For many athletes, there comes a time when a large sum of money lands in their bank account—whether it’s a professional contract, a signing bonus from their first 9-to-5 job, a financial gift, or even a tax refund. While it may be tempting to splurge, managing this money wisely can set the foundation for long-term financial security. Here’s how athletes can make the most of a financial windfall or payday, while ensuring it benefits both their present and future.
How to Manage a Big Payday Responsibