Financial Psychology

Key topic

Financial psychology relates to our behavior towards personal finances and financial decisions regarding money, budgeting, investing and so on. Family, society and culture play a huge role in the development of the athlete’s financial psychology.  Money is a social tool and our attitudes, beliefs and practices connected with it, are heavily influenced by the people who surround us.  In this lesson we discuss how the pursuit of money is all about trying to meet either emotional or psychological desires and identifying these desires will give student athletes greater control over their financial behavior. Lastly, this lesson gives insights on financial mindfulness, helping athletes develop awareness and control over their financial decisions.

Learning objectives

• Understand that our financial beliefs and behaviors are related to the general psychological principles of needs, wants and environmental influences.
• Realize that the financial behavior of athletes is influenced by family, society and culture.
• Become aware that our financial beliefs and resulting emotions usually direct our financial decisions and our spending and saving habits.
• Understand that financial behavior can change, once athletes recognize what constitutes bad financial behavior, understand their money personality and develop a strong set of financial skills.
• Seek proper help and support which will enable athletes to withstand societal pressures and expectations regarding their financial behavior and take corrective action.
• Be ready to draw upon and utilize a number of athletic strengths to deal with and overcome financial setbacks.
• Develop the ability to make intentional, emotionally balanced financial decisions by practicing mindfulness techniques that promote financial awareness, control, and long-term stability.

Introduction

We have already discussed that you need to start creating your life plan and we went over the skills you need to do so.  We have also talked about the challenges and hard realities that student athletes have to deal with and offered guidance on how to deal with such situations, if and when they arise.  Today we will discuss financial psychology and how it influences our money decisions along with the resulting effects on our life and financial plan.  Understanding how our financial beliefs have been formed, will give us greater control over our financial behavior.

A large number of athletes with modest financial backgrounds and means, come to “sudden wealth” when they turn professional.  Their decisions on how to handle this sudden wealth are influenced largely by their financial beliefs and the expectations of society.  Financial beliefs and society pressures exert a high degree of power over the athletes’ financial behavior and lifestyle choices.  With proper guidance and support, athletes can modify their financial beliefs and formulate winning financial strategies that can lead them to financial independence.

Financial beliefs and behaviors are rooted in psychology

Wealth is often created or destroyed based on our behavior.  Our financial behavior is rooted in our past experiences, our mindset and our beliefs about money, which can lead to irrational money decisions based on emotional associations related to money.  Our past experiences shape what we perceive and feel about money and they are linked with the financial outcomes in our lives.  Understanding the psychology of money can help us become aware of the origin of our financial beliefs and be able to create meaningful change in our financial behavior.

Maslow Hierarchy of Needs

According to humanist psychologist Abraham Maslow, our actions are motivated by the achievement of certain needs. Maslow first introduced his concept of hierarchy of needs in his 1943 paper “A Theory of Human Motivation” and his subsequent book “Motivation and Personality”. This hierarchy suggests that people are motivated to fulfil basic needs before moving on to other, more advanced needs.

Maslow used the terms “physiological”, “security”, “belonging”, “love”, “esteem”, and “self-actualization” to describe the pattern that human motivations generally move through. According to Maslow, the higher people climb up the needs-hierarchy, the better their lives will be.

It is obvious that financial issues place you in the lower levels of needs. You must first address these lower issues in order to be able to move to the fulfillment of the higher levels of need.

Action Steps – Exercise 1 (20 minutes): How would you spend $100,000?

a) Give the following instructions to the athletes:

• Pretend you have just received $100,000 to spend any way you please, with no strings attached.
• Take a few minutes to write down what you would do with the money.
• After you’ve figured out how you’d spend the $100,000, take a few minutes to explain why you’d spend it that way. For example,
  • If you’re going to save them, what are you saving for? (For example, I want to start my own business as soon as I retire)
  • If you’re going to buy something, what’s the occasion? (My sister wants to buy an apartment and I can help her out with that money, because she has always been there for me)

b) Identify motivation in spending. Ask a few athletes to read their answers and ask the following questions and follow with a discussion:

• • What need did you fulfill by spending the money the way you did?
  • At what stage of the Maslow Hierarchy of Needs do you think you are right now and why?

Now that we’ve seen how finances can fulfill different psychological needs, let’s think about how we’ve learned to use money to fill those needs in our lives. We’re going to step away from Maslow for a minute and talk about human conditioning.

