Newspapers are often full of eye-catching headlines about professional athletes’ outrageous salaries and over-the-top spending habits. A study by Personal Capital discovered that many basketball players spend a large amount of money on expensive clothes and cars. With average expenses of $42,500 per month, it works out to a staggering half a million USD per year.
What we collectively tend to forget, though, is that most athletes got rich in their most vulnerable age. They need to think smart to protect their assets and live comfortably, even when their career in the field is over. Sadly, they often don’t have someone to tell them that on time.
With that in mind, we decided to talk about protecting your assets as a professional athlete and how you can still live a comfortable life while not wasting away your fortune.
Know How Much You Earn and Spend
The most important thing athletes can do to protect their assets is track their earnings and expenditures.
We have to understand that professional athletes usually lead a busy life that shifts their focus from their finances. Combine that with massive salaries that they start earning before anyone has taught them about financial management, and the problem becomes easier to explain.
If we know that around 60 percent of former NBA players go broke five years after leaving the court, we understand how vital proper money management is.
With that said, as a professional athlete, you should be aware of your spending habits and take control of your income. If needed, hire a trusted professional who will undoubtedly do a better job of managing your finances.
Insurance, Insurance, Insurance!
Athletes depend on their bodies to earn a living. Unfortunately, their career is often filled with various injuries that might put their careers at risk.
For that reason, they need to get insured as soon as possible, and preferably while sporting a pristine bill of health.
There are a wide variety of insurance policies to choose from. Some pay monthly installments, while others will give out a lump sum if it comes to an injury-related early retirement.
Be Smart With Real Estate
People often think that you cannot go wrong with investing in real estate; however, this cannot be further away from the truth.
Many successful athletes have good salaries, which allow them to buy properties many can dream of buying. However, they should also think about the resale value of a home, the chances of its capital growth, the mortgage, and so on.
Think twice before deciding to buy a property. Hire trusted professionals who will guide you through the buying process and tell you what to expect and what to watch out for.
Dedicate Time to Proper Tax Planning
If you’re a professional athlete, you know how complicated your tax situation can get. There are too many things to consider – from duty day calculation to state of residency issues.
Because of all this, hiring an advisor can help you do your taxes properly. Advisors can help you address questions, such as setting up a separate corporation for off-field marketing income or calculating your taxes in case you get traded and split residence between two states.
Plan a Career After You Retire
Many professional athletes struggle with filling up their time after they retire. It’s understandable why this happens, considering they’re in sports practically their whole life.
In a sense, professional athletes need to re-establish themselves once their career is over, which is often hard to do. This is also why most players stay on as coaches or in some other capacity, which allows them to remain connected to the sport even after retirement. That said, timely financial planning for after you lose most of your steady income sources (depending on your popularity, advertising may still bring in substantial cash) is vital to having a comfortable retirement.
For many athletes, life is all about the game. The field is the place they feel the safest and most comfortable. However, many things that happen outside of the court have a massive impact on their lives once they retire. Following our tips on money management will help you secure your future and make smarter financial decisions today.