By Stefanos Gregoriou, The Sports Financial Literacy Academy
Athletes often make headlines for striking massive deals, seemingly living in a world of boundless wealth. However, these same headlines can later reveal stories of financial turmoil, even bankruptcy. This reality underscores the importance of mindful spending habits.
Financial Mindfulness
Financial mindfulness means making deliberate choices about spending and saving; it means being fully aware of our current financial situation and doing what we have to do in the present to help our financial wellbeing in the future. Mindful spending habits involve thoughtful decision-making, planning for the future, and making financial choices that align with long-term goals. By adopting such habits, athletes can protect their earnings and build lasting wealth, ensuring they do not fall into the same traps that have ensnared many of their peers.
Examples of high profile Athletes
Take, for instance, the former NFL player Vince Young. Despite signing a contract worth $25 million with the Tennessee Titans in 2006, Young filed for bankruptcy in 2014. Reports indicated that spending on homes, cars, and gifts for friends and family, led to his financial downfall.
Contrast that with NBA icon LeBron James, known for his strategic approach to finances. James prioritized financial education early in his career, assembling a team of advisors and investing wisely. His prudent habits have solidified his status as one of the wealthiest athletes in history.
Beyond the high-profile examples, countless athletes have transitioned from sports to retirement successfully by embracing mindful spending habits. NBA veteran Andre Iguodala is renowned for his frugal lifestyle, opting for modest purchases and wise investments over extravagant indulgences. Iguodala’s disciplined approach has positioned him for financial security long after his playing days are over.
Tracking Spending
One of the fundamental pillars of financial mindfulness is tracking spending. Athletes must monitor where their money goes, identifying areas where they can make adjustments to avoid unnecessary expenditure. Setting clear financial goals is equally important, providing athletes with a roadmap for their financial journey and helping them stay focused and motivated.
Budget Necessity
Creating and following a budget is essential for effective money management. By allocating money according to priorities and differentiating between needs and wants, athletes can ensure that essential expenses are covered first while avoiding overspending on non-essential items.
Savings
Automating savings helps athletes build a saving habit, ensuring they consistently set aside income for future needs. Investing earnings is crucial for long-term wealth building, using vehicles like stocks, bonds, or real estate. Athletes should seek advice from a financial advisor for personalized guidance and valuable insights into their financial goals.
Regularly reviewing finances helps athletes assess their financial health, make adjustments, and stay on track with their goals. By adopting these practices, athletes can build a strong foundation for lasting wealth and prosperity. Mindful financial management focuses on how wisely athletes save, spend, and invest, determining long-term financial success.
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].