Humans are conditioned to move away from pain and toward pleasure.  Let’s think about that in a financial context.

• If you take pleasure in your daily steak or getting the latest iPhone as soon as it hits the high street, it’s easy to justify spending your money on those
• If your favorite place for holidays is Hawaii, it’s probably easier for you to save money for tickets and accommodation for your next trip there.

These are all financial decisions that move us toward pleasure—we’re using money to get what we want. We also make financial decisions to avoid pain. The positive aspects of pain avoidance are things like using money to buy insurance to avoid the future pain of paying medical bills out-of- pocket; or putting money in savings to avoid the fear that comes when you get your paycheck and it’s less than you need to cover monthly expenses. The negative aspects come in when we avoid spending money wisely because it’s not as pleasing as spending money on fun. That’s how we get into situations where we spend $4 a day on coffee but don’t have anything saved for retirement.

Often the difference between making smart financial decisions and foolish financial decisions comes down to whether we’re conditioned to think about money in terms of long-term pain and pleasure, or short-term pain and pleasure.

• Someone who knows from life experience that it’s painful not to have enough money for rent or food or medicine will probably take steps to avoid that pain by saving, planning, and thinking about long-term
• Someone who has always been fairly comfortable in terms of meeting their physiological and security needs but uses money to reward themselves or loved ones—that is, someone who’s always used money to meet love and belonging needs—will find it pretty painful to cut back on spending money to buy

Action Steps – Exercise 2 (10 minutes):

Discuss the following scenarios and identify the level of need in Maslow’s hierarchy that each person is trying to meet and what is that person’s motivation, seeking pleasure or avoiding pain:

• Andrew wasn’t paid in the last two months by his football club. He has enough savings to make his rent payment this month, but if he doesn’t get paid soon, he will have to choose whether to pay his electric bill or his phone bill. Andrew cancels his plans for the Christmas holiday with his girlfriend and asks his father to lend him some money. What level of Maslow’s hierarchy of needs is he seeking to fulfill? Would you say Andrew is seeking pleasure or avoiding pain? (Answer – Physiological needs & seeking to avoid pain)
  

 

• Every year, John’s team mates book tickets to extravagant destinations to celebrate the holidays. Some team mates go for the holidays in Europe, others to exotic islands like Bora Bora. Only one team mate once decided to stay home for the holidays, and everyone gossiped about him being stingy. John doesn’t particularly enjoy this extravaganza during the holidays, and he plans to celebrate at home with his family. What level of Maslow’s hierarchy of needs is he seeking to fulfill? Would you say John is seeking pleasure or avoiding pain? (Answer – Self-esteem & seeking pleasure)
  

 

• Paul is planning to start an after-school soccer academy for underprivileged children. He hopes the program will help inspire children to work hard and find their passion in soccer, just like he did when he started playing at age four. Now that Paul is a successful soccer player, he wants to pass the same opportunities along to others. What level of Maslow’s hierarchy of needs is he seeking to fulfill? Would you say Paul is seeking pleasure or avoiding pain? (Answer – Self-actualization & seeking pleasure)

 

• When Arnold was growing up, his parents lived paycheck-to-paycheck. He remembers not having enough money for new clothes or shoes, and even a few times when they didn’t have enough to eat. Now that Arnold is an adult, he has a professional basketball contract. However, Arnold always worries about what would happen if he had an injury. He still buys everything used and puts as much as he can into savings, just in case. What level of Maslow’s hierarchy of needs is he seeking to fulfill? Would you say Arnold is seeking pleasure or avoiding pain? (Answer – Security needs & seeking to avoid pain)

Dealing with the sudden wealth phenomenon

Young athletes and the people who surround them make lots of personal sacrifices for many years, to help the athlete gain professional status and be able to play sports for a living.  Athletes usually make a great effort to prepare themselves physically and mentally to perform at the top level in their sport.  In contrast, the effort they put to prepare themselves for dealing with the emotions associated with the changes in their financial lives when they turn professional, is almost never equal to their athletic efforts.

