By Marianna Kazazi, The Sports Financial Literacy Academy
Successful professional athletes are famous for their lavish lifestyles since they earn excessive amounts of money from various sources. These sources include sports contracts, brand endorsements, NIL commercialization, performance bonuses, and more. Despite these high earnings, many athletes end up bankrupt, sometimes even before they retire.
Living luxuriously should not be frowned upon, as athletes work extremely hard to achieve great things in their sport. They dedicate their entire lives to their sport, earning their success. However, when treating themselves and loved ones, athletes must remember their career may end unexpectedly. They need to focus on living a financially sustainable life, using their income to create long-term wealth.
Financial Mismanagement
A high percentage of athletes once lived lavish lifestyles and earned money that could have lasted a lifetime. They ended up broke due to financial mismanagement. A well-known example is Mike Tyson, the biggest success story in boxing history. He won numerous championships and made a fortune. At the peak of his career, he lived in mansions, bought luxury cars, and wore expensive jewellery. However, in 2003, he declared bankruptcy, having no money left.
Financial Advisor
Athletes can avoid financial mismanagement and make their wealth last in various ways. They should hire a trustworthy financial advisor specializing in sports. A financial advisor can guide athletes through the financial planning process and help them make conscious decisions. Advisors help prioritize needs over wants, ensuring a sustainable budget with savings. Income diversification contributes to financial sustainability through investments, franchising, and entrepreneurial ventures using their knowledge, skills, and fame. Athletes should create investment strategies with their financial advisor.
Financial Literacy
Basic financial education can shift athletes’ mindsets on what a fulfilling lifestyle entails. A luxurious life doesn’t always mean buying expensive things. It means investing wisely to live comfortably after retirement and support causes that matter.
In conclusion, overspending without enough savings can take athletes from financial success to bankruptcy overnight. Lack of planning and financial knowledge contributes to this. Athletes should live within their means and adopt healthy saving habits. Living in the moment and spending carelessly can lead to disaster.
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].