To most budding pro athletes who are fresh out of high school or college, it’s quite easy to get lost in all the dollar signs that come with larger signing bonuses and endorsement deals.
After years of dedication, injuries, training sessions, heartbreaks, and triumphs, it seems like your vision is coming together after you’ve finally been drafted to the league. As your lifelong goal begins to actualize with a monumental first step, you can easily get overwhelmed or enamored with the financial aspects because of all the money that moves around.
Within the past few decades, the price for top-notch athletic talent has risen higher than ever before, meaning that bigger paychecks for athlete signings and draft picks are now the norm. At this point, you might be in the midst of a multi-million dollar signing that may seem big to you, but the truth is that it’s quite small compared to what you can get years down the line.
Right now, with the large sum of money that you’re going to get, you might be thinking:
“Should I get a new car for each of my family members?”
“Is it time to finally get a house of my own?”
“Would it be right to put a large chunk of my signing bonus in some investments?”
It is understandable to have your mind feel like it’s going a thousand miles per hour while you go over what you’re going to do with the large sum of money that you’ll get. As understandable as it may be to feel excited over your newly-minted position, there’s one fact that you’ll need to acknowledge: You should be ready to lose a chunk of money to taxes.
According to Shaquille O’Neal’s interview on In Depth with Graham Besinger, the former Lakers center said that there are two things every new athlete needs to know about, which are FICA and taxes.
With the US government becoming even more particular about staking their claim in professionals’ salaries, any starry-eyed athlete needs to get their facts straight and understand that Uncle Sam always has a cut. However, the unfortunate truth about taxes and signing bonuses is that many athletes are unaware of the shrunken amount once the check arrives, putting themselves in debt in the end.
At this point, it’s safe to admit that your take-home money isn’t what it seems. Despite the multiple figures and the presence of two commas at the very least, the final result is far smaller than you might expect, making it vital to seek financial advice. Compared to other horror stories that you might have heard of, you can turn your beginning into a successful one if you learn to account for tax-related matters and enlist the services of an advisor early on.
During the vital moments that lead up to the time when you start receiving a regular income from your team, you must understand that it’s at times like this where you’re most financially vulnerable. Given that you have millions of dollars on hand and a near-infinite range of possibilities to consider along the way, you can easily put yourself millions of dollars in the hole, even if you account for FICA and taxable income. However, with the help of a skilled professional like Aaron Parthemer, you can stay in the right direction and make sure that your finances grow and last for a lifetime!
For any professional athlete who is about to get the first multi-million signing bonus of their lives, there are many factors that can easily turn things around and make matters worse. Through the help of this guide and a skilled financial advisor, however, you won’t need to risk putting yourself in a tough spot or overlook the vital consideration of taxes or dues!
We're one of the top professional athlete accounting firms in Fort Lauderdale, FL, that's guaranteed to accommodate any client with an ample amount of service. If you want to find a service provider who has your best interest and financial growth in mind as you embark on your professional career, get in touch with us today to see how we can help!