Sudden money or sudden wealth is a phenomenon connected to individuals who suddenly come into large sums of money; perhaps they have won the lottery or they have inherited money or they have signed their first sports contract! The phenomenon is magnified when these amounts are six, seven, eight digits or more. Scientists have even created the term “Sudden Wealth Syndrome” to describe the adjustment problems faced by individuals who suddenly come into large sums of money. Many athletes have successfully managed their wealth, while others have faced serious financial struggles due to poor handling of their sudden wealth.  Examples include:

• Antoine Walker, a former NBA player, earned over $108 million but lost it all due to excessive spending and poor investments.
• Mike Tyson, once worth over $300 million, declared bankruptcy due to lavish spending and lack of financial discipline.

Sudden wealth can be a great opportunity for anyone to create a better life for themselves and their friends and family if they manage their money properly. If the athletes are not ready or if they don’t take the right measures, they might end up even worse off than before signing their first professional contract.

So how can the sudden wealth phenomenon affect an athlete? Many become overwhelmed and start to overspend; and athletes who tend to spend too much money on themselves, will often spend money on others too. Pressure for money, from family and friends, can weigh heavily on anyone. In addition to that, the rise of social media has created immense pressure for athletes to showcase their wealth. This often leads to impulsive spending on luxury cars, jewelry, and other unnecessary purchases.  Athletes should avoid publicizing major financial decisions, as this can attract scammers and financial predators and they should focus on long-term security rather than short-term image, ensuring wealth lasts beyond an athletic career.  It is important for athletes to prioritize financial privacy and make strategic investments instead of spending for social validation.

Being overwhelmed is the simplest of the psychological effects that an athlete who suddenly comes into money might face.  There are other symptoms of the sudden wealth syndrome which we want athletes to be aware of:

• Increased levels of anxiety or panic attacks that may lead to obsessive thinking and might affect the athlete’s daily life and on-field performance.
• Sleep disorders, such as insomnia or early morning awakening and irritable mood.
• Feeling guilty about having money or being overly self-confident, which leads to acting on impulse, over-purchase things, or do things that undermine sound money management.
• Athletes may get stuck in feelings of confusion and uncertainty as to who they are and what is important to them which can lead to denial of real choices and being passive in managing their money.
• Excessive concerns about being exploited or hurt by others. There is no trust in others and there is fear, which may lead to bad decisions.
• Increase in feelings of depression. Feeling empty, gloomy, not enjoying ordinary pleasurable activities.

Sudden wealth is not a problem of professional athletes only. The challenge is the same for anyone, trying to turn sudden wealth to lasting wealth.  All life changes, including sudden shifts in finances can be traumatic; therefore, athletes should take things slowly and not rush into any big decisions. They should take time to adjust to the changes and think clearly in order to make decisions that will serve them well in the long run.

To help them with these decisions, athletes should surround themselves with trusted financial professionals who can teach them how money can create options and show them that they can facilitate their dreams by creating a financial life plan and a budget based on their core values and lifestyle. This process helps athletes set their priorities and makes the adaptation to their newfound wealth easier. It’s a process of identity change, to a person who accepts having money as a resource and a tool to a comfortable life, that can make all the difference.

Action Steps – Exercise 3 (5 minutes):

Ask the athletes the following question and discuss their answers with the class:

• You have just signed your first professional contract for $10 million. What will you do with that money and why?

Coping with family and societal pressures

Professional athletes live a unique life because of the status and popularity they enjoy, especially nowadays when they have millions of social media followers.  Many athletes earn millions and, under societal and peer influence, feel compelled to embrace a luxurious lifestyle. The combination of sudden wealth, social media pressure, and a fast-paced environment can push them toward impulsive financial choices.

Athletes need to realize that they can be luxurious in their lifestyle and at the same time exercise control over it.  It is common for young athletes to let their athletic successes and sudden wealth affect their financial decisions, despite the fact that their earnings window is very small and their earnings are extremely volatile (e.g. risk of injury or bad off field behavior).  The statistics show that there is a great possibility that an athlete may end up broke:  But what are the main aspects of an athletes’ lifestyle that may lead to financial distress and how can athletes cope with them?

The most common mistake that professional athletes make, usually as a result of peer pressure, is the extremely high spending of their newfound wealth, to support their new extravagant lifestyle which society expects them to follow.  It is very important for athletes to set and follow their own lifestyle that may be similar to the lifestyle they followed before becoming famous. Maintaining daily routines, personal time, and overall well-being helps athletes stay grounded and resist external pressures. A structured lifestyle reinforces both financial and emotional stability.

