By Marianna Kazazi, The Sports Financial Literacy Academy
An athlete’s emotional state is often influenced from many factors outside the playing field. Effectively handling one’s personal finances is a major factor for maintaining emotional stability especially because the contrary can lead to negative psychological effects. While an athlete’s success on the field may yield considerable earnings from a young age, these financial gains present their own set of challenges when it comes to managing them. When money is flowing in, season after season, it sort of becomes the norm for the athlete and leads to the belief that it will never stop flowing in. As a result, athletes may resort to reckless spending, without any plan or thought for the future.
Even top professional athletes who make a lot of money, may end up broke not only after retirement but way before that. Common reasons for that include their limited earnings timeframe, lack of financial expertise and of course, overspending.
Overspending is the outcome of multiple reasons, the main one being the maintenance of a high-profile status along with the social pressure that comes with it. The athletes’ high-profile careers, marked by success and fame, create a unique environment where the pressure to maintain a certain image or status is intense. In addition to that, the competitive nature that drives their performance on the field, can sometimes spill into their financial decisions. Athletes may feel an innate sense of entitlement due to their hard work and sacrifices, leading to a mentality of “deserving” luxury items or experiences.
The intense moments during competition often resemble the financial choices athletes make outside the game. Emotions play a crucial role in overspending, prompting athletes to make impulsive purchases driven by stress, thrill, or even sheer monotony, resulting in rushed financial decisions.
Excessive spending led former MLB star Jack Clark, known as ‘Jack the Ripper,’ to file for bankruptcy in 1992, exposing a massive $6.7 million debt fueled by his obsession with luxurious cars. His ownership of 18 vehicles, including a $717,000 Ferrari, underscored the dangers of reckless spending habits among athletes.
Another example of excessive spending involves Mike Tyson. Despite amassing a staggering $300 million throughout his boxing career, Mike Tyson, the ex-heavyweight champion, filed for bankruptcy in 2003. His excessive way of life, comprising lavish homes, cars, and extravagant spending, resulted in substantial debts.
Recognizing and addressing the psychology of overspending is important in cultivating a sensible financial behavior for athletes. They can adopt a range of strategies to avoid overspending and the negative results that come with it. First, they can start investing in their own financial education. Moreover, setting achievable financial goals and crafting comprehensive strategies that encompass savings, investments, and reasonable spending will help athletes in creating a sustainable financial plan. Developing emotional awareness and mindfulness in recognizing triggers that encourage overspending, and discovering alternative coping mechanisms, is equally important. Additionally, building a reliable support network consisting of trustworthy advisors, mentors, and friends who prioritize financial wellness offers invaluable guidance for athletes in creating their financial freedom plan.
In conclusion, despite substantial earnings throughout their careers, a number of athletes end up in a financial mess. Overspending, driven by various influences, is a major cause of financial distress. Addressing the reasons and causes of overspending, demands financial education, realistic goals, mindfulness and seeking guidance from trustworthy advisors. These strategies can help athletes overcome irrational spending patterns and they can become the cornerstone of a secure financial future.
The Money Smart Athlete® Blog is established and run by the Sports Financial Literacy Academy® (SFLA). Through its education programs, the SFLA has the vision to financially educate and empower athletes of all ages to become better people, not just better athletes. For more information on our courses, our SFLA Approved Trainer Program®, and how they can benefit you and your clients, please get in touch with us at [email protected].
