fbpx
U

6 Financial Mistakes Pro Athletes Make and How They Apply to You

July 31, 2015

Financial Mistakes Athletes

Have you seen the new show on HBO called Ballers? It stars Dwayne Johnson (who else?) as a retired NFL player who’s transitioning into a financial advisory role for fellow athletes.

As with most shows on TV, the pro athlete lifestyle is depicted as — well, “baller.” Unfortunately, this is very different from the reality many athletes face day-to-day.

Your Money Guys would know. Brian used to work at a firm assisting A-listers and athletes with their portfolios, and Bo has a few friends in the NFL and MLB. They’ve witnessed countless athletes making the same financial mistakes over and over.

In this episode, Brian and Bo review six financial mistakes pro athletes tend to make — and that you can avoid whether or not you’ve got millions in your bank account.

Mistake #1: Not Having Emergency Reserves

Brian and Bo love to talk about how important emergency funds are, and for good reason. Without one, you might find yourself on thin ice. As a pro athlete, it’s easy to assume you’ll have tons of money rolling in at all times. That assumption is false.

During the off-season, athletes aren’t getting paid. They need to manage their money as well as anyone else. There’s no job security in the NFL with the average career of a player lasting 3.5 years. Pro athletes can be replaced, just like any of us.

Mistake #2: Not Thinking Long-Term

Our biggest motivators are often greed and fear. Pro athletes may have $50,000 to $100,000 hitting their bank account every paycheck. With that kind of income, buying a $7,000 watch might seem like “nothing.” It’s a drop in the bucket — until that paycheck stops coming in.

This is true for anyone who gets too comfortable in their job. Nothing is guaranteed, especially employment. Bo recommends adopting a “forced scarcity” mindset by earmarking money for savings and other goals so your budget feels tight. By allocating all your money, you won’t be tempted to spend it on other things. Pay yourself first.

Mistake #3: Getting Into Debt and Personal Guarantees

Some may remember the financial fallout from the Michael Vick fiasco. He made one too many personal guarantees, and when he lost his income, he owed more than he could afford. This goes hand in hand with thinking money is limitless. Your income can dry up, and it’s important to implement safety nets in case that happens.

Mistake #4: Thinking You’re Invincible

This occurs a lot among professional athletes. They love what they do, they give their sport their all, and they feel invincible on the field. But even if you love what you do and have no plans to retire, life can change those plans. Pro athletes are especially susceptible to this as they get injuries and can no longer play.

Guard yourself against these possibilities with insurance, regardless of how much money you have right now. You might think you can cover a medical emergency, but think about your family and what would happen to them if your earning power went away.

Mistake #5: Not Diversifying Enough

Diversification beyond assets is important. Get into tax diversification by putting money into taxable accounts, tax-deferred accounts, and tax-free assets. It’s a great way to secure success for your investments and financial future. Don’t put all your eggs in one basket like some athletes do, where all their income is tied to their position or team.

Mistake #6: Losing Focus Once Successful

How many times have we seen pro athletes try and branch out into fields completely unrelated to sports? Stars love to get into the apparel, restaurant, and production industries because they have big bucks, but that doesn’t mean they’ll succeed.

Lesson? Be knowledgeable about a potential investment before opening your wallet, and don’t let anyone take advantage of your money. Sadly, many newer pro athletes have to face their families and friends asking them for money once they’ve made it. Know who’s in your corner and who you can trust.

Whether you have a lot of money coming in or not, everyone would do well to be aware of these traps and take the necessary measures to avoid falling into them. Don’t get too comfortable with your financial situation and find yourself in a bind later on.

If you enjoyed this episode, you’ll love free access to more content from The Money Guys. Click here to learn more and join the community!

Most Recent Episodes

Dave Ramsey vs. The Money Guy: Which Strategy is The Best?

Dave Ramsey has an incredible legacy of helping folks get out of debt and take control of their financial lives. We agree on a lot of things, but there are a few points of contrast. In this episode, we’ll discuss differences between The Money Guy Show and Dave Ramsey...

Top 4 Financial Mistakes We Saw This Year! (2022)

We saw some wild financial mistakes this year during the bear market. From making extreme changes to portfolio allocation, chasing the hot dot, and using too much leverage, we’ll talk about some of the biggest financial mistakes we saw in 2022 in this episode.   In...

How Millionaires Build Wealth! (With Dave Ramsey)

Join us for a very special episode as we welcome personal finance radio host and influencer Dave Ramsey to The Money Guy Show! There’s so much misinformation out there about building wealth. We had the pleasure of having a great conversation about how millionaires...

Do These 4 Things with Your Finances BEFORE 2023!

There are unique financial opportunities available at the end of the year - especially this year with the market down. In this episode, we’ll talk about what you need to do with your money BEFORE 2023! In this episode, you'll learn: What you need to do with your money...

How to Win When the Financial World is Burning!

Lately it’s felt like the financial world is in chaos, with rising interest rates, a falling stock market, and high inflation. Let’s talk about how to focus on what you can control and how to minimize the time spent worrying about what you can’t control. In this...

Financial Advisors React to RIDICULOUS Money Advice on TikTok!

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

Loss Harvesting: Why Wealthy People Love It (And You Should Too!)

Tax-loss harvesting: what is it and should you be doing it? In this episode, we’ll cover everything you need to know about tax-loss harvesting, including whether it makes sense for you, how much it could save you in taxes, and how to eliminate the downside of loss...

The Market is Crashing! (Where Should You Put Your Money?)

The stock market has not had a great year so far. You might be asking yourself, “Since the market is crashing, where should I put my money now?” In this episode, we’ll discuss how to invest when the market is dropping and how to make the most of your money. In this...

Will Rising Interest Rates Tank the Economy?!

The Federal Reserve is raising interest rates to combat inflation, and many are concerned about how it will affect the economy. In this episode, we’ll discuss what rising interest rates means for your wallet and how to make the best of it. In this episode, you'll...

How to Be Wealthy By Age! (Can You Catch Up?)

How much does it take for you to meet your retirement goals by age, and what are some common traps your peers fall into? Learn more about how to be wealthy, mistakes to avoid, and exactly what a little extra saving can do for your retirement income. In this episode,...