Who we are is not just a product of the goals we set or our circumstances, but a product of our actions repeated over time, our habits. Professional athletes, more than any other group of people, are well aware of the extremely important role good routines and habits have in reaching the top level of any sport. Focusing on developing good habits in your diet or sports training, can help you eventually sign a professional contract and perhaps excel to a sports star.
However, focusing too much on developing sports related habits that will help you succeed in your professional career, might lead you to overlook developing good habits in other parts of your life, such as in managing your money.
Things get worse when you start developing bad habits, something inevitable but manageable. Smoking and drinking, just to name a few, usually come along with bad consequences for your health. Likewise, developing money-related bad habits can ultimately damage your financial health and leave you broke with an uncertain financial future.
A short career span, extremely volatile income and absence of financial education, can all add up to an athlete’s financial failure. When in 2009 Sports Illustrated examined the finances of former NFL and NBA players, it found that after just two years of retirement 78 percent of former NFL players were stressed financially or had gone bankrupt. Sixty percent of former NBA players were broke within five years.
With knowledge of the above-mentioned statistics, we list a few bad money habits, common to athletes along with how you can change them; we don’t want you to become just another statistic like the ones described above.
- Stop spending extravagantly! Just because you currently have lots of money to spend and people recognize you when you go out, doesn’t mean you have to adopt the lifestyle of the rich and famous. It’s not all about showing up the money. You need to create a budget and follow it, in order to find balance between your savings, investments and spending money in the everyday pleasures of life.
- Gambling is an addiction no different than alcoholism and drug dependency, and as a professional athlete you may be prone to it because of your competitive nature. If you think you have such an addiction it is important to seek professional help immediately. Some other steps you can take to help yourself is to find people close to you who can support you, perhaps join a peer support group or try to distract yourself by scheduling other activities.
- You love your family and all the people who have helped you get where you are now. That doesn’t mean that you have an unlimited budget to give back to them, either as gifts or as loans. If you have the habit of shoving money to any person that asks for it, you need to learn to say no, as there are other ways to show your appreciation to them instead of giving them money or expensive gifts. If you find it hard to say no, then you need to seek support from your professional advisor(s) who can say no to them on your behalf.
- Not putting money aside for retirement is a really bad habit with possibly tough consequences in the future. You might feel your income is going to be enough to take you all the way to retirement but usually this is far from the truth. You need to create a retirement plan with the help of a professional in order to live comfortably after the end of your professional career, and beyond.
- If you are in the habit of getting romantically involved without a financial understanding between you and your romantic partner when things get serious, then you may be in for an unpleasant surprise in the event of a break-up; and the unpleasant surprise may turn to a completely nasty situation with battles over alimony and child support payments. Be smart and sign a prenuptial or cohabitation agreement before you decide to get married or live together with your better half!
Becoming financially literate is key in facing and changing any bad financial habits you might have. Contact us now at [email protected] for more details on how we can help.
