by AMY ANDERSON
As promised in my last blog entry, I’d like to bust some myths about the earnings of child actors. People tend to make a lot of assumptions about child actors and their money, and I’m here to tell you that many of their assumptions are wrong.
The most common myth is that parents spend and live off of their working child’s earnings. I’m happy to say this is mostly not true. The other commonly held myth is that the money goes to a special bank account that no one can touch, except for the child when he/she turns 18. While this particular myth is based on some true facts, most of it is false.
There are many ways parents choose to handle their child’s earnings. Sadly, the stories we all know and love to hate are those of parents who spend all of their child’s earnings and leave the kid with nothing, years later. This has happened in some rare cases, but I assure you, it is not the norm. Why? Because it’s actually illegal for anyone else to spend the money a child earns.
So what does happen to all of that money? Why aren’t there more child actors out buying candy stores and unicorn ranches?
In the entertainment industry, there is a bank account all minors must have, whether they shoot one commercial or star in a blockbuster movie franchise. It’s called a Coogan account (after the Coogan Act, or the California Child Actor’s Bill) and can be opened at most major banks.
A common misconception is that all of the child’s earnings goes into this account and is protected: not true.
A minimum 15 percent of the child’s earnings from any given project must go into this account. The parents (or child if he or she is old enough to have input) determine the amount. One can put in a higher percentage but the interest is almost nil, so it’s a weak financial move. A smart parent will invest the maximum amount of the money earned elsewhere.
The only person who can touch the money in the Coogan account is the child, once they turn 18. (For more detailed information about what a Coogan account is and tons of other helpful information about kids in show business, I recommend reading Bonnie Wallace’s blog and soon-to-be-book, HollywoodParentsGuide.com, a terrific resource for parents of child actors.)
So this brings us to the question, what happens to the other 85 percent of a minor’s earnings?
This is where things can go terribly awry—or be a success, when they are done the right way. Legally, parents are not allowed to spend or take the money for themselves, but some do and it’s not very well policed. These folks have turned the label of “stage parent” into a dirty little moniker that precedes the rest of us stage parents every time we walk into a casting session or onto a set.
In our setup, Aubrey has the minimum amount deposited into her Coogan account, while much of the rest is put into conservative investments under the watchful eye of an excellent wealth management advisor. Aubrey will have access to different accounts at different times in her life, a carefully thought-out strategy that protects her money from her and her from her money. (Even if she goes crazy at age 18–which over my dead body will this ever happen–and decides to buy Fiskers for all of her BFFs, there will still be plenty of money left later in life when she becomes a real grownup and realizes she should have gone with Teslas.)
Aside from the investments and the Coogan, there is still a decent amount left for professional expenses, taxes and payroll.
But the important thing for me, as a parent, is to teach Aubrey manage her money wisely. As I mentioned in my last post, Aubrey doesn’t know how much she makes, but she does get a set “payment” from each episode she shoots. We go to the bank and withdraw it at the end of each work week and then, following the advice of every article I’ve read about teaching financial responsibility to children, she must divide that amount into “spending” “saving” and “giving”.
The saving part is really more for the lesson, as she has a lot saved already. For the giving portion, she uses the funds to help buy birthday and holiday gifts for her friends. She can also choose to give to a charity or we figure out a way to help others. This year, we put together bags of useful items for homeless people (toiletries, snacks, socks, health items) and kept them in our car to give out. Sadly, they were gone in just a matter of days, but it was a simple, very tangible way to show Aubrey she can use her money to help others.
The “spending” portion adds up quickly, and I’m really lucky that she already understands the gratification of saving up for something big rather than immediately spending it on junk. The first big ticket item she bought was an American Girl Doll salon chair/spa set. She had been salivating over it for months and I thought she would burst with pride the day she finally bought it.
During the off-season (mid-March through July) we do the same system but with allowance that I pay her out of my own pocket. You know, like a regular mom. She gets a dollar for every year of her age, bi-monthly, and she divides it into saving, spending and giving.
Jobs come and go, no matter what line of work you’re in, but this is especially true in the entertainment industry. Hopefully, I can teach Aubrey that she can manage what she is making now so that the money doesn’t have to go when the job does.
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Photo courtesy of Joanna Degeneres.
Amy Anderson is a Korean American adoptee, comedian and actress. She created and hosted the first Asian American standup showcase “ChopSchtick Comedy” at the Hollywood Improv. She has appeared on Comedy Central, VH1, AZN, and the Game Show Network. Her daughter Aubrey Anderson-Emmons plays the role of Lily on the Emmy-winning show Modern Family.
The Hollywood Mamalogues will be published online biweekly. Read the previous Mamalogue here.
