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Financial Advice for Pro Athletes

I’m sitting at home watching an NFL pre-season game. Growing up in Texas, football was a big part of my high-school life, even though I’m a little embarrassed to say I don’t always understand the game…

Every time I watch what amounts to a bunch of people mostly my age or younger beating each other up while making no less than $340,000 a year (and often much MUCH more), I’m a little bit flabbergasted. I made about 15% of that when I started my first job – and I had NO idea what to do with it. It was about 10 times more money than I’d ever made in my life, and I thought there was no way I could spend it all. Granted I sure found a way to spend it (and then some), but the fact remains that I made more than enough to meet my needs, and even enough to fund most of my wants. When I think of NFL players [1] making $340,000, I can’t help but wonder how many of them actually manage it well.

My advice to NFL Rookies

It’s always been my secret dream to be a financial planner for an NFL rookie [2] – or really anyone who suddenly makes an absurd amount of money at once. $340,000 after taxes would be at least $225,000, and maybe more depending on your filing status [3], deductions [4] and other income. That means every NFL player is bringing home AT LEAST $18,000 each month. If I was advising them on what to do with that money, here’s what I’d recommend:

  1. Only talk money with people you trust. Simply put, when you come into money there will always be people out to get their hands on it. Stay away from loans to friends and family, don’t invest in any businesses, and don’t let just anyone advise you on financial transactions like stock purchases. Of course I would also tell someone to hire a financial advisor [5] they trust…but I would hope I was that person!
  2. Buy what you can afford. You need a house. And a car. ONE. Maybe two. Buy cars in cash, and take care of them. Finance a house if you need to, but don’t buy more than you can afford [6] or need.
  3. Buy in cash. If you’re making $350,000+, you can probably forego credit card rewards [7]. Pay for things in cash so you always know where you stand, never miss a credit card bill and stay away from accrued interest.
  4. Education matters. If you didn’t finish your degree before joining the world of professional athletes, consider going back to school while you can afford it. Even one class per summer or semester can help you chip away – and help make sure you have something to fall back on if your athletic career comes to an end. You could even follow the example [8] of one of my favorite pro athletes from my alma mater and get another degree!
  5. Give some away…but not too much. If you tithe, make sure you are sending money to a church you can trust. I understand players who come from financially strapped households want to share the wealth. That’s ok – give some to your parents, or siblings. But make it clear it’s a gift that you are choosing to give, and that you are not obligated to give in the future. Make a habit of giving on YOUR terms – not in response to a request. And remember that gifts can have tax consequences [9] to the gift-giver.
  6. Get good insurance. I’ve actually been wondering if NFL players are even eligible for long-term disability insurance [10] – why would anyone want to insure that kind of income in such a dangerous job? Assuming it does exist, get it. Even though premiums are likely to be outrageous, that’s precisely the kind of thing you SHOULD spend your money on. So do it. And while you’re at it, make sure you’ve protected your family by purchasing an appropriate amount of life insurance for both you and your spouse.
  7. Save for the future. If there’s ever a profession where you should spend only what you need [11] and save the rest, pro sports is it. You will undoubtedly NOT be an NFL player longer than you will, so saving now allows you to continue to be comfortable in the future. Maxing out retirement accounts won’t be enough for someone making this kind of money – so in addition to the NFL pension, a 401(k) and IRA [12], you should also consider taxable savings accounts.
  8. Speaking of taxes…Of course you should also hire a tax expert to help you avoid taxes [13] legally – don’t get in trouble for tax evasion or tax fraud [14]!
  9. Know that it won’t last forever. If you have big goals [15], fund them while the income lasts. Put away enough to send your kids to college. Pay off your house. Take the dream vacation. And prepare now for the fact that the dream job and related income will likely go away…but your financial stability doesn’t have to.

On some level, the mistakes of new earners [16] probably apply to pro athletes too – just on a bigger level. But even more responsibility comes with earning a big salary that could very well last for only a few years. If saved and invested wisely, even three years of a minimum salary should be enough to see someone through retirement – that adds up to over $1 Million, which is a higher lifetime income than someone working for 20 years at an average of $50,000. If any NFL players want me to expand feel free to contact me – I promise not to write about it here!

What advice would you give to pro athletes? And how can all of us learn from that advice?