Why have so many pro athletes, who were once wealthy, later found themselves broke? More importantly, what can we learn from their falls from financial grace? Some of the richest and more high profile pro athletes who have gone broke include:. Tyson has said he squandered much of his fortune on extravagant purchases including jewelry, cars, and Siberian tigers. After spending time in jail following a rape conviction, and dealing with a wealth of other problems, Tyson has slowly recovered. But he is still worth a fraction of what he once was.
He can't access the trust fund until Other athletes that have gone broke over time include:. These pro athletes all have a few things in common in regards to how they lost their fortunes. Athletes have a unique problem that many other professions don't: the earnings window is small. While the more traditional careers may allow a person to work 30 to 50 years, a professional athlete will work only a fraction of that time.
This leaves the retired athlete with the job of managing what they have to last for the rest of their life. Although most people don't have a small earnings window, the lesson to learn here is that our income is never guaranteed. Living within your means while putting money away for the unknowns of tomorrow is a necessity not matter how much you earn. According to Sports Illustrated , most athletes lack the financial knowledge to manage the large sums of money they're earning.
Tyson and Iverson are among many athletes who lived a lifestyle based on their peak earnings, yet failed to think about the money they would need later in life.
Regardless of your net worth , you have to play an active role in the management of your financial affairs. Even the best money manager won't care about your money as much as you do, and for that reason, you have to be the final and most important decision-maker and those decisions have to be made based on your financial knowledge.
If you know very little about managing money, it's not too late to change that. In June , the U. There has been a long-standing controversy over the sizeable revenue generated by college sports. The players, who actually create the income, see none at all. The NCAA maintains not compensating athletes preserves amateurism in college sports.
Warren Buffett may be one of the richest men in the world, but you may not know it by looking at his modest home and relatively simple lifestyle. He chooses a modest lifestyle because he knows that the accumulation of "stuff" is contrary to good, long-term money management.
Many of the athletes who find themselves broke overspent on extravagance, only to find their possessions nearly worthless later in life.
Regardless of your level of income, live a lifestyle that doesn't stretch your budget. Not only will it set you up for financial freedom, but it's far easier to sleep at night when you're not worried about the next paycheck. Time is not on the side of those who are undisciplined, unrealistic or too trusting. Careers are short, and savings must last for the rest of your life.
Beating the odds requires a lot of work and discipline. More from Investor Toolkit: Too smart to get scammed? Think again The world's 10 best-paid political leaders Human advisors beat robo-advisors in these 4 ways. As we are in the midst of various draft seasons, here are some guidelines to offer new athletes and high-net-worth individuals that may help improve their journeys:.
It's your money — own it. Athletes in their prime earning years can develop a detachment from their own money. Since so much is coming in so quickly, suddenly few purchases require more than a moment's consideration, so money stops being a real concern and becomes just a bunch of numbers on paper — until it's gone.
It's essential that high-net-worth individuals realize the tenuousness of their situations and just how vulnerable they are, even if they have advisors in place. Taking ownership of their money and keeping constant track of what their advisors are doing with it is the first step toward security. Preserving capital can be as hard as obtaining it. Though we've become accustomed to the likes of Michael Jordan and Michael Strahan settling into second careers as endorsers, TV personalities and even team owners, most athletes won't be so lucky.
The simple truth is they won't have the opportunity to make money like this again. That's difficult for a young person to recognize when in the midst of living a dream. There are so many ways it can disappear: friends, family, lifestyle and constant pitches for can't-miss opportunities.
Athletes, as well as other high-net-worth individuals, must not only save — but also invest wisely — all while navigating the minefield of people looking to take advantage of them, because there likely won't be more coming in. Risk and return are forever linked. High-profile clients are bombarded by constant pitches for potential business "opportunities" — often by trusted sources I probably got pitched a "once in a lifetime" opportunity every month. It's important to realize that if a proposal sounds too good to be true, it probably is.
Anything offering a great return likely does so for a reason — usually, drastically increased risk. First, all of these items cost of lot of money. Not only do many athletes spend exorbitant amounts on their cars and houses, but many feel the need to give back to the people that helped them get where they are now.
Without having a proper budget, this is a simple way to blow through a million dollars. Second, sound financial planning for your future usually involves NOT making the flashy choice. Some may think that this does not apply to me as I do not live such an extravagant lifestyle. However, many Americans find themselves in a similar situation as they face substantial debt, usually in the form of student loans. First, create a budget and stick to it.
Avoid impulsive purchases. Only sparingly purchase the luxury item read: new pair of shoes, not new car. Second, consult a proper financial advisor, preferably one who has references or works at a trusted investment company, and perform your due diligence before making large investments.
Finally, you need to plan for the long-term. By investing or saving money now, you will have plenty for down the road. By following these simple steps, you can avoid the fate of a staggering amount of professional athletes. Skip to main content. Help Center.
Members Members. Member Resources About Resources Ch. John's Case Blog. Newsroom Newsroom.
0コメント