Many of us aspired to become professional athletes when we were younger, then the reality sunk in that only a very elite few make it to the big leagues. The rest of us went off to college or trade school to pursue more “traditional” careers instead.
As a fellow sports fan, you have probably dreamed of the wealth and fame that many professional athletes enjoy, but you might not have considered the fact that they’re prone to financial problems just as much as the rest of us!
We might not be in the same league as these players when it comes to athletic ability and incomes, but we have quite a bit in common with pro athletes when it comes to financial management. Here are a few valuable lessons we can learn from those who made it big on the playing field.
Financial Lessons We Can Learn From Professional Athletes
Live Below Your Means
Did you know that 15% of NFL players eventually declare bankruptcy? Despite their average $1.9 million annual salaries, they still run into financial ruin because they spend much more than they’re making during their careers. Then, when they retire, they have little to no income, no income-earning assets like rental properties or investment portfolios, and possibly high medical bills that push them closer to personal bankruptcy.15% of NFL players eventually declare bankruptcy. Here's what you can learn from their mistakes.Click To Tweet
There’s also the story of Vin Baker, the NBA player who made over $100 million during his 13-year career, then blew all of his money and now has to work at Starbucks during what would have been his retirement years.
It’s perfectly possible to live below your means, even if you’re not making big bucks like pro athletes. This requires a bit of careful budgeting and self-discipline. But, adjusting your lifestyle to meet your income levels is not as difficult as we oftentimes assume.
Protect Your Income
The most consistent financial factor in your life is your income, not your investments or other tangible assets like your primary residence. Fortunately, you’ll be able to earn money for decades, while the average professional athlete’s career lasts just 3-5 years. Just like pro athletes planning for relatively short careers, however, you still need to be prepared for any worst-case scenarios by taking out disability insurance.
Disability insurance protects your income in case you’re injured and/or unable to work. While you might not have to worry too much about traumatic brain injuries in an office environment like a football player does out on the field, there’s always a risk that something could happen. So, why not take that extra step of precaution?
Your Physical and Mental Well-Being Are Important
According to a recent study published in the Journal of the American Medical Association, 87% of former NFL players had chronic traumatic encephalopathy. CTE is typically caused by concussions or other incidents of head trauma and leads to severe symptoms, such as mood disorders, memory decline, dementia, and even suicidal thoughts. Injuries are extremely common among professional athletes. Not even top-quality health care can overcome years of wear and tear on the body in competitive sports.
With this in mind, it’s important to realize how much better our lives can be when we take good care of our minds and bodies. Improving your own quality of life could be as simple as starting to exercise more often, or as complicated as revamping your diet completely to lose weight and lower your risk for costly, obesity-related health concerns.
Since you likely don’t have multibillion-dollar organizations like the NFL, NHL, or NBA paying for your health care needs, you might consider opening a health savings account to help pay for your medical care.
Find a Good Financial Advisor
The professional athletes who manage to avoid the financial pitfalls of wealth and fame typically share something in common. They have awesome financial advisors telling them how to best allocate their money.
You don’t need a top-level financial advisor to help you make the most of your money. You might not even need a human advisor at all. Instead, you could invest with a robo-advisor such as Wealthfront or Betterment.
Robo-advisors are great because they charge lower fees on transactions and utilize advanced algorithms to determine how to best allocate their clients’ funds into investments. Robo-advisors are also ideal for everyday people like us, who might not have millions of dollars in our portfolios like pro athletes do, but we still want access to high-quality financial advice.
We have more in common with professional athletes than we might think. We’re all prone to impulsive spending at various points in our lives, but whether this leads to financial ruin depends on how well we invest in our financial futures.
Sure, you might not make even a fraction of what a professional athlete makes, but these valuable financial lessons demonstrate how much we can actually relate to their struggles and triumphs when it comes to money management.