‘I don’t know FICA’: Shaq once spent $1M in one day on 3 luxury cars and jewelry — had ‘no idea’ a fat portion of his check went to taxes. How it changed his perspective on wealth-building

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lower than the average U.S. household income, according to the Federal Reserve.

For NBA legend Shaquille O'Neal, it was like he already had a wish list all set, even before the money landed in his bank account.

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On the financial literacy podcast "Earn Your Leisure", Shaq shared how he'd once overspent his savings due to not realizing that a portion of his earnings went towards taxes.

“I have no idea about FICA. They're taking some kind of $200,000 from me!" he recalls thinking at the time.

This is how the experience influenced Shaq's views on money and building wealth.

Money blindspots

As personal financial operations used by individuals and households to organize, evaluate, and keep track of their financial activities.

In other words, people set aside funds from different sources of income and allocate them for various expenses.

Can result in poor financial outcomes, including the "windfall effect," where a sudden influx of money is viewed as less deserving of serious consideration than regular income.

This windfall bias might be the reason why Shaq spent his seven-figure paycheck more quickly than expected.

"He said to me, 'Hey, I got a check for a million.’ I remembered, I had already bought that new black Mercedes.”

After buying the expensive car for $150,000, Shaq was convinced into purchasing two more luxury cars - one for each of his parents. He also added some jewelry and clothes to the growing amount he spent that day.

Shaq's mental math made him think he still had a lot of money left over. "I get a call from the bank manager and he says, 'you spent a million dollars,' and I said, 'No, I didn't.'"

However, after reviewing his statements, Shaq noticed a substantial amount of his paycheck had gone towards Federal Insurance Contributions Act (FICA) payroll taxes.

I had no idea what FICA, income tax, and state tax, as well as sales tax, were," he confessed. "So then I said, 'Okay, I don't want to be like the rest of these NBA players, I've got to teach myself.'

In 2024, while running his shopping spree, FICA taxes equal 15.3% of your paycheck - 7.65% is taken directly from your pay, with the other 7.65% paid by your employer. Self-employed individuals, however, are required to cover the full 15.3%.

With a new way of thinking, Shaq carefully saved his paychecks, made smart investments in various business deals and built a fortune that is now worth approximately $500 million, according to CelebrityNetWorth.

A similar change in perspective could also benefit the average savers and investors, who could adopt a more long-term approach to their financial goals.

Easily boost your financial situation without disrupting your daily routine

Better budgeting

in place.

Without a clear plan in place, many individuals may rely on their personal mental calculations to manage their expenses.

For example, 67% of people who pay taxes expect to get money back in 2024, and nearly 30% of them plan to use that money for things like vacations, home repairs, and buying things they don't really need, according to Bankrate.

This implies that a bigger-than-expected tax refund could be splurged on non-essential items by many American citizens, rather than being set aside for savings or investments.

By planning ahead, you can arrange your finances to get the greatest value out of them and set up a fund for emergencies and unexpected expenses.

We can also assist you in saving you time by enabling you to file your taxes earlier, giving you an estimate of how much you may owe (or get a refund), and helping you determine where to invest any extra cash flow from different sources so you can achieve your financial objectives more quickly.

For long-term financial planning, discard the idea of mental math and utilize a spreadsheet instead.

Update — Aug. 16, 2024: This story is now clarified to report that it's unclear exactly how much Shaquille O'Neal lost solely due to FICA taxes.

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This article offers information and should not be considered as advice. It's made available without any kind of guarantee.