An interaction with celebrity business manager Lester Knispel at a bar taught Shaquille O'Neal a fundamental lesson about personal finance.
“He had a piece of paper and said: ‘This is $100’ — [then] ripped it in half,” the NBA Hall of Famer recounted to Yahoo Finance recently (video above). “He said: ‘You save $50, you can play [with] the other $50. But the difference between rich and wealthy is you rip the $50 in half and with the $25, you can do whatever you want. But with that other $25, you save it.’”
The elaborate analogy and demonstration taught O’Neal to attempt saving 75% of his earnings for taxes, retirement, investing, and long-term savings. In fact, according to Shaq, his savings plan enabled him to avoid touching the $40 million deal he signed with the Orlando Magic in 1992.
“I actually didn't touch my first check until I got married and started having children,” Shaq said. “So Lester Knispel, thank you for that advice.”
For most people, attaining O’Neal’s high net worth — he made $700 million during his playing career and now sits on the board of Papa’s John’s (PZZA) — is out of reach. But the principle stands: O’Neal’s suggestion is to attempt to save as much as of one’s income as possible to prepare for the future.
And O’Neal wasn’t always the fiscally responsible saver. Knispel’s lesson came after the basketball legend spent $1 million in one day after signing an endorsement deal with a trading card company. He reportedly bought two Mercedes Benz cars, paid off his mother’s home mortgage, and bought jewelry for himself.
Luckily for him, Knispel lesson served O’Neal well as he developed his personal finance long game.
Stephanie is a writer for Yahoo Finance. Follow her on Twitter @SJAsymkos.