Next Gen Athletes: Ensuring Your Money Works for You and Lasts for Generations

In the world of college and professional sports, the thrill of victory and the agony of defeat are constant. Yet, beyond the stadium lights and roaring crowds, there is an equally crucial arena that many athletes must master: Wealth Management. Dwyane Wade, a three-time NBA champion, embodies the importance of this often-overlooked aspect of a successful career. With nearly $200 million in career earnings, Wade’s journey underscores the necessity of having a solid financial plan to ensure your money lasts well beyond your playing days.

The Importance of Financial Planning

Financial planning is essential for everyone, but it’s especially critical for athletes who experience a sudden influx of wealth. Dwyane Wade himself admits it took years to manage his finances effectively. Athletes like Caitlin Clark, now earning millions, must heed this advice early in their careers. A study, from the University of Florida, found that the majority of professional athletes who faced financial distress after retiring did so due to a lack of budgeting, saving, and financial literacy during their playing days. Proper financial planning ensures that the wealth generated during peak earning years supports a comfortable and secure future.

The Sad Truth

It’s easy for the armchair quarterback to belittle athletes who earn millions, only to blow it all within a few years of retirement. We need to take a step back and understand the reality of these athletes’ lives. Many athletes work day and night to achieve their dream of earning a scholarship to play their favorite sport. While they have earned free tuition and many perks as college athletes, the constant mental and physical stress, lack of time, and being held accountable for academic and community responsibilities are significant pressures.

Now, with NIL (Name, Image, Likeness) deals, athletes can suddenly find themselves with large sums of money, going from having $200 in their checking account to anywhere from $200k to $1 million. This sudden wealth can be a shock to the system. It’s human nature to feel entitled to indulge after such hard work, but this is where the value of a financial advisor becomes evident. A good advisor not only helps athletes invest and save but also has their best interests in mind and is motivated to see them prosper long after their playing days are over.

Saving for the Future

One cornerstone of financial stability is saving. Despite earning vast sums, many athletes find themselves in financial distress post-retirement due to a lack of proper savings. Establishing a habit of saving early on can safeguard against this. The earlier athletes invest their funds, the more growth and benefits they will enjoy once their playing days are over. A well-structured savings plan, including emergency funds and retirement accounts, provides a safety net and peace of mind. It’s not just about preserving wealth but also about growing it through smart investments and sound financial decisions.

Identifying Life Goals Beyond the Arena

While the allure of a professional sports career can be all-consuming, it is crucial for athletes to identify life goals beyond the sporting arena. By setting clear life goals and aligning financial strategies to achieve them, athletes can ensure they remain productive and fulfilled long after their playing days are over. Shaquille O’Neal, known for his NBA championships and many shattered backboards, is also a successful entrepreneur in tech, real estate, clothing, gyms, and fast-food restaurants. His post-NBA success stems from setting up a financial plan with his career earnings.

Learning from the Experiences of Others

Too often, we hear about professional athletes who did not have a financial plan in place and went bankrupt after they retired. Early in his career, Wade struggled because he didn’t have mentors who understood the financial complexities of sudden wealth. Today, he advocates for young athletes to reach out to trusted and knowledgeable advisors. A report from Sports Illustrated estimated that 78% of NFL players face financial hardship within two years of retirement, and 60% of NBA players find themselves in similar positions within five years. Choosing an independent and trusted advisor is crucial. Athletes need to be aware of the deals made behind closed doors and the investment products pushed onto them. Wealth advisors who educate, advise, and have the athlete’s best interests in mind are the financial professionals who should be sought out.

Generational Wealth: A Legacy Beyond Sports

The ultimate goal for many athletes is to create generational wealth that benefits their families for years to come. This requires more than just saving money; it involves strategic investments, sound financial advice, and continuous education. Achieving generational wealth starts with early and consistent financial education, ensuring that today’s earnings continue to provide for tomorrow’s needs. In the emerging world of NIL opportunities for college athletes, the difference between those with a solid financial plan and those without will become increasingly apparent over time.

If you’re a college athlete thinking, “I don’t need to save; look how much money I’m making”, you are taking the first step towards potentially losing it all. While everything may seem perfect when you’re under the lights, making plays, and earning significant income, you’re always one play away from a career-ending injury or an unexpected turn of events. Recognizing that you have the power to change your family’s financial trajectory for generations by being financially disciplined is crucial. It’s not just about the money you make today, but how you manage and invest it for the future.

Bottom Line

Athletes work incredibly hard to achieve their dreams, and their financial success should reflect that dedication. By prioritizing financial planning, saving diligently, setting life goals beyond their sports careers, and seeking advice from seasoned professionals, athletes can ensure their money works for them and lasts for generations. If athletes neglect their finances, they risk becoming just another statistic among the many who go bankrupt after their careers end. As Dwyane Wade wisely points out, understanding and managing your finances is where the journey to generational wealth truly begins. For athletes and non-athletes alike, this is a crucial lesson in securing a prosperous and stable future.  Whether you are a parent navigating your child’s newfound NIL wealth, or a student athlete weighing all your NIL options, please feel free to call or email to schedule a consultation with our student athlete wealth management team.