November 10, 2020
Athletes need to realize that they can experience financial hardships, just like any occupation. Although you may be at your peak now, that doesn't mean that you won't lose your thunder as you get older. This is why athletes must have a long-term financial plan.
Protecting your career as an athlete
Understandably, most athletes think that their body is their greatest asset. It dictates how long you'll stay active in the scene and when you'll plan to retire. However, there are other hurdles you'll face beyond physical conditioning and seasonal competitions. Anything as simple as paying your rent and following tax laws will be hard to do if you're not financially conscious of your actions. Your financial standing is something you have to deal with all-year-round, which is why you must know what financial mistakes you should avoid.
If you want to protect your future retirement and current athletic career, here are three financial mistakes you should avoid:
1. Not knowing about tax planning opportunities
Tax planning is important for anyone, regardless of what your occupation is. It's necessary to ensure that you don't get confused about what you should do with your different assets. For example, there are different taxation rules concerning competition prizes that are separate from your monthly allowance or salary.
Some athletes hire a financial advisor or CPA to help them navigate through the different taxation rules and tax strategies for their specific situation. These financial experts can also act as a safety net to ensure that you're not losing your earnings from shady deals. They will assist you in managing your current investments and prepare you for your future.
2. Not asking for advice from teammates and mentors
Sometimes, the best way to receive career advice is from your peers and mentors. Unlike a regular job, athletes don't have a strict manual of what to do after their career. Although you may have a competitive spirit, that doesn't mean that you'll always have enough money to pay for your living expenses.
Learn about what your teammates and peers are investing in. Ask your coach or mentor about what financial advice they have to offer in your current situation. Speaking to players in your industry can give you insights on what to avoid and what to do better in your career. Take note of what they say and bring it up the next time you talk with your financial adviser.
3. Ignoring your future planning
It's common for younger athletes to focus more on their body's condition over their financial well-being. After all, there's nothing to save if you don't win any competitions. However, it can be a short-sighted way of maintaining an athletic career.
Many athletes fail to realize that they can only play for 5 or even 15 years before leaving the scene. Different variables can factor into early retirement, from lack of success to the loss of funding from sponsors. Your viability as an athlete may drastically change from one moment to the next, so it's best to understand how to handle your savings and assets while you're still in the industry.
Conclusion
There's nothing wrong about wanting to focus on your physical and mental prowess as an athlete. However, it's important to realize that all things must come to an end. Whether you're planning a short or long career in your chosen sport, you should learn to prepare for responsibilities and obligations beyond the competition lifestyle. Being mindful of the potential financial mistakes you could commit is one way to work towards a sustainable future for your career.
Finding a financial advisor who has the industry experience to cater to your needs as an athlete is the right step towards economic sustainability. Aaron Parthemer is a US-based financial advisor who offers athlete financial management. Sign up on our website to receive a free guide on financial tips for athletes.
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