5 financial strategies players may embrace
Anyone who reads my articles knows that I have been passionate about players’ fiscal health and an advocate in helping them retain their wealth. In May 2012, I wrote “The ten reasons why NFL players go broke” before the 30 for 30 “Broke” episode was promoted and aired. I wrote several articles on ways players could hire competent advisors and avoid the common trappings athletes fall into.
After talking to one of my retired clients a few days ago, (who initially squandered some of his early earnings, but then I eventually helped stop his spending and helped him start saving), he reminded me that most players won't ever understand or embrace traditional fiscal tools such as intangible investments, wealth creation strategies and/or trusting professionals they don’t know. He reminded me that I have to talk their language and play to things they can easily relate to.
The NFLPA, the league and financial advisors will always preach for a plan and disciplined saving habits but the efforts are still not working. So for those who will not trust anyone, and look to be at risk for financial self-destruction, these five pieces of advice might help to at least keep some of their wealth intact.
1) Pay off your house: Most of my retired players own their house outright without a mortgage. Most investment people may say this is foolish because borrowing rates are so low, (3 to 4.5%), and that it’s better to have the money working for you in investments than sitting as equity in your house. Well for players who don’t trust anyone or won’t have the patience for long term investments, it may make more sense to own their home outright.
They will always have a roof over their head and will just need to earn enough money to pay the taxes, maintenance and utilities. Owning a tangible asset (the house) is something anybody from any socio-economic background can understand. I found that while in the trenches of dealing with players this is one concept that everyone buys into.
2) Buy gold, silver and precious metals: There is no doubt that precious metals can fluctuate greatly over time. However, it’s an investment that players understand and take pride in owning. Knowing that many athletes do like buying their share of jewelry, buying and owning precious metals is a plan they can relate to.
3) Buy a classic car: We all know that the obvious areas that players blow most of their money are on cars. They buy them new, ($65,000 to $120,000), they spend more on add-ons and they get bored with them in a year or two and sell them for about half of what they paid. However, classic cars can be had for between $15,000 and $40,000. Players do take great care of their cars and owning a classic muscle car, pre 1997 Porsche or old ford truck can turn out to be good investments that can be enjoyed and used. I have several clients that have bought a classic as their second car and they still own them today. They have appreciated in value and cost very little to own.
4) Assign each check a job: Players get paid either each week during the season or every other week, which can make their checks enormous. The money is not spread out over a year or even monthly. Thus, many of them are out of cash by the month of May. For a few clients I had who were big spenders, I would lean on them to pay off, in a lump sum, things like insurance and/or car payments for the upcoming year. I got the idea of assigning checks a job, from Client Al Harris of the Packers. Al would go into a season with goals of allocating each of his game checks to either college funds for his kids or paying off his mortgage. Each check was assigned a job.
5) Don’t finance anything/retire with no debt: Most players from any walk of life do understand that debt is bad. Of course a player may have to initially finance a new home purchase but the immediate goal should be to pay it off right away. Now retired client, Ravens DT Kelly Gregg made it a priority to get his house paid off and retire with absolutely no debt whatsoever. He accomplished this several years before he was finished playing.
For those players who won’t embrace the wise advice of a caring financial consultant, listen to an experienced CPA or CFP. His friends, family and or agent might be able to get through with these strategies that are easy to grasp, real world, and at least curb some bad habits. For some players, it’s really matter of communicating in terms they can understand. These are not the ideal ways to help a player create wealth and prevent a financial Armageddon. However, they may be better than being the star of Broke, the sequel.
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This story originally appeared on Nationalfootballpost.com
