12 Things Athletes Must Know About Their Money
Know Why – Educate. Educate. Educate. A PhD in investing is unnecessary, but you must know why your advisor(s) is doing what he/she does. Ask questions. Be curious.
The Difference Between Income Rich vs. Asset Rich – Someone who is income rich makes a lot of money and only lives a luxurious life as long as the income continues. (Who can predict that?) Someone who is ‘asset rich’ lives the life they want, even when their income source is gone… their assets provide that income. Their money makes them money. Being asset rich is true wealth. True wealth is sustainable and lasts for generations.
Debt Can Be Tricky – Debt on income producing or appreciating assets (real estate, etc.) can be beneficial. However, using debt for a depreciating asset (car, etc.) or a risky investment can be fatal. Usually the one who has the deepest pockets gets hit the worst. Know the risks before getting involved.
Be Different – Statistics show that ‘normal’ in our society = in debt, overweight, overworked, stressed and broke. If you want what everyone else has, do what everyone else does; including some of your teammates. But if you want what few people have, you must choose to do what few do. There is a reason everyone is not wealthy. Don’t be afraid to look “weird”.
Stick to Your Plan – Always begin with the end in mind. Have a plan for each dollar before you make it. If you don’t make the choice to save, your lifestyle will choose for you. Never forget the goal.
Saying ‘No’ Does Not Make You a Bad Guy – Learning to say ‘no’ can save you a lot of money and heartache. It’s okay to be the ‘bad guy’ every now and then… your future depends on it! If you have trouble saying no, make sure you have a ‘Mr. No’ on your team!
Teamwork Makes the Dream Work – Selecting your team is not a popularity or likability contest. You do not need any more ‘friends’ or ‘yes-men’ in your circle. Surround yourself with people who will hold you accountable, who are truthful, and who do the job you hired them to do. If they check these boxes and just so happen to be your friend, all the better.
Money Changes Everything – Specifically your relationships and family dynamics. Learn how to empower, instead of enabling your loved ones. (ex: Pay off their debt instead of giving them money.)
Trust is Everything – Blind trust cannot exist in your world. Do the people on your financial team do what they say they are going to do? … when they say they are going to do it? … all the time? … every time? Trust is earned, not given and consistency is key. Make sure you are paying attention.
The True Cost of Ownership – The sticker price on that house, car, boat, etc. is not all you owe… that’s just what you pay to get the keys! The true cost of ownership is much more expensive (taxes, insurance, maintenance, repairs, etc.).
Patient Money is Key – Allow your investments time to compound. Creating multiple streams of income and building wealth takes time. Rome wasn’t built in a day. Invest in your future now and trust that the delayed gratification will be worth every penny!
Winners Do Not Pocket Watch – Stop spending money on things you don’t need to impress people you don’t like. ‘Keeping up with the Joneses’ will have you featured on the next 30/30. All that funny money is here today and gone tomorrow. Handle YOUR business. Act YOUR wage. Stick to YOUR plan.
Investing involves risk. Including the loss of principle.