Athletes may be expected to provide for their family, friends, and others who have helped them succeed.  It is not easy for athletes to say no as they feel an obligation towards these people. The athletes should have strong professional support to guide them in handling these types of pressures in a rational, yet diplomatic way.

Society views wealth as a life goal and a solution to all problems. At the same time, there is great disparity in the way money is distributed between the population, creating hostility and mistrust towards people who have money and causing people of all income levels to view one another with suspicion. Critics and media voices express all sorts of opinions, regarding the lifestyles of athletes and the way they spend their money.  The media often scrutinizes how athletes spend their money, sometimes glorifying excess or criticizing financial decisions unfairly. To manage this pressure, athletes should:

• Adopt a private financial strategy—not every purchase or investment needs to be public.
• Ignore social comparisons—each athlete has different career lengths, earning potential, and financial goals.
• Use media attention for positive financial messaging—some athletes use their platforms to promote financial literacy and smart investments rather than flaunting wealth.

Athletes should accept that people will have different opinions on their athletic skills and their character; this is just the reality of being a pro athlete.  Accepting criticism as part of the game and not internalizing it, can help athletes cope with it.

Athletes should also be careful not to start using money as a substitute for intimate connections and for creating instant gratification emotions. Studies show that many athletes fall into the trap of using money to fill emotional voids, whether through excessive shopping, gambling, or risky investments. Instead of relying on material possessions for happiness, they should:

• Invest in meaningful relationships that are not tied to their financial success.
• Find healthy outlets for stress, such as hobbies, community involvement, or mentoring younger athletes.
• Seek professional mental health support if struggling with the emotional effects of wealth and fame.

They need to keep a tight inner circle of people or friends with whom they have created real relationships, which are not based on their athletic and financial success. This inner circle can assist athletes in nurturing their emotions and stay grounded in their life and money management. Athletes can cope with all the stresses that come with their expected lifestyle with smart money management and by recognizing and overcoming the different lifestyle traps.

The importance of money and developing a strong set of financial skills

It is often being said that money is the most important thing in the world. Is money really as important as some people believe it to be or should we consider such people as simply overly-materialistic?  Money itself, paper and coins are not important. What is important is that money is a tool that can give you freedom and choices.

When you have money you have the freedom to decide for things such as where you want to live or you have the choice to hire someone to do all the chores you don’t want to do such as cleaning your house, cooking your meals or washing the dishes and instead use the extra time to do something you enjoy.

As an athlete, you have the potential to earn substantial amounts of money from a young age, either from your playing contract and prize money or by building and monetizing your image. There is a great possibility that these earnings will drop significantly after the end of your career, so it is critical to prepare financially for any possible outcome.

Most athletes don’t get the chance to develop their financial skills through the usual education path that most people follow, because of their very busy training schedules or their choice to go professional before or during receiving higher education. Because of their lack of financial education, many athletes trust others to manage their money—sometimes with disastrous results. Not all financial advisors have the athletes’ best interests at heart. Some have hidden fees, they make poor investment choices, or even steal money.

• Always research financial advisors before hiring them.
• Never sign contracts without understanding all the terms.
• Get a second opinion before making major financial decisions.
• Stay involved in financial planning rather than blindly trusting someone else.

Developing strong financial skills can support both your motivation and the attainment of your financial goals as it allows you to choose the lifestyle you want to have, create your legacy and help people and causes you care about, experience the freedom to do what you want, when you want to do it, live without the stressors and negative emotions often associated with financial struggles and make a positive contribution to society.

Money usually does not change who we are. What it does, is magnify our personal traits inherent to our nature. If you have a mean and selfish disposition, you will have more to be greedy and selfish with. If you are caring, kind and loving, you have more to be thankful for and give out. As Tony Robbins put it, “In the end though, what all of us are really after is not money, it is the feelings and the emotions money can create, such as empowerment, freedom, a sense of security and feeling alive”.

Financial skills are skills related to the understanding, evaluation and management of your financial resources and the creation of personal wealth.  They also relate to your capability to use relevant knowledge and understanding to manage an expected or unpredictable situation in order to solve a financial problem and convert it to a benefit or opportunity.  These skills can be acquired through financial education and they include but are not limited to:

• Being a conscious consumer
• Creating a financial game plan (budgeting for career and post-career life).
• Understanding sponsorship & endorsement contracts (avoiding bad deals).
• Managing digital banking & credit monitoring (protecting wealth).
• Avoiding bad investments & financial scams (risk management).
• Building long-term passive income (real estate, business, diversified investments).
• Planning for retirement early (ensuring post-career stability).

