By Stefanos Gregoriou, The Sports Financial Literacy Academy
Athletes face financial uncertainty. They live in a world of financial highs and lows—big earnings, short career windows, and income that can be unpredictable. That’s why financial planning isn’t just important—it’s essential. One of the most crucial steps in that process is building an emergency fund. This fund acts as a financial safety net. It offers protection against sudden expenses or income disruptions. Also, it helps athletes stay on solid financial ground, no matter what comes their way.
While the general rule for most people is to save three to six months’ worth of essential living expenses, athletes should aim higher. This is due to the targeting savings approximately equal to twelve months of living expenses. This larger contribution to the emergency fund reflects the unique risks and uncertainties that come with an athletic career.
Steps for building an emergency fund
The first step in building an emergency fund is calculating monthly essential expenses. These include housing, utilities, food, transportation, insurance premiums, and other necessary costs. Once this number is clear, it becomes easier to set a savings goal. For example, if an athlete’s essential monthly expenses total $10,000, their emergency fund should be approximately $120,000 (twelve months). This extended buffer is particularly important for athletes because injuries, contract renegotiations, or even career-ending events can lead to sudden and prolonged income gaps.
Building an emergency fund requires careful planning and commitment. Once the goal is set, athletes should focus on funding the emergency account until it reaches the desired level. Automating savings by setting up recurring transfers into a separate account can help maintain consistency. Once the emergency fund is fully established, the focus shifts to maintaining and adjusting the fund as needed.
It’s also important to periodically review the emergency fund to ensure it matches current needs. If living costs increase or income changes dramatically, the fund should be adjusted accordingly. For instance, a salary increase or lifestyle upgrade might require more savings, while a simpler lifestyle could mean the fund doesn’t need to grow as much. Placing these funds in a high-yield savings or money market account allows for accessibility while earning some interest.
Importance of Financial Habits
Beyond building an emergency fund, sound financial habits are key to long-term income and stability. Budgeting helps athletes strike a balance between spending, saving, and investing. While an emergency fund provides immediate liquidity for unexpected situations, diversifying investments—like stocks, bonds, real estate, or retirement accounts—can grow wealth over time. Once the emergency fund is secure, athletes should look to these opportunities to ensure financial growth and security beyond their playing careers.
An emergency fund isn’t just a financial safety net; it’s peace of mind. For athletes facing unique career uncertainties, having twelve months’ worth of living expenses saved means they’re prepared for whatever life throws at them. It’s about more than just money—it’s about freedom. Freedom to focus on recovery if injured, freedom to negotiate contracts without pressure, and freedom to transition into life after sports. By making this a priority and committing to disciplined saving habits, athletes can protect their financial future and navigate their careers with confidence and resilience.
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].