Athletes tend to give little regard to their personal finances while at the height of their careers. With money pouring in from contracts and endorsement deals, you may think that there will never be an end to the amount of available cash. Unfortunately, this is far from true. In 2008, Fortune magazine reported, “60% of NBA players go bankrupt within five years after leaving their sport”. This is largely because players spend more time focusing on the game than they do on things like fiscal management, education, and retirement. This article will point out things that every NBA player should know about personal finance.
Compared to every other profession, the career of a professional basketball player is incredibly short. On average, a player will only work for the NBA for 4.5 years. This is a small window of time to earn money, yet big enough to inhibit successfully entering another career. Most players do not consider what life after the pros will be like or how very long it will last.
There is a certain culture in professional sports that encourages players to spend lavishly on alcohol, cars, clothes, etc. Players often urge one another to be more and more frivolous. Rookies in particular are vulnerable to this peer pressure. Having a lot of money for the first time in your life is bound to make you spend recklessly and the desire to get in good with the older players only worsens this tendency of wastefulness.
Being a famous athlete allows a man to encounter many beautiful women. Yet, if you don’t play it smart, you could end up paying thousands of dollars in child support over the next 18 years. Similarly, even if you find the one person you want to spend the rest of your life with, sign a pre-nuptial agreement. Divorce settlements and alimony payments can be a huge drain on your bank account.
Hiring a manager or an accountant can help you save a lot of money. These people care about you and want you to succeed – not the least because their income is linked with yours. Not only will they help you avoid making poor decisions, they can also help you to invest your money in stocks and bonds.
However, you should only hire someone you trust. The history of sports is littered with stories of star athletes being robbed of millions of dollars by devious accountants and managers. Find a person who genuinely has your best interests at heart and will manage your money well.
Investing your money is the best way to save it. First of all, by putting your money into stocks or bonds, you cannot use it on frivolous purchases. But more importantly, the money will grow and help you to live a comfortable life in the decades following your retirement from the NBA.
Retiring from the court does not mean your time in the spotlight is over. Your name and face still have widespread recognition and acclaim. Many athletes use this to earn lucrative endorsement deals. The best time to get sponsored is at the height of your career; if you are smart you will be able to land deals that continue to pay royalties years after you have retired.
Ideally, every professional athlete would study finance at university so that they can understand contracts, money management, and investments. This is rarely the case but any degree is better than none. By having a solid education and the diploma to prove it, you will be able to find a good job post-NBA. If your first time at college was overshadowed by basketball, then invest in going back to school after your professional career is over. There are many programs specifically designed to help athletes transition from sports careers to ordinary jobs.
The best way to ensure your future is comfortable is to establish a budget while you are still a professional basketball player. Good money management can stretch the millions of dollars you are earning for years, if not decades, especially if you invest that money wisely and avoid wealth-draining activities.
Most importantly, discover things you like to do other than basketball. Most players retire in their mid-thirties. The next 50 years can be very long indeed if you do not find something to occupy your time.