Financial goal setting

Financial stability isn’t just about affording luxury—it’s about securing a future beyond sports. The right financial goals allow athletes to enjoy financial freedom while ensuring stability for the years ahead.

Goals define the actions you must take to make your dreams real. Setting goals and priorities, and then following through with active plans to make them happen is the essential process for turning dreams into reality.  The process of setting and achieving financial goals is very similar to the experience of an athlete setting an athletic goal.  Similarly, if you choose to work with a professional financial advisor to create your financial plan, you are creating an athlete-coach like relationship.

It is important to start the process by identifying your goals, which must be directly connected and in line with what is most important to you and what exactly you want out of life. Discuss your goals with a financial advisor and set dates for their achievement. A financial advisor will then help you quantify these goals and help you build a plan around them. Your ultimate goals are not going to be achieved overnight so you will have to set intermediate goals with events and dates that will help you stay focused and enjoy small victories on your way to their achievement. Intermediate goals also provide a measure to check whether your plan is working or needs adjustments.

Athletes choose to work with a coach that can advise them on their training routine, diet or their lifestyle. Coaches are usually people with a background and experience in the area of sports and have knowledge that can help the athlete move forward. Most importantly they keep the athlete on alert and in a state of preparedness; by reviewing their performance, keeping them on track and reminding them what their goal is and what it takes to achieve it. Working with a financial advisor follows the same logic. A financial advisor is there to help you stay focused on your plan and to provide you with an honest and objective assessment, so you will have to choose an advisor who you feel can understand your goals and has helped other people achieve similar goals.  It’s relatively easy to assess our current situation and figure out where we want to be. The toughest part is what happens in between, the actual work to get there. Successful athletes are not always those who work the hardest or the longest but those who work the smartest. Successful investors also need to make smart and efficient financial decisions. A financial advisor will help you make the right adjustments to keep you on track in your journey to financial freedom.

Athletes have to maintain balance in their training, resting time and diet with the help of their coach. Your financial advisor will help you maintain balance in the factors that affect your financial plan, the amount of money you save, the time you have available to reach your financial goals, and your related risk.

The process of setting and working towards achieving your financial goals doesn’t need to be perfect. The path to success won’t be straight, and you will need to achieve intermediate goals and correct your course along the way. Your goal should be constant progress following the steps we recommended above: identifying your goals, choosing an advisor that suits you, making smart decisions and maintaining balance to reach success. The basic methodology to financial goal setting is quite simple.

The Six-Step Athlete Financial Plan:

1. Write down your personal financial goals (see examples below)
2. Identify Your Priorities – What financial goals matter most (security, investment, post-career plans)?
3. Set Clear Timelines – Define short, mid, and long-term financial targets.
4. Build an Income Strategy – Determine how contracts, endorsements, and investments will fund goals.
5. Implement & Track Progress – Use financial tools or advisors to monitor spending, savings, and investment performance.
6. Review & Adjust – Financial goals should evolve with career changes—adapt as needed.

To fully understand what financial goals are, we list some examples below:

• Saving for vacations
• Paying off credit card and other debt
• Paying off your car loan
• Building an emergency savings fund
• Saving for a home improvement/renovation
• Saving for a house down payment
• Saving for college education
• Investing for retirement

Action Steps – Exercise 4 (10 minutes):

Ask the following questions and have a discussion in connection with the athletes’ answers:

• What is the most important short term financial goal for you right now and why?
• What is the most important medium term financial goal that you are planning to set for yourself and why?

Your money personality and how it affects your financial planning

Financial psychology is a science that comes in to fill the gap between psychology and behavioral economics.  Advertisers and marketers use scientific research on this field to tempt consumers to spend money on their products and services. Well, if it has such a great effect on the manner we spend our money, we definitely need to take some time to understand what it is all about.

All of us relate to money in different ways.  Things, such as what money means to us and how we behave in situations that require us to make a financial decision, define our relationship with money. This relationship is called our “money personality” and it affects our overall finances.

Our money-management habits tend to fit into five money personality categories.

