This is a true story that any investment coach or financial advisor has to love. In August the Business Insider reported that Ryan Broyles, a Detroit Lions wide receiver has a contract for $3.6 million but supports his family on a budget of $60,000. This is one smart man.
We’ve all heard the horror stories of sport superstars going broke. Basketball great Vin Baker made $97 million in the NBA, lost most of it, and has had nothing but financial hardship since retiring in 2006. The trail of former NFL greats who lost millions includes Johnny Unitas, Lawrence Taylor, Terrell Owens, and Dan Marino.
78% Of NFL Players May File For Bankruptcy
In fact, according to the web-based personal finance service, Mint.com, 78 percent of NFL players file for bankruptcy within five years of retirement. National Basketball Association (NBA) players do better. Only 60 percent of them file for bankruptcy within five years of retirement. And if you think baseball players do better, consider that they file for bankruptcy at four times the national average.
These athletes make so much money you’d think they’d be set for life. Most make more in one year that the average person will make in a lifetime. It’s true that their careers are short—4.8 years in the NBA, 3.5 years in the NFL—but if professional athletes spend responsibly and invest wisely they would be immune to financial troubles. So what gives?
Overspending And A Lack Of Financial Understanding
The Mint article cites many factors including overspending, a lack of financial understanding, making poor investments, and entrusting their money to the wrong people. “There’s a far shorter peak earning period [in sports] than in any other profession,” says Michael Seymour, a money manager quoted in the Mint article, “and in many cases they lack the time and desire to understand and monitor their investments.”
Ryan Broyles knows this. Apparently he’s seen other players blow through huge piles of cash. It’s made him determined to not let the same thing happen to him and his family.
Sportsman On The Field, Businessman Off
“Whatever comes, it’s just a blessing,” Broyles told ESPN. “But I got the mindset of a businessman off the field, I’ll tell you that.”
ESPN says the wide receiver checks his investments daily using a mobile app. Broyles also takes advantages of everything he can to increase his savings, including the NFL’s matching 401(k) plan. He even traveled to Washington, D.C., last March to speak with students about financial planning.
Another reason why Broyles is in such a good financial position today is that as soon as he signed his first contract in 2012 he sat down with a financial advisor. That advisor gave good advice. He told Broyles to set up a reasonable budget and live within that budget. Broyles said he and his wife, Mary Beth, have lived on $60,000 a year, “give or take,” throughout his career. Everything else has gone to investments, retirement savings, and securing Broyles’ post-football monetary future. Broyles wants to make sure his NFL career, however long it lasts, really does set him up for life.
So whether you make $5 million a year or $35,000 you should follow the smart path that Broyles is on. Spend less than you earn. Have a budget and stay within it. Learn about investments. Put away as much as you can for your future financial needs.
Gene Thomas Offredi, CFP®, RFC™ is the founder of Guilford, Connecticut’s Summit Investor Coach, LLC. Contact Gene on the web or by phone at 203.453.1017. Summit Investor Coach, LLC is a Registered Investment Advisor.