Being an athlete is a dream for many, but the reality behind the glitz and glam often includes financial challenges. Whether it’s due to unexpected expenses, mismanagement, or simply not earning what was anticipated, finding oneself in a financial hole can be daunting.
I’ve been in a financial hole before, and it wasn’t because I was trying to impress others. Even after a few years of educating myself about money and working full-time, I made financial decisions that were not aligned with my income, my financial goals or my savings. Thankfully, with the right plan in place and a ton of discipline and patience, I was able to get back on track financially. Just as we athletes overcome obstacles on the field or court, we can also tackle financial setbacks with the right game plan. Here’s a playbook for athletes looking to dig themselves out of a financial hole.
A Playbook for Athletes in a Financial Hole
Face Reality: The first step in any comeback is to face reality head-on. Take a hard look at your financial situation. Assess your income, expenses, debts, and savings. Understand where your money is going and where it needs to go. This may be uncomfortable, especially when you’re breaking down numbers or discussing your financial matters with a partner. However, it’s essential to get a clear picture of your financial standing before you can make any meaningful progress.
Create a Budget: Once you understand your financial reality, create a realistic budget that aligns with your income and goals. Cut unnecessary expenses, prioritize essential spending, and allocate funds towards debt repayment and savings. A budget provides a roadmap for your finances, helping you stay on track and avoid overspending.
This might mean cutting out small luxuries in your life, such as subscription services, maini/pedis, eating out and others. For me and Kurt, getting ourselves out of a financial hole meant not eating out and cutting down on travel. It wasn’t fun at all, but, we were able to eliminate our debt much faster and minimize the interest we were paying on our credit cards.
Prioritize Debt Repayment: If you’re in debt, make debt repayment a top priority. Start by paying off high-interest debts first while making minimum payments on others. Consider consolidation or refinancing options to lower interest rates and simplify repayment. Allocate any extra income, windfalls, or savings towards debt repayment to accelerate your progress.
When we had thousands of dollars of debt remaining from our first fixer-upper project, we made it a priority to pay off debt and save very meagerly. The way we saw it, the longer we were in debt, the longer we were paying interest and other fees, while also not being able to pocket our own money. Making a plan to pay off any debt is definitely the way to go.
Increase Income: Explore opportunities to increase your income, whether through additional endorsements, sponsorships, investments, or alternative revenue streams. Leverage your skills, expertise, and platform to generate supplementary income outside of your primary sport. Every extra dollar earned can expedite your journey towards financial stability.
Even if you aren’t able to earn NIL income, there are hundreds of ways you can bring in extra income. Hosting camps, offering training sessions, creating recruiting websites for athletes, and more are just a few ways to earn income to help boost your earnings while getting out of a financial hole.
Build Emergency Savings: Establishing an emergency fund is crucial to prevent future financial setbacks. Start small if necessary, but make regular contributions to your emergency fund until it reaches an adequate level. Having savings set aside can provide a financial safety net during unexpected circumstances.
This might be tricky at first because you may want to pay off as much debt as you can at once. I used to find it frustrating when articles and experts would say “save enough to cover at least three to six months’ worth of living expenses.” That’s a whole lot of money that people don’t have on hand. To make my savings goal manageable, I’d start by saving a weeks worth of groceries, then the cost for utilities, then one months’ rent. Growing my savings a little bit each week made it easier for me to save without feeling discouraged.
Invest Wisely: Once you’ve stabilized your finances and built a solid foundation, consider investing for the future. Educate yourself about investment options, risk management, and diversification strategies. Consult with financial advisors or professionals who can provide personalized guidance based on your goals and risk tolerance. Remember to invest prudently and avoid high-risk ventures that could jeopardize your financial security.
Seek Professional Help: Don’t hesitate to seek help from financial professionals, such as advisors, planners, or counselors, especially if you’re unsure where to start or overwhelmed by your financial situation. They can offer expert guidance, personalized recommendations, and accountability to help you stay on track towards your financial goals.
If you don’t have the money to pay them right up front, some professionals might help you with a consultation call. Having a strategy that you can work on at first, can help you get out of a hole and better positioned to work with a planner.
Recovering from a financial hole requires discipline, perseverance, and a willingness to make tough decisions. As athletes, you already possess the qualities needed to overcome challenges and achieve success. No matter where you start, it is totally possible to navigate your way out of financial hardship and towards a brighter financial future. It’s not about where you start, but how you finish. With determination and the right game plan, you can stage a remarkable financial comeback.