The Five Money Personalities and their characteristics, according to a recent article posted in Investopedia are: https://www.investopedia.com/articles/basics/07/money-personality.asp

1. Big Spenders – The Status Seekers

Big spenders enjoy luxury, high-end brands, and the latest technology. They often prioritize appearance and lifestyle over financial security, spending freely without much concern for accumulating debt. While they may be comfortable taking investment risks, their spending habits can lead to financial instability if not managed properly. Maintaining a balance between enjoying wealth and long-term financial planning is essential for this personality type.

2. Savers – The Cautious Planners

Savers take a conservative approach to money, focusing on financial security and minimizing unnecessary expenses. They avoid debt, prefer low-risk investments, and prioritize long-term stability over instant gratification. While this cautious mindset helps prevent financial mistakes, over-saving without strategic investment can limit potential financial growth. A balanced approach that includes calculated investing and wealth-building strategies can help savers maximize their financial potential.

3. Shoppers – The Emotional Spenders

Shoppers gain emotional satisfaction from spending money, often indulging in purchases even when unnecessary. They tend to enjoy finding bargains but may still struggle with overspending and accumulating debt. While some shoppers invest wisely, others focus too much on immediate gratification, jeopardizing their financial future. Developing self-discipline and a structured financial plan can help them strike a balance between spending and securing long-term financial stability.

4. Debtors – The Disorganized Money Managers

Debtors often lack financial awareness, spending more than they earn without tracking where their money goes. Unlike big spenders, they aren’t necessarily driven by luxury or status, but their disorganized financial habits can lead to overwhelming debt. Since they rarely plan for the future, creating a budget and sticking to a structured financial plan is crucial to avoid long-term financial struggles. Learning basic money management skills can help them gain control over their finances.

5. Investors – The Wealth Builders

Investors are financially conscious individuals who focus on making their money work for them. They take calculated risks, actively seek investment opportunities, and aim to achieve financial independence through smart wealth-building strategies. While they tend to be well-informed about financial markets, overconfidence or risky investments can lead to financial losses. A diversified investment portfolio and disciplined financial planning help investors maintain long-term financial security.

Understanding your money personality allows you to identify financial habits, manage risks, and create a financial plan that aligns with your strengths and weaknesses. By recognizing these tendencies, you can make smarter financial choices and work toward long-term wealth stability.

Action Steps – Exercise 5 (5 Minutes):

• Have athletes pick out the money personality that describes them best and have a discussion in class on how it affects their lifestyle choices.

Financial setbacks and how to maintain a positive attitude

Financial failures and setbacks are unavoidable in life. It is true that we all had that time in our life that we had our financial hardships, sometimes mild and sometimes severe. What we have to realize is that the most successful people around the world are the ones who have failed the most to reach high, even if we only know and see the ‘bright side’ of their success and admire their achievements.

In today’s world, where we are flooded left and right with tons of information, we hear about financial success stories of individuals almost on a daily basis. It is natural to compare ourselves and our situation to theirs, and feel ashamed for failing or not achieving as much financially, at a personal level.  Such feelings of shame though, may lead us into the darkness of depression.

As an athlete you must have had your fair share of failure; and you have learned to deal with it and move on because this is how the game of life is. The same attitude should be applied to your financial life and the financial difficulties you are encountering.  The British novelist J.K. Rowling, expresses her opinion about failure with the most inspirational quote: “It is impossible to live without failing at something, unless you live so cautiously that you might as well not have lived at all–in which case, you fail by default.”  Therefore, when faced with financial setbacks, stand-up, gather your pieces and rise from your ashes by just following the below four small steps.

STEP #1. ACCEPT IT

The first and most important step for financial recovery is to accept reality!  Accepting any situation in life makes you understand that a setback or a failure is not your final destination, but a stepping stone in your journey to financial freedom.   You have to realize that failure is part of the process to succeed. Yes, you will experience difficulties, you will repeatedly get disappointed and upset, but you have to stay focused on your target and not let it bring you down.

STEP #2. “UNBLOCK” YOURSELF

After the acceptance stage, there is always an emotional stage which must be handled really carefully and with full awareness of the situation.  After you have taken some time to realize and accept the situation, you have to clear your mind from any negative thoughts. Don’t let yourself be overwhelmed with feelings of misery.   After all, once the harmful emotions finally dissipate, you will then be able to see clearly and turn your focus to recovery.

