Financial losses by professional athletes are in today’s news a couple of times a year, it seems. It’s both sad and frustrating to read about pitcher Curt Schilling and quarterback Mark Brunell, two former professional sports stars in the media for losing much of their sports-related earnings. Schilling, (a video game entrepreneur-38 Studios), told a Boston radio station recently that he may have “lost all the money he saved from playing baseball.” Brunell lost millions in commercial real estate and a “Whataburger”.
When one can lose $50,000,000 to $75,000,000 before age 50, that’s an extraordinary achievement. Most of us won’t make that much in a lifetime, even if we count the entire family. To put $50,000,000 in perspective, if you lived to age 82, it would mean that you had $1670 to spend every day of your life.
On his finances page, Ruettgers has 5 “Reality Checks”, one of which is “get help”. Another one is “downsize.”
Those are useful reminders, rules and habits. However, the rule that these athletes both ignored was to pay yourself first. That bears repeating.
Pay yourself first.
When you get your first job, pay yourself right away, before you pay the bills. Your future is the most important bill. Don’t wait until the end of the month. If you can go through your entire working life living on 90% of what you earn, you have given yourself a terrific boost. This is ten percent of your take-home pay, mind you – in addition to any other employer contributed funds, pension benefits (ha) , bonuses etc.
Ten percent of Curt Schilling’s lifetime earnings in baseball is $11.4 million. At the conventional “safe withdrawal rate” of 4%-that is $38,000 income per month (before taxes).
Even if you don’t have the millions of a Schilling or a Brunell, you can follow the rule above.. If you can’t begin with ten percent contributions to savings, pick a lower number and promise yourself that you will increase it regularly. this is how you will do better than the millionaires. Remember:
- Pay yourself first
- Get help
(I’m sure that each of these athletes saved money along the way, but apparently those funds were not set aside in a way that would ensure their families’ financial security even if other business efforts failed.)
- Curt Schilling And Why Athletes Make Such Poor Financial Decisions (forbes.com)
- Money Lessons from an ‘Ultimate Fighting Champ’
From the article above: “Financial advisers generally recommend allocating the lion’s share of your wealth to traditional asset classes such as stocks and bonds, and devoting only a small portion to real estate and alternative investments such as private equity. Yet athletes often do the reverse.”