What would you do with a million dollars?
Professional athletes can make millions of dollars per year - with a NFL player averaging $1.9 million per year and an NBA player averaging $5.15 million. However, Sports Illustrated estimated that 78 percent of NFL players go broke within two years after retirement.
What happened to their money? Not all of us have the fortune to earn $1 million in a year, but the average worker in the U.S. may earn $1 million over their career. Some of the harmful financial behaviors of athletes are also common outside of professional sports. Taking a look at the common financial pitfalls that athletes experience may help you avoid making your own mistakes:
When friends and family ask for money: Keep this in mind - unearned money breeds dependency. Before you loan money to a loved one, make sure you can afford to without affecting your ability to meet your own obligations, such as saving for retirement. Also consider the individual before you hand over the money - if he/she tends to overspend or are not taking steps to support themselves, you may be enabling them with a handout.
They spend too much money: Anyone with a windfall knows how quickly the money can dry up. You can see this with how some people treat their tax refund - putting it towards a “want” purchase instead of into savings for a “need” expense or future retirement. Despite winning millions of dollars, lottery winners are more likely to declare bankruptcy than the average American. What a NFL player is promised in their contract can be a lot higher than what he actually earns, if he is injured early or cut from a team. Living below your means during the good times will help you survive the bad times. Everyone should prioritize saving for emergencies and retirement.
They trust their wealth management in the wrong pair of hands: Some players have ended up the victims of Ponzi schemes or the clients of negligent advisors. Before trusting your wealth to a financial advisor, make sure to take the initial step of reviewing FINRA’s BrokerCheck service at https://brokercheck.finra.org/ BrokerCheck is a trusted tool that shows you employment history, certifications, licenses, and any violations for brokers and fiduciary investment advisors.
TABER Asset Management is a fiduciary and investment advisory firm based in Des Moines, IA that serves the needs of clients across the U.S. Please email firstname.lastname@example.org or call 515-557-1860 for more information on how we can help you grow your retirement funds.