STEP #3. REFLECT

Reflection is a synonym to thought, meditation and consideration. Three words with high importance for every person who wants to operate under the control of their own power and who want to learn from their mistakes and not repeat the same action again and again and expect a different result.  Reflection might be the most critical step and many people do not take it seriously.  It’s simple but invaluable. You have to take some time to reflect on what happened and it is extremely important to be harshly honest with yourselves on why it happened. When you reflect on something, you obtain the skills to answer these three vital questions:

• What went wrong?
• Why this went wrong?
• How can I fix it?

STEP #4. TAKE ACTION

Your actions are what actually define you as a personality.  Nothing actually happens, until you take some action.  It’s not only about just thinking and dreaming.  The actual work is that you have to make the right decisions and act wiser without falling into the same trap. Your actions are what will lead you to achieve your goals and success.  Many people envision improving their finances, but how many of them really take action? And that is what makes all the difference.  The difference between successful people and unsuccessful ones, is the capability to steadily and consistently convert their ambitious thinking into actions toward achieving their goals.

Using your athletic strengths to overcome financial setbacks

To be able to deal with challenging financial situations, we all try to draw upon our experiences and strengths in order to bounce back as quickly as possible.  Athletes are no different than the rest of us in this respect; they also try to use their strengths to deal with financial distress.  What is different though in the case of athletes, is that during their athletic training they have developed a unique set of strengths, unlike most people, which if used properly, can help them get into a positive recovery mode faster.

Let’s take a look at these unique athletic strengths and how athletes can apply them to financially challenging situations in order to expedite the recovery period and have positive results.

1. Resilience – Throughout their athletic career, athletes must have failed more times than they have actually won. They realize that this is how life is and they always get up and keep going, because very soon, there is another game or another competition to be won.  There is no time for self-pity; they have a situation and they need to deal with it immediately and move on!  Resilience is one of the important traits in situations of financial difficulty as it gives the person the strength and the insight needed to move on quickly; athletes have an advantage because they have already cultivated and possess this trait, so they can get a head-start due to their ability to bounce back quickly.
2. Focusing on the target – Also, particular to athletes, is focusing on a target. Because athletes have been winning and losing their entire life, they have learned to eliminate external influences and focus on the target to win the game.  In consequence, they do away with all the negative emotions associated with failure-like situations fast and they focus on how to win the next game.  Drawing upon this strength can help athletes minimize the negative emotions arising from financial distress and focus on devising a recovery plan.
3. Self-reflection – For athletes it is common practice to reflect on the results of the performance during game breaks and after the end of the game, to assess what was done right and what went wrong. Self-reflection helps athletes reflect and analyze the financial challenge they are faced with, in order to assess what went wrong and how to prepare themselves to do things differently to turn around the undesirable situation.
4. Collaborating and following instructions – Most athletes are part of a team. As team members they have learned to receive tough feedback from their coach and coaching team and to follow instructions.  These skills are important when faced with a financially challenging situation because in most cases, you will have to create a team of professionals with whom you will collaborate and whose instructions you will have to follow in order to get out of the rat-hole!
5. Getting into an effective state of performance – When under pressure, elite athletes make sure they get the performance they want by being able to shift their body and mind into an effective state of performance. How do they do that?  They tip the balance in their favor by visualizing past and future successes to increase self-confidence, they develop consistent pre-performance routines in order to increase perceived control and they make sure their goals are set towards success and not against avoiding failure.  All these are learnable techniques and they can be applied to a multitude of stressful situations including financially challenging ones.
6. Self-Control – Research shows that self-control is a decisive factor that enables athletes to transform their workout intention into actual workout behavior. Regularly exerting self-control strength in one situation can have a positive self-control effect in various different situations.  The self-control strength that athletes cultivate by training throughout their entire athletic career can be applied when they find themselves in a negative financial situation, in order to restrain their spending and change their spending habits.
7. Work Ethic – The best athletes have become the best because they have perfected their skill by perfecting their work ethic. They know that in order to be successful, they need to work long and hard.  The effects of financial failure can be devastating and along with resilience and devising a plan to come out of it as soon as possible, a lot of hard work is required from the athlete’s part.  Having a strong work ethic helps athletes put in the hard work necessary to overcome financial failure.

In addition to the transferrable athletic strengths identified above, there are many more sports-unique traits that athletes can draw upon when faced with financially challenging situations.  These traits include persistence, attentiveness, organization and so forth.  All these strengths, skills and traits, inherent to and as a result of athletic training can be transferred and utilized by athletes in all sorts of challenging situations and they give the athlete the tools to deal with such situations more effectively and come out a winner!

