One of the greatest challenges that many professional athletes face happens off-field; it’s the issue of financial security.
With a career span of only several years, many of these professionals often don’t make enough, (or make a lot, but spend even more) to live comfortably after they retire from playing professionally.
The severity of the problem is best portrayed through an ESPN article which states that “the average NFL career lasts 3.3 years, according to the NFL Players’ Association; 78 percent of players go broke within three years of retirement and 15.7 percent file for bankruptcy within 12 years of leaving the league, according to a paper published by the National Bureau of Economic Research.”
To help mitigate the gravity of this issue, wealth management firm MGO Private Wealth has spearheaded an initiative called The Future Game, which helps athletes become more financially literate, and teaches them important aspects of managing their finances especially after their career is over.
Louis Barajas, a business manager for entertainers and a wealth advisor and a partner at MGO private wealth with experience spanning three and a half decades, says that The Future Game is financial literacy for athletes.
“Financial literacy is about having the client ask the right questions,” Barajas says. “I tell people I’m not the library, I’m the librarian. I don’t have all the answers but I know where to go.”
According to Barajas, what happened recently is that a lot of their clients would ask to be taught about various things in relation to financial literacy.
“We found over the years that while in the past athletes have been very passive about their investments and just trusted someone who had a degree, now they’ve become very active and very engaged,” Barajas says.
Barajas, who has written five books about financial literacy, adds that one of the biggest problems that these young athletes face is the lack of understanding of how much they should be spending when they have the money, as a lot of them save little and spend a disproportionate amount on expensive things like cars, homes and clothes.
“We try to make them conscious of the fact that their earning years are very short, whatever money they make in that very short period they’ll have to make it last for a long time,” Barajas says. “It’s okay to spend some money now and enjoy the fruits of their labor, but behaviorally what we want them to do is have a long term focus on what they’ll do after their career.”
NBA star Draymond Green, who participated in The Future Game video about how he learned the true value of money, says that he had to learn that when he did a commercial for $20,000, he would only be allowed to spend half of that, and maybe not even half, because he had to pay taxes and other expenses.
“It taught me the discipline of understanding of the true value of a dollar and essentially that I may take home 46 cents of every dollar, so every time I get a dollar I can’t run and spend the whole thing,” Green says.
