When one’s fortunes grow, the adage “a penny saved is a penny earned” takes on new meaning. Thoughtful planning and prudent financial management can go a long way, especially during life’s downturns. Unfortunately, we can’t say the same about a few stars and legends whose reputation and fame disappeared as quickly as a train at a station.
It is pretty simple to get swayed by the abundance of luxury and prosperity in one phase of life. The fame might continue for years after retirement; however, the capital earned diminishes in number if not protected. Add poor financial decisions to that mix, and voila, you have a financial disaster at hand.
But the story of every sportsperson is not the same. Like heavyweight boxing champion Mike Tyson or the famous Tennis player Boris Becker, some have seen a wrong turn of events. It is solely because they fell prey to unsolicited financial advice or poor investment decisions.
Why do some legendary Athletes choose to follow the course against their better judgement?
When money begins to pour in from many sources, it becomes difficult to manage investments efficiently. The famous boxing champion Mike Tyson who is now 53 years old, was declared bankrupt even before the retirement phase, and that’s because his reckless spending got the better of him. Athletes undertake risks. Their stardom is dependent on their ability to match or outperform the best. It is crucial to keep the savings intact, especially during the early periods of success. Once the money flow stops, it would be difficult to go back in time to the same earning potential.
Strategizing to avoid money pitfalls
Living the life of one’s choice isn’t bad, especially when you have a lot of fame and wealth to corroborate your luxury living. However, without a proper plan, over expenditure would be a risk with no reward. Taking a fiduciary’s help is great, but understand the appropriate steps first.
Begin Planning your Finances Early
A strategic plan is crucial for investing and saving. In the long run, it is the robustness of your financial plan which delivers desired results. Financial planning is a viable option for HNIs and even for a commoner working hard to enjoy a life of luxuries. Remember that spending is good, but not if you invest all your earnings in assets that are depreciating or locked in for years.
Do not pile up your Credit Card or Loans
Not just the high-earning individual but also the middle-class people rely on taking unnecessary credit from their credit cards. People tend to fall for Buy Now Pay Later opportunities for expensive commodities they cannot afford. However, credit amounts like these often accumulate so high that debtors fail to pay them back, and financial institutions start charging high-interest rates. At any point in time, when you notice a drop in your income, the interest rate would feel immensely burdensome. It is in everyone’s best interest to avoid relying on credit options.
Create passive income sources
If your career and earning years are dependent on your ability to perform and compete, like in the profession of sportspeople or actors, then creating passive income sources is crucial. As Boris Becker did, one way to take up assignments or deals in line with your career that augments your earning potential during your post-peak years is by taking up coaching and commentating assignments. The other would be to invest your initial earnings prudently in assets that generate regular income, even post-retirement.
Prepare for Your Retirement Early
For star athletes, retirement comes much early, and amidst extravagant expenditure and privileged lifestyle, they forget to allocate their resources for the years when they would be helpless. But for the ordinary salaried individual, retirement age comes later; there is no harm in planning for it early. Fixing up insurance or allocating existing assets works well when you sit with a professional. Please discuss with your advisor about your goals and let them know the income resources you have for the next few years. These details would efficiently map out the income source for those days when you would not be working.
In a Nutshell
Money is similar to the time that slips away from your hand, and you do not realize it unless it’s too late. All the pro athletes and famous stars need to spend to maintain a specific lifestyle. However, if they do not hold their reins early, they would be another broke public figure and a lesson to others.
It is crucial to identify the right financial advisor who would not offer you unsolicited advice but rather craft solutions to help you live a financially secure life in the coming years. Finance is a sensitive matter, and it is essential to take all the lessons from your early mistakes to ensure they are not repeated in the future.
Are you prone to money management pitfalls? Need advice?