Professional athletes receive a large paycheck during the peak of their careers that can give them a false sense of financial security. Many make the mistake of living like a one-day billionaire because they make many expensive unnecessary purchases and fail to consider long-term financial stability.
While many athletes earn high salaries, their careers are often short-lived. Their paycheck highly depends on the sports they play, their performance, their contract terms, and the injuries that can affect their careers. Because of this, they need to seek athlete financial planning to save for their retirement and attain financial stability, especially when their money will not always roll in steadily.
If you are a professional athlete, long-term financial stability starts with learning how to save your hard-earned money. Here are some tips to help you grow and protect your wealth:
Being paid handsomely can tempt you to buy expensive cars, houses, jewelry, and boats to treat yourself. After all, you trained and fought hard for your game and handsome pay, and these luxury items are a sign that you have truly made it as a professional athlete.
Buying luxury items in moderation is acceptable, but remember that they lose value over time. The key to attaining long-term financial success is choosing to live like a prince for a lifetime rather than a king for a year. In other words, you can purchase some expensive yet necessary items, but avoid living an extravagant lifestyle.
Saving your money is easier said than done, especially since you earn in several years what the average employee may not even see in their lifetime. Don’t hesitate to seek athlete financial management when you’re having trouble handling your finances. Acknowledging you need help and taking concrete action to resolve your financial issue is a big step closer to gaining full control of your finances and experiencing financial success.
After signing a contract that pays you $1 million a year, you may feel giddy that you can’t stop thinking about what you would do with your money. However, remember that you receive considerably less than that amount because of taxes.
Understand how taxes work and keep in mind that you have a higher tax rate the more you earn. If you earn $500,000 or more a year and you pay the federal government, roughly 40 percent of your salary is taken in taxes, which means you get to bring home only about $600,000 a year. Aside from taxes, there are other fees that have to be taken out of your paycheck, such as compensation for your agents or financial advisors.
Getting behind in tax payments incur high penalties and interest charges. To prevent being charged for late and unpaid taxes, work with a reliable professional athlete accounting firm that is capable of doing your taxes and handling your finances.
Learning to protect your wealth cannot be learned overnight, but you can be more financially responsible over time. Stretch out your earnings over a lifetime by following the tips listed on this guide and teaming up with a reliable financial advisor who specializes in helping professional athletes like you.
Make better financial decisions and learn more about advanced tax strategies by seeking our athlete financial advice. Access our free guide today!