There is a good percentage of athletes that would benefit greatly from financial literacy classes. Investorplace.com listed some athletes that mismanaged their funds. Among which are six-time NBA champion superstar Scottie Pippen who lost millions in bad investments. Allen Iverson also lost millions and at one point owed a jeweller more than $800 thousand. NFL superstars like Warren Sapp, Michael Vick and Terell Owens all lost money in misguided financial undertakings.
These athletes could make more in a year what ordinary people can make in a lifetime. That is why people compare athletes with lottery winners because of the financial gain in the sport. Of course, this is not to belittle their talents and skills and the hard work put in to sharpen those tools. But if they are not too keen in managing their finances, all their effort will go to waste. They could lose everything even before they retire.
Financial literacy with a twist
Coming off from Superbowl, quarterback Brock Osweiler of the Denver Broncos is the face of a new technique that aims to teach young people about making sound financial decisions as reported by Dailyinterlake.com. It is a fact that football is a national sport loved by many Americans including the kids. That is why when looking for ways to make financial literacy campaigns fly off with kids, incorporating it with football was the way to go.
Designed to be a video game and part of the classroom curriculum, “Financial Football” was developed. It is part of a statewide campaign to reach out to teens with the objective of teaching and improving financial management skills. The way the game works was that for every money management question thrown away, a correct answer would enable players to to choose from a variety of running and passing offensive plays.
Being an alumnus of Flathead High School, Brock Osweiler visited his roots where more almost 60 business and finance students waited to see him and play financial football. Reaching out to teens is a great time to talk about financial literacy as they are prepared to tackle financial responsibilities when they grow up. This would include funding college, buying cars, renting or purchasing homes and even starting a family.
3 Key things
Before starting the game, Brock Osweiler talked about the 3 things he learned as he was in his journey to practical financial literacy.
Budget. He pointed out that athletes do earn a lot. So much that some could think of the money as a neverending well of dollars. But no matter how much you make in a month – $400, $4,000, $400,000 or even $4M, having a budget is of utmost importance. It will show and guide you on how to properly manage the income that comes in. Without a budget, it will be as if you are walking in the dark and might he headed to bankruptcy like some athletes.
Affordability. One rule of thumb in making purchases is the fact that if you cannot buy the item using cash, do not purchase it. There are of course exceptions to the rule but sticking to this mantra will help you avoid unnecessary purchases. If there is a item that you want to buy and you do not have enough funds to buy it, save up for it rather than charging it to credit.
Educate yourself in terms of finances. Take classes, talk to you parents, save with your friends. Improving your financial literacy will benefit your finances in the long run. Brock Osweiler took several marketing, personal finance and even sports entertainment marketing classes just to be on top of his money. This is hard work but just like in practice, the harder you work on it, the better you become at it.
Here is a video on financial football:
Managing finances properly
With all these athletes losing money and even filing for bankruptcy a few years out of retirement, is there a way to prevent this? Financial literacy is a great tool in addressing this concern. Again, it goes back to the fact that athletes get so much money from salaries to endorsement deals that they sometimes make the most absurd purchases.
Investopedia.com recently released an article that aims to be somehwat of a refresher list for those lookiing to straighten up their finances. A brush up of financial literacy would always be a good step in proper money management.
Some of the things we need to be on the lookout are the following:
Starting point
This is similar to performing an audit of your current situation. It is great to have a budget and a goal that you would aspire for but the amount of work that you need to put in is dependent not only on the goal but also where you are starting from. Take for example a goal of buying house of your own. Knowing how much the property is will serve as your goal. If the house is valued at $30,000 then you would need that amount to but it.
But how much will you need to save up? $30,000? This is why knowing your starting point is a good idea to let yourself know how hard you still need to work. If you have not started yet then you really need to put up the whole amount. But if you have $10,000 in the bank and some assets and investments you can cash in that would all total $15,000 – that is already $25,000 right there. You would only need $5,000 more to get that house. From here, you are able to know how much more you need to set aside every month for the house,.
Needs and wants
It is essential also to distinguish needs versus wants. Putting a clear fine line between the two would help you prioritize purchases which is a backbone of financial literacy. Needs are the things you cannot live without. This would cover food, water, shelter, clothes, medicines and other items meant for your survival.
Wants could be different or in the same category. It could be water – you need water but you want that $10 water brand when you have water at home that would do the same job of quenching your thirst. You have food but want to dine out in expensive restaurants to partake of the meals prepared by world-renowned chefs. Same with shelter and clothes, we need them both but want is staying in a community we cannot afford because of the stature it brings and wanting to buy signature clothes because they say so much about what you can afford.
It is important to satisfy the needs first and balance them with the wants in our life. In fact, our wants could even be a push to the right direction. If you have a car but you need a big SUV because the family is getting bigger and there is that brand you want because it offers the top of the line safety features – then work hard for it. If you cannot afford it yet, save up for it so you can buy it for your family.
Spending monitor
One of the things that is essential to maintaining a fool-proof budget is knowing where everything is going especially in the expense side. List them down to know where you can take out or reduce expense items.
Get rid of debt
Debt is very prohibitive in nature. It limits our capacity to save for emergency and even start and end early with our retirement plans. Get rid of debt as early as possible to put income into good use.
Money management plays an integral part of our financial plans. Financial literacy starts with proper management of income and expenses coupled by making informed decisions along the way.