Money Smart Athlete Blog

Saving while earning high

By Mina Kourtzi and Constantinos Masonos


We have extensively discussed the various pitfalls athletes face when managing their finances in some of our previous blog articles. We have described how the special nature of the athletic profession, characterized by unpredictable income, short career span and the danger of premature retirement due to injury, affects athletes’ financial planning.

One of the most common mistakes we see athletes make, when their income is at its highest, is failing to understand the need to implement a saving strategy which is the cornerstone of a financially secure lifestyle, accommodating any possible setbacks in their career or future retirement. Setting aside money each month builds a foundation for establishing future wealth which can be used in many ways: as an emergency cushion, for retirement as average life expectancy grows and government pensions are pretty volatile, for education purposes, etc.

Saving money should not be confused with investing and understanding the difference is vital. Your savings are money which you will put into the safest places or products which you can easily access at any time, such as savings and checking accounts or certificates of deposit, and are usually insured by the FDIC in the US or EDIS in Europe. When you invest you have the opportunity to earn more money, but you also have a greater chance of losing when investing because the money you invest for example in securities, mutual funds, or other similar investments is not insured.

You can follow some simple steps to develop your saving strategy which must of course adhere to the goals of your greater financial plan. Automating your finances is crucial for implementing your savings plan. Start by asking the finance department of the sports club or organization you are employed by to direct deposit your paycheck to your bank account, which helps alleviate some of the temptation to spend it, since the cash never touches your hands.

You should start saving money according to what you want to do with it. We suggest you divide and allocate your savings into three basic categories: emergency, fun and long-term.

Your emergency savings must be your priority and must equal to at least 12 months of your living expenses.  If for example your monthly expenses like rent, electricity, water and phone bills are €5000 per month, you need to save €60000 in your emergency savings. Having emergency savings can reduce your worry in case any unexpected problems arise.

Life is all about experiences and this is why fun savings are important. You can use these funds for the fun things you like to do like travelling and it’s up to you to determine how much you must save each month to pay for them.

Your long-term savings account is the backbone of your saving strategy and this is where you will hold the money that guarantee your future. Deposit money into this account every month.  You should make priority to deposit money in this account first, before you pay your bills or buy clothes and accessories. Your long-term savings is the money that will give you financial security from a young age and will allow you to plan your future, whether this is  studying for a second career or creating your own business after your active playing careers are over. Having real goals in mind makes the choice to save—rather than spending—much easier.  This is definitely something to look for and capitalize on.

If you are not sure about what percentage of your monthly earnings you should save, start by setting a goal to save 15% of your income for long-term savings and 15% for your fun savings.  That means if you make €10,000 per month, you save €1500 for long-term and €1500 for fun each month. This goal may sound challenging, but it gets easier over time. Don’t forget that savings is the key to calling your own shots. By setting up and following your budget, you’ll see your savings grow over time. Start your savings plan now and reap the benefits every day of your life.

For more information on how to devise the savings plan that fits your lifestyle and your goals you may contact us at [email protected]