One of the huge topics of discussion within the Sports Financial Industry and among professionals is the Financial Failure of Athletes. There are many professionals dealing with this subject and there are numerous articles and publications that provide advice regarding the actions to be taken to prevent this. The vast majority of such publications and articles are devoted to giving advice on actions to be taken when an athlete is just starting his career or during his sports career.
What happens though with those athletes who have just retired and face financial failure? How can they learn from their failures and how can they achieve financial stability?
The starting point is to identify and drill down to the actions the led them to financial failure. What were those actions and behaviors that resulted to the devastating fact of going broke. Whilst there are lots of reasons why this might have happened, we refer to the most common ones:
1. Reckless spending:
Money for professional athletes comes too fast! Many young athletes find themselves, in their twenties, getting their first professional contract and getting big paychecks for the first time in their life. Most of them wrongly think that once started, the large sums of money will just continue to come in and they just spend their money as they receive it, with nothing saved.
2. Family and friends
Athletes usually feel that they owe their family and friends. Especially athletes who come from tight, extended families want to give back to them once they have access to lots of money. Buying houses, cars or even paying for vacations for family members and friends is quite common among athletes.
3. Bad Investments
Many athletes get approached by financial advisors who suggest to them a ‘’guaranteed’’, ‘’sure money’’, investment to put their money in. They are also often approached by friends and family who need a loan in order to start new businesses. Bad real estate deals, restaurants and production companies are just a few of the examples of how athletes have gone broke.
The absence of prenuptial agreements is another reason why athletes go broke. Statistically athletes have some of the highest divorce rates. Losing 50% of their assets along with the alimony and child support payments is another reason behind the financial problems of athletes.
You may refer to one of our previous blogs on the matter ‘’Professional Athlete’s Financial Failure – Where it is rooted?’’ for further analysis of these reasons.
So now it is the time, even after retirement that you become a Money Smart Athlete! Once you have identified where you went wrong, we suggest that you take the following steps which will help you achieve the sought after financial stability in your life!
Cut the flow (and we mean the outflow…)
You are now in a position where your income has significantly decreased. Your salary went from a six or seven digits number to almost zero. It is necessary to stop overspending and minimize your expenses to the lowest possible level. You just can’t keep having the same spending behavior you had when you were receiving that big playing salary. Now it is the time where you have to adjust your lifestyle and spending to your new status.
Assess your situation and your prospective earning capacity
Define where you are financially. Assess your financial position and take inventory of your net worth and resources you have in hand. Check out and identify your current sources of income, how much money they will be bringing in and for how long they will provide you with income. It is also very important to identify new, possible streams of income through either employment or entrepreneurship. Be resourceful and creative in figuring out how to supplement your income, going forward.
It is very important to find the appropriate advisor who will guide you and assist you to reorganize your finances in such a manner that will lead you to financial stability within a certain time frame. Reorganizing your finances and adjusting your lifestyle to your new reality, is something that might prove difficult to do on your own so you will need all the support and guidance you can get.
Financial failure is not the end of life. There are always ways to recover. It is crucial that you identify want went wrong, be willing to take action, and make the sacrifices required in order to turn things around. Having the right persons next to you to assist you and guide you through this, is equally important in turning things around and achieving financial stability.
If you need any help on bouncing back during your post sports years and achieving financial stability please get in touch with us via e-mail at firstname.lastname@example.org.