3 Ways Professional Athletes Can Spend Their Wealth Mindfully

3 Ways Professional Athletes Can Spend Their Wealth Mindfully

You don’t have to be told that your career is unlike any other. Not only do you begin your career at an early age, but you also earn the type of income individuals will work an entire lifetime for in a much shorter period of time. But, great privilege can present great challenges when it comes to making your income last over your lifetime.

Because of the physical nature of your profession, your career won’t last as long as the traditional types. If you are lucky and physically well, your athletic career may extend into your forties, whereas the standard individual will likely work into their sixties and seventies. The income you see in your twenties and thirties may be a lot by anyone’s standards, but not quite as much when amortized over time.

Simply put: you may earn more now, but that income won’t last forever. This is why so many professional athletes struggle financially later in life: they spent while the paychecks were coming in with no foresight about what would happen once they retired from professional sports.

Also see Harbor West related article: Top Financial Hazards for Professional Baseball Players and How to Navigate Them

Saving and investing for the future, then, is of paramount importance for professional athletes. Yet, so few professional athletes succeed. But why?

Contending with Human Nature

As humans, we are hard-wired to approach financial decision-making based on our wavering emotions, rather than steadfast logic. We make choices that make us feel good in the moment, even if it means it puts our financial future at risk. But, we don’t always have to trade one for the other. We can reward ourselves for our hard work and enjoy some of the wealth we earn while preparing for the long-term. The key is to spend (and save) your wealth mindfully, rewarding both your present self and your future self at the same time.

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Top Financial Hazards for Professional Baseball Players and How to Navigate Them

Top Financial Hazards for Professional Baseball Players

Professional baseball players face many of the same financial hurdles that we all do such as curbing our spending, increasing our savings, and financially preparing for the future. However, they face the unique challenge of earning a high-income for a short period of time early on in their lives, making long-term financial planning seem less pertinent. This unusual earning structure, combined with limited experience handling money, is most often why professional athletes are notorious for blowing through a lifetime of income with a lot of life left to live. With so much focus on perfecting their athletic abilities, financial planning often falls by the wayside.

Here’s a closer look at some of the top financial hazards professional baseball players encounter in their lifetime and how they can handle them for a healthy financial future long after they’ve left the field.

Overestimating How Long Their Money Will Last

In traditional careers, individuals typically work to increase their income over time, whether that is by moving up the corporate ladder or improving the client base of their own business. As such, the majority of individuals will end their career at their highest earning potential, giving them ample time to learn how to manage their money.

The opposite is true of professional baseball players. These athletes certainly earn a great deal of income, but it is earned very quickly and at a very young age. In these cases, as is often the case with lottery winners and inheritors of large lump sums, this sudden influx of money can provide a false sense of security, promoting both overspending in the near-term and underpreparing for the long-term.

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Regulatory Disclosure: The information on this website has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. This website is neither an offer to sell nor a solicitation to buy any securities. Gerard Gruber offers Securities and Investment Advisory and Financial Planning service through Geneos Wealth Management, Inc, Member FINRA/SIPC.  Investments are not FDIC insured. Investments are not deposits of the financial institution and are not guaranteed by a financial institution. Investments are subject to investment risks including loss of principal amount invested.