It is very common for the average athlete, a bench warmer even to make more than a doctor or lawyer. I am not writing this to berate the system’s of rewarding of entertainers salaries more than those that save lives. What i am writing about is the problem we see with athlete’s coming into the major leagues(NFL, NBA,MLB etc) with no type of financial savvy, or financial advisers. Most of these guys get up front bonus for just joining these teams. Most are in the millions. Some of these guys come from low or middle income backgrounds and have no experience dealing with that kind of money. They usually go out and buy brand new phantoms, and Maserati’s, and Lamborghini’s and do not even think about their future.
Even though, i don’t think any high profile sports figures read this particular blog, the following ways are the best way to preserve your new found wealth so that it will last you throughout your career. Since most professional athlete’s have short careers(in the sense that they don’t work more than 20 years) its important that you use the time and income you have now to grow your money overtime. Here are the following steps and advice:
1.Get a reputable financial adviser(Cousin Carl, and Auntie Ray won’t cut it)
2.The upfront money you receive, put it in a short term CD until you get your ducks in a row(call adviser, get a tax attorney, etc)
3. One you have an adviser, tell them your risk tolerance, and they will take it over from there.
4. If you must spend your new money take 10% out of it, give the rest to the adviser firm, and use that 10% and buy what you want.
To address credit cards: If you have millions in the bank, there is NO legitimate reason to get an credit card. Live off cash. If you can not afford it with cash then wait until you have the money to buy it.
Just my two cents….