Many professional athletes earn large salaries. However, because their careers are often short, it is particularly important to manage their money wisely.
- Save As Much As Possible
Many athletes are tempted to spend extravagantly while they are earning big salaries. However, because those paychecks may only last a few years, people who do wealth management for professional athletes recommend saving as much as possible from the start of your career. Tucking a good portion of your earnings away in a savings account or investments removes some of the temptation to spend it. The more money you put away early in your career, the more financial security you will have when your playing days are over.
- Minimize Taxes
One way to increase your savings is to minimize the amount of taxes you pay. Many athletes can live anywhere in the country. Consider choosing a state with low, or no income tax. Athletes may be eligible to deduct some expenses as business expenses on their taxes. Work with a certified public accountant or another financial professional to make sure you aren’t missing out on any deductions. Choose tax-efficient investments when doing your retirement planning.
- Plan for the Long-Term
What seems like a huge salary, may not look as impressive when you consider the value in terms of your entire career. This is particularly true because you will pay higher taxes when you earn very large amounts in a few years than if you earned smaller amounts over a longer time. Set financial goals for your future and create a plan to achieve those goals. Include a retirement plan for when you retire from sports and for when you retire from working.
As a professional athlete, you may be earning a very large salary. However, you can still run out of money if you do not manage it wisely. Properly managing your money now can help you live a comfortable life.