kind of lifestyle has led many of the famous and the formerly famous into bankruptcy.

“Most high earners, like celebrities, should view themselves like ballplayers do,” said Everett Weinberger, a financial adviser at Merrill Lynch. “You need to put away money right at the beginning, assuming that it may end. … Young people can be very shortsighted, forgetting that they’re not going to be famous forever.”

Michael Jackson knows this story all too well. He’s defaulted on a $23 million loan, and if he doesn’t pay the full amount — plus $212,963.83 in interest — by the end of January, he could lose his beloved Neverland Ranch. Twelve years ago, the female R&B group TLC was also forced to file for bankruptcy, despite selling a staggering 23 million records. Britney may not be far behind. Court papers show that she spends $102,000 each month on entertainment, gifts and vacations. Her monthly clothing bill is a whopping $16,000 — $1,000 more than she forks over for child support.

Lindsay Lohan reportedly spent more than $1 million on clothes last year, but her publicist denied it. (Her stylist Rachel Zoe also reportedly said that her client’s closet is filled with $8,000 Prada dresses and $2,000 Prada bags.) And Jessica Simpson’s penchant for $1,400 Egyptian-cotton sheets was well-documented on MTV’s ill-fated “Newlyweds.”

[From Fox News]

The article goes on to give one of the most famous examples of ridiculous spending followed by financial ruin – MC Hammer. Although Jacko’s obviously following closely behind. Hammer made over $33 off “U Can’t Touch This” – and ran through it all in under four years. His entourage included over 200 employees. He had 17 cars, an entire stable of thoroughbred race horses, and added three waterfalls and $2 million worth of marble to his home. Not only did he blow through all $33 million, but when he filed for bankruptcy in 1996, Hammer was in debt an additional $13 million.

The article goes on to list some celebrities that have been smart with their money by investing it to make even more.

Rapper Jay-Z owns a stake in the New Jersey Nets, co-owns the Rocawear clothing line and is president of Universal Music Group’s Def Jam Recording. Sean “Diddy” Combs has interests in Bad Boy Records, the clothing lines Sean John and Sean by Sean Combs, a movie production company and two restaurants. And Def Jam Records co-founder Russell Simmons owns a management company, a clothing line called Phat Farm, a movie production house, TV shows, a magazine and an advertising agency. The three men are worth approximately $547 million, $358 million and $340 million respectively.

“Celebrities tend to over-invest in real estate because it’s tangible and sexy,” Weinberger said. “They see that beautiful house in Florida or California and have to have it. People should know, in general, that real estate is not going to appreciate as well as the stock market.” Nevertheless, real estate can always be sold off to pay creditors, whereas handbags, stilettos and sheaths lose value the minute the tags are cut.

[From Fox News]

I think the author is taking a rather biased view – she doesn’t bother to mention any female celebrities that have made good financial decisions. As much as I can’t stand her, Kimora Simmons has quite an empire going on. Oprah has phenomenal business skills. There are certainly a lot of young idiot celebrities that may very well blow it all, but it seems like they’re focusing on the ladies a lot more than the men. Certainly there are some guys out there sporting too much bling and an excessive entourage. I seriously doubt saving money is even on Britney’s list right now – but considering the downturn her entire life has taken, she may want to get a good financial advisor to safeguard her money. And Lindsay’s been reported to be broke for almost a year now, with rumors floating around that she’s selling pictures of herself to gossip mags for money. The optimistic part of me hopes that as they mature, they’ll be able to save and spend a little better. And hopefully they’ll still have careers then too.

Picture note by Jaybird: Here’s Lohan again, shopping at Chanel in Beverly Hills, after having lunch at the Ivy. She reportedly bought an expensive purse – though Lindsay’s known for her ability to haggle free swag. In light of this article, more power to her I guess. Header image of Britney and her new white $200,000 Mercedes SL6. She went shopping with “boyfriend” Sam Lufti at trendy baby store Bel Bambini, on Robertson Boulevard in Los Angeles on November 10th. Images thanks to Splash Photos.