Professional athletes are paid handsomely because they are the best in the world. An NBA star can earn millions of dollars every year through salary payments, endorsements, and bonuses. Yet he is obliged to spend all of his time and energy keeping in top physical shape and practicing for the next game. This prevents him from learning skills that can be used to start another career after he retires from the NBA.
In addition, he most likely does not have time to learn the intricacies of stock markets, property markets, bank securities, and other forms of investment. Indeed, this lack of awareness has led many great athletes to be seduced into making poor financial decisions and losing all of their money. If you don’t want this to happen to you, you should start making preparations now. In order to get the most out of your athletic career, you are going to have to look to the future.
The first step on the road to prosperity is making sure you get a fair deal during contract negotiations. You work hard to earn your team victories and you deserve to be justly compensated for that effort. Many agreements require the player to give up some money in exchange for other goods or services. It is important that you fully understand the trade-off you are making and the consequences of your decision. Although the team may offer you a lot of nice perks, at the end of the day it’s often best to just have cold hard cash.
Money management is not typically an athlete’s strong suit. Most never worry about sticking to a budget because they (incorrectly) believe that the money will never run out. You spend a lot of time away from home training and traveling to games in other cities; it can be difficult to restrain yourself from spending money at fancy restaurants and clubs. Yet you must figure out some way to limit the amount of money wasted on frivolous enjoyments like parties and alcohol.
Even if you are a famous basketball player, you still need to pay your mortgage, car payments, utility bills, etc. Far too many athletes go bankrupt soon after retiring from professional sports. By managing your money carefully, you will be able to avoid such a dismal fate.
In 2008, a report by Fortune magazine revealed that after retiring from the NBA, 60% of basketball players went bankrupt within five years. It is extremely important for you to have a source of income after your basketball career is over. Making your money work for you through investments is a great way to do that. With such a massive salary, a professional athlete has the opportunity to trade on any market he desires.
But that does not mean things will come easily. To make the best investments, you will need to thoroughly research how the market you are investing in works. Whether it’s traditional stocks, real estate, bank securities, or Forex trading, you want to understand everything about your portfolio in order to keep as much of money in your pocket as possible.
Some NBA players are married and have children while they are still actively playing basketball. Most others begin to start a family towards the end of their professional careers. One of the most important reasons for investing your money wisely is to secure your family’s future as well as your own. As a twenty-something-year-old athlete, you probably have not yet considered the costs of life insurance policies, college tuitions, and trusts funds for your children.
These things can all be really expensive. Yet it is vital that you allocate money to guarantee your spouse and children are comfortable and secure for years to come. Additionally, as the biggest breadwinner in the family, it will most likely fall to you to care for aging parents and wayward siblings. In other words, a lot of people will be relying on you to provide them with financial support. Bear this in mind as you plan for the future.
Before retirement age is upon you (which in the NBA means mid- to late- thirties), you should seriously consider what is going to happen once you stop playing. Having a retirement plan in place from the very first paycheck you receive can help you to build a comfortable nest egg for the post-basketball years. Moreover, if for any reason you cannot finish your contract – if you become injured or cut from the team – this retirement fund will provide you with a cushion to fall back on as you decide what to do next.
Once you decide to leave the court, you may come to find that the world is a big, scary place. There are so many career paths you can now take – how will you ever decide? While you are still with the NBA, start to consider how you want to spend your life after you retire. After all, even if you save enough money to never have to work again, 50 years is a really long time to be idle.
Moreover, prolonged periods of inactivity can lead to boredom, depression, and anger. Think about what you would like to commit your time and energy to once you stop playing basketball. Perhaps you will start a business or become a real estate agent. Perhaps you will devote your life to a religious or charitable organization. Knowing in advance what the next step is going to be can spare you from a lot of stress and anxiety.
Many professional athletes go bankrupt shortly after retiring. But that won’t happen to you if you have enough foresight to invest in your future. For the best chance at comfort and security manage your money wisely, make good investment decisions, and plan ahead for your life after the NBA.
Jimmy Doan is the owner of Doan Sports Management, a company that helps you every step of the way. His experience as a lawyer helps him be the best agent to all his players. Contact us at (844) 321-0000 or fill out our convenient online form.