We’re in the middle of another football season (and watching the Patriots can sometimes be painful). Do you ever wonder how do players make their money last?
We always hear stories about players getting huge salaries with mega payouts. And of course, we hear about the 10,000 square foot houses, fancy cars, and anaconda skin-wrapped couches. (Who doesn’t love a cushy anaconda-skin couch?)
But let’s face it, being a pro athlete is a tough career. If you get injured – you’re done. If you miss a few too many big plays – you’re done. If you’re old, well… don’t get old.
The average pro football career is just 3.3 years. So, you need to be smart with your earnings. Even then, Sports Illustrated estimated that 80% of retired NFL players go broke in their first 3 years out of the League. (1)
I think a lot of this results from “Sudden Wealth Syndrome” when you hand over a mountain of cash to folks who are very young and financially immature. So, with all the attention, hangers-on, and temptations for parties, luxury goods, and bad advice from well-meaning friends or family, or shady “advisers”, it’s no wonder that money disappears.
So, with the odds of a lengthy career against you – how do you make your money last?
Meet one man who’s doing it differently: Glover Quin – a safety for the Detroit Lions.
Apparently, there are two traits Glover possesses that most do not: He keeps his expenses low by spending only 30% of every dollar he makes, and he invests 70%. That’s pretty incredible.
According to an ESPN article, Glover estimates he has made nearly as much investing as he has playing football for the past 8 years. If this is true, that adds up to quite a bit of cash. Because as of 2017, he’s earned more than $21 million, before taxes, in his 8-year career. (2) Net of his sports agent fee, that still works out to be nearly $19 million, before taxes, or about $2.3 million per year.
Um, how can he save that much?
Supposedly, Glover is really careful about spending money. Really, really careful. As stated in ESPN, “for the first 3 years of his career, Glover lived on $6,000 a month, and he invested the rest of his salary in well-known, publicly traded companies. His teammates called him cheap, but he stuck with his plan.” (3)
He’s taken to heart one key piece of advice: Spend below your means.
And if you think that he’s living like a pauper, think again. If he’s truly spending “only” 30% of his income, that works out to be about $700,000 per year, before taxes.
And if you say, “well, he’s got it easy and I could do that without a spouse or kids,” think again. He’s married (sorry, ladies) and has three children.
The lesson for all of us:
Even though some players get big pay days, it comes down to the same issues that we all must deal with: You have to be smart about your money. Here are three simple tips:
1.) Make a budget:
What are you making each month? What are you spending? What are your short and long term debts (credit cards, car loans, mortgage, etc.)? Once you know these numbers, set a budget and stick to it.
I’m a big fan of the 20/30/50 Spending Plan: Invest and save 20% for your future self, spend 30% on those discretionary items, and limit your fixed overhead to 50%.
2.) Create a financial plan:
Chart out your future needs and goals. At what age do you want to retire? What do you expect your income and expenses to be in 5 years, 10 years, 20 years? Don’t forget to consider family expenses if they apply. Will you be paying for a child’s education, wedding, or caring for elderly parents, for example?
3.) Put your money to work:
Save and invest at least 10-15% of your income. (If you can pull a Glover and save 30% or more, great.) Invest through a retirement savings account to reduce your taxes and help ensure your retirement. If you max out on your retirement accounts, then consider no-load, low-cost tax-deferred variable annuities. And to protect your income and wealth, consider having the right level of insurance protection.
But the key is to invest and make your money work for you. You can diversify your investments and your income sources by finding and funding passive income streams: dividend-paying stocks or ETFs, Master Limited Partnerships (MLPs), peer-to-peer lending, absentee-owner franchises, or through rental real estate as a “wholesaler”, or as a direct owner, or through crowd-funded real estate platforms.
I’ll leave you with this quote from Robert Kiyosaki which sums it up nicely: “It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.”
And remember Glover – No huge houses, no fancy cars, and no snake-wrapped couches. Just living modestly, and building an empire.
If you’d like an objective second opinion about your finances, please reach out to Steve Stanganelli, CFP®, CRPC®, AEP® at Clear View Wealth Advisors, LLC. Email him at Steve@ClearViewWealthAdvisors.com.