Making Your Money Matter

The great book “The Millionaire Next Door” says that the key to being wealthy is something that athletes should be able to relate to – a person needs to play both good offense (make a lot of money) and good defense (spend little and protect what they have).

As an athlete I understand the urge to spend when you sign your first contract, especially if you play a sport where you get a signing bonus (NFL). Unfortunately, most NFL contracts aren’t guaranteed (even though they should be). Professional athletes need to figure out how to efficiently spend their money. Don’t be afraid to save your money, it won’t burn a hole in your pocket. Whether your career is a marathon or not your money can be. Don’t sprint through it, don’t rush into anything… take your time with big purchases so you can make the right choices.

I’m not saying don’t have fun with your money, go ahead and take the vacation you’ve always dreamed about or buy some nice things for your family but realize, the money you are making now may have to last you the rest of your life. Unfortunately, playing a physical sport doesn’t allow athletes to choose when they come and go – compared to other professions; your career is much shorter. The money you make playing ball will probably be the most money you’ll make in any of your professions. If you manage your money responsibly from the start, you should be able to allow that money to grow into something else.

You’re just getting started so don’t be afraid to say no to family and friends. You don’t have to pick up the check every time you go out to dinner. You don’t have to loan or give money to everyone in your rolodex. Don’t cave in and be careless because you feel like you owe the world something. The ones who really love you are the ones whose affection you won’t have to buy – figure out who your true friends are and who has your best interest at heart. It’s a hard position to be in but as a professional, and quite honestly a CEO, you must figure out which lines you will and will not cross if you plan on enjoying the fruits of your labor for years to come.

Of course there are a lot of people who supported you while you chased your dream. Fortunately, I had a great support system growing up in Detroit, but if you decide to look out for those people, make sure they qualify for the things you decide to pay them to do. Athletes often end up with their friends working as their bodyguard, assistant or foundation liaison – if these people aren’t educated in their field, make sure you at least get them training so they can be legitimate and do a good job. You want to put together a team you can trust who will represent your brand professionally on all levels.

Making it to the pros is a gift and a curse. Once you get drafted, you become a target because everyone knows where you play and how much money you make. You may find the people around you are trying to chase their dreams through your money. Before you invest in any situation, due diligence and homework is essential to make sure it is a sound business decision or investment. You need to set the precedent that your financial situation isn’t personal, it’s business and be financially frugal. Make sure you see and review all of your bills – many athletes obviously have an accountant or someone in charge of paying their bills and they never see them, then when something goes wrong, can’t figure out where all of their money went. Protect your power of attorney; we’ve all read horror stories about athletes who were robbed by their representation. It is important to set up a good financial team early on.

When it comes to being smart with your money, focus on maximizing income from all sources, minimizing your expenses, controlling your liabilities (eliminate liabilities and limit or eliminate borrowing of any kind), invest in appreciating (or at least neutral) assets only and protect the value of your assets (insurance and estate planning). Use your money to make more money. Appreciating assets are the key to your future and you should hold onto them. These items have the potential to increase in value and/or produce income. If you’re looking for a way to invest your signing bonus, consider the following; real/rental properties, business opportunities, mutual funds, stocks, shares or liquid assets. Try to stay away from depreciating assets (automobiles, furniture, clothing, and electronic equipment) because they lose their value over time. In order to protect your investments, get insured (homeowners insurance, auto insurance, health insurance, life insurance, etc…). Wills and trusts are also important so you can protect these assets even beyond your life.

Don’t wait until your playing career is done or about to wrap up to start pursuing a second career. You don’t want to look up and it’s too late. Make managing your money just as important as how fast you run, how high you jump and your focus on athleticism. I am blessed to be in a good financial situation after 13-years of professional basketball because I took the time to manage my assets from the start (and I made a pretty penny… lol). I also had a long term plan for my future and started working on that plan before I stepped off the court landing me a job with ESPN as a studio analyst. If you’re looking for money for tomorrow, the time is now.

Treat your money as a legacy – something you want to last a lifetime for your children and family. Use the money you have now and your celebrity status to create a platform for the future. Take advantage of people you meet while you’re playing because they could be potential sponsors or offer endorsements to you. This is a “What have you done for me lately world,” and you want to make sure you’ve done more than compile stats. Start building your legacy the minute that signing bonus or new contract is signed so you can finish the marathon.