There was a time when “rich” people looked at how “poor” people are playing sports. Today we can tell that the picture has turned 180 degrees. On the court, there are lots of young talents who are getting paid really well at the beginning of their careers. How do they handle their money and are they thinking about the future as well?
In this post you will find:
- Opportunity to live like a king?
- Learn from others’ mistakes
- Build your finances upon a solid ground
- Surround yourself with good people
- How to really help your family and friends
- Your large number of toys does not show your success
- Be patient, humble and cautious
- Key take-aways for every athlete
Opportunity to live like a king?
When we talk about success or famous professional athletes, we straight away imagine enormous incomes, fancy mansions, designer clothes, and unbelievable vacations on luxurious islands.
This is something young athletes secretly dream of in the middle of the night – doing the hard work and enjoying their fruits of labor. Who wouldn’t want to live like a king, if you have the opportunity?
Living la Vida Loca is fun and memorable, but every person should think about its future. All this hard-earned money can give a false sense of security to a young athlete.
That paycheck is only large for a few years or, at best, a decade or two, depending on what sport they play, their contract terms, how well they perform, and how injuries affect their career.
Many athletes start earning from a very young age when their financial education or knowledge is fairly limited.
Learn from others’ mistakes
There are many mistakes that a professional athlete can make when he is blindsided by a large amount of income —helping struggling friends, buying super expensive cars and houses, designer clothes, dining in luxurious restaurants, and not saving for the future.
Some, later in their lives, fall behind on their taxes or divorce and end up with expensive alimony. Learning from other bad experiences is difficult but vital.
There are many ex-professional athletes who had it all but ended up with empty palms.
Here are some examples:
Mike Tyson was just 20 years old when his real success started. In 1986 he beat the record for the youngest boxer to become a WBC, IBF, and WBA champion.
During his long career in the ring, over 100 professional matches were fought. He held the heavyweight championship more than once and earned more than $400 million. Yet Tyson declared bankruptcy even before he retired in 2003.
So, where did all go wrong? During his successful career, Tyson spent his money furiously on every luxurious thing he could think of. From jewelry and limousines to Siberian tigers.
Also, crooked promoters didn’t help, making him spend $100 million on one suit.
This former shooting guard was one of the highest-earning NBA basketball players in the world. During his 2008-2009 season with the Detroit Pistons, Iverson’s salary was just under $21 million. Picture perfect, isn’t it?
In 2010, another picture of Iverson emerged, when his wife filed for a divorce. It became public knowledge, that Iverson was broke and heavily in debt.
What went wrong? For example, it was rumored that every time Iverson traveled, he was too lazy to bring his carry-on and ended up buying a new set on designer clothes. In 2012, he claimed to be so broke, that he didn’t even have money for one cheeseburger.
Fortunately, there is a $30 million trust fond waiting for him in 2030.
Before Ronaldo and Messi era, Diego Maradona was considered one of the best soccer players of all time. Some true fans even believe that he might be the best up to today!
In 2000, he was one of two recipients of FIFA’s “Player of the 20th Century” Award. In his most successful times, he was earning a salary of nearly $3 million per year.
Unfortunately, Maradona was one of those professional athletes who avoided paying his mandatory tax to the government. The Italian government claims that he owes $50 million in unpaid taxes from his time playing for Napoli from 1984 to 1991.
As you see, so many small yet important decisions can affect your financial future. It is fairly simple to get caught in the middle of a luxurious lifestyle, believing that money does grow on trees. So, how to secure your life post successful career?
Here are some tips on how to secure your financial stability and continue living well even after retirement
Build your finances upon a solid ground
Start with the basics, make your monthly or yearly budget, limit your spendings, and create a separate fund for rainy days. You never know when an injury can end your career or put it on a long pause. Expect the best, prepare for the worst! If you have put enough money aside, you can start with small steps toward investing. Ask advice and talk with professionals beforehand. Make smart decisions and don’t take too many risks. Think about the future and of your family, it is never too early to start saving for your retirement.
Surround yourself with good people
Surround yourself with good and intelligent people. With the ones from whom you can learn, who challenge and give you the best advice. It is important that you trust them and you know from the bottom of your heart, that they have only good intentions. Try to avoid the ones who are only after your fame and money. Sometimes it is hard to do, especially if they are your loved ones or family members, but you have to think of your well being first!
How to really help your family and friends
The desire to help your loved ones comes from a good place, we all believe that. But sometimes, it may do more harm than good. Athletes need to be careful about simply giving material items to people—reasonable gift-giving is fine, but never go overboard.
Always remember the saying – give a man a fish and you feed him for a day; teach a man how to fish and you feed him for a lifetime.
Try to not spoil your loved ones nor make them dependant on you. Next time instead of buying them an expensive toy, give them your time and attention.
Take them somewhere nice and spend time with your loved ones. Give them opportunities to earn their money instead of giving them a handout.
Your large number of toys does not show your success
The pressure from outsiders and fellow athletes is enormous to show off your luxurious lifestyle and toys. It is easy to get caught in rivalry with your fellow athletes and argue about who has the newest and most expensive car or the biggest and most luxurious house?
Or even who makes the most expensive gifts to his/her partner. Sometimes you just have to ask yourself, would you rather live like a king for a few years and die broke or live like a prince forever?
Remember to stay humble and think if you really need to buy the next very important thing on your list.
Be patient, humble and cautious
If something seems too good to be true, it usually is. You’re not in a hurry so don’t rush your decisions. If your ex-friend or -colleague comes to you with an investment proposition, always call in the professionals. Be smart about your decisions and avoid the “get rich quick” scheme.
In addition to investing money the smart way, don’t forget to invest your time into yourself. Take some classes or courses to study finance. This way, you will always stay on top of business.
Key take-aways for every athlete
- Live within your means and maintain reasonable expectations
- Start saving for rainy days and retirement as early as possible
- Don’t spend your money mindlessly on things you don’t actually need.
- Be careful not to fall into pressure to show off
- Remember to stretch out high short-term earnings over a lifetime
- Surround yourself with smart, trustworthy and good people