By Stefanos Gregoriou, The Sports Financial Literacy Academy
For professional athletes, success isn’t limited to winning games; it extends to securing a prosperous future. In the world of sports, financial stability can be as unpredictable as a game-winning shot. Therefore, it’s crucial for athletes to employ effective saving strategies to align their financial well-being with their career aspirations.
One fundamental saving strategy for athletes is to create and adhere to a budget. Similar to how they plan their game strategies, athletes should establish a financial game plan. A shining example of this approach is the NBA’s Isaiah Thomas, known for his financial acumen. Early in his career, Isaiah created a budget, meticulously managed his expenses to accumulate savings, ensuring long-term financial stability.
Investing is another critical component of financial success for athletes. Allocating a portion of their earnings into diversified portfolios, real estate, or business ventures can yield substantial returns in the future. NBA legend Magic Johnson serves as a prime example of an athlete with successful investments. He strategically invested in businesses like Starbucks, the Los Angeles Lakers, the Los Angeles Dodgers, and EquiTrust Life Insurance Company, securing a stable financial future beyond his playing career.
Retirement may seem distant when athletes are in their prime, but early planning is essential. Contributing to retirement accounts like 401(k)s or IRAs can provide a secure nest egg for the future. Dexter Fowler is a testament to the importance of saving for retirement. Describing himself as a lifelong saver, Fowler’s famous motto is “Live like you are already retired.” His consistent commitment to retirement savings sets a positive example for athletes looking to secure their financial future.
Moreover, Dexter Fowler embodies the financial discipline necessary for athletes. While athletes often enjoy substantial incomes, it’s important to maintain a frugal lifestyle. By avoiding extravagant spending and resisting the allure of flashy purchases, they can bolster their savings for the years ahead. Fowler’s prudent approach to managing his finances serves as a valuable lesson in financial responsibility for athletes aiming to secure their financial well-being.
Athletes often have the privilege of a significant income stream from their primary sport. However, diversifying their income sources can further enhance their financial well-being. Endorsement deals, product endorsements, and personal brand development can serve as lucrative income supplements. A prime illustration of this approach is former NBA player Shaquille O’Neal, who has masterfully crafted a strong personal brand and engaged in diverse business ventures, media appearances, and television opportunities, effectively expanding his sources of income.
Injuries can pose a significant threat to an athlete’s career and financial stability. Investing in comprehensive insurance coverage, including disability and injury insurance, can protect their financial future in case of unexpected setbacks. NBA player Klay Thompson wisely invested in disability insurance, which proved invaluable when he suffered a significant knee injury that kept him off the court. Additionally, NFL quarterback Patrick Mahomes has comprehensive insurance coverage to protect his career earnings against potential injuries.
Securing a prosperous financial future is as important as achieving on-field success. Athletes who implement effective saving strategies, such as budgeting, investing wisely, saving for retirement, building multiple income streams, leveraging tax efficiency, exploring insurance options, and embracing frugality, can align their financial well-being with their career goals. Following the examples of athletes who have excelled in these areas, can provide aspiring sports stars with a blueprint for success both on and off the field.
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].