Financial Mindfulness

Financial mindfulness is the practice of being fully aware and intentional about your financial decisions, rather than making choices based on impulse, stress, or outside pressure. Athletes often face intense financial situations, including sudden wealth, external expectations, and personal financial anxieties. Without mindfulness, these challenges can lead to overspending, poor investments, and long-term financial instability.

Mindfulness is about pausing, observing, and making conscious choices that align with your financial goals and values. Many financial mistakes happen when decisions are made in an emotional or reactive state. Whether it’s an expensive impulse purchase, feeling obligated to support family and friends, or trying to match the lifestyles of teammates, a lack of mindfulness can lead to financial stress.

One of the biggest risks athletes face is emotional spending—using money as a way to cope with stress, excitement, or external pressure. Some common emotional spending triggers include:

• Peer Pressure: The desire to match the spending habits of friends, teammates, or influencers.
• Status and Image: Feeling the need to show success through material purchases.
• Stress Relief: Buying luxury items or experiences as a way to escape financial anxiety.
• Obligation: Guilt-driven spending on family or friends who expect financial support.

To develop financial mindfulness, athletes must practice intentional financial habits that allow them to take control of their money, rather than letting money control them. One way to achieve this is through the Pause and Reflect technique:

1. Pause before making a financial decision—whether it’s a large purchase, an investment, or a financial commitment to someone else.
2. Reflect on the reason behind the decision. Are you making this choice based on logic, long-term goals, or short-term emotions?
3. Act intentionally by making a conscious decision that supports your financial stability rather than reacting to external pressure.

Practicing mindfulness in financial planning also means being present when making financial choices. Instead of worrying about past financial mistakes or stressing over the future, focus on making the best decision in the moment based on clear financial reasoning.

A mindful approach to money also includes budgeting with awareness. Instead of viewing a budget as a restriction, see it as a tool that enables financial freedom. This shift in perspective helps athletes develop a healthier relationship with money, recognizing that financial planning is about creating choices rather than limiting them.

Another key aspect of financial mindfulness is gratitude and financial awareness. Instead of focusing on what you don’t have or what others are spending, appreciate the financial security you are building through smart decisions. Regularly reviewing your finances with a clear, calm mindset helps in making adjustments where necessary, without fear or panic.

By incorporating financial mindfulness into daily life, athletes can develop the ability to:

• Make financial decisions without emotional influence.
• Resist impulsive spending by focusing on long-term financial stability.
• iManage financial pressures from family, friends, and society with confidence.
• Cultivate a mindset of financial control, ensuring a stable and secure future.

Financial mindfulness is a skill that takes practice, but it is one of the most valuable tools an athlete can develop to ensure lifelong financial success.

Lesson wrap-up

Today’s session covered key financial psychology concepts that are essential for athletes to build financial security and long-term success. We started with the sudden wealth phenomenon, examining how athletes can manage rapid financial changes wisely to avoid common pitfalls. We also discussed coping with family and societal pressures, emphasizing the need for setting financial boundaries and maintaining privacy in financial decisions.

From there, we explored the importance of financial skills, highlighting how budgeting, investing, and financial planning play a crucial role in long-term wealth preservation. We moved on to financial goal setting, where we discussed short, medium, and long-term financial planning strategies, emphasizing the Six-Step Athlete Financial Plan as a framework for success.

We then analyzed money personalities, allowing athletes to identify their own financial behaviors and adjust their financial strategies accordingly. Recognizing whether one is a Saver, Spender, Shopper, Debtor, or Investor helps athletes develop better money management habits.

In dealing with financial setbacks, we highlighted the importance of resilience, adaptability, and taking proactive action. Athletes can use their natural strengths—such as focus, discipline, teamwork, and work ethic—to overcome financial difficulties and rebuild stability.

Lastly, we introduced financial mindfulness, a key tool in making intentional financial decisions rather than reacting impulsively to external pressures. By practicing awareness, self-control, and gratitude, athletes can take full control of their financial future while reducing financial stress.

At this point the instructor should go over the learning outcomes stated at the beginning of the lesson and take questions from student athletes.  An open discussion on the concepts taught and how they relate to the student athletes and their greater life plan should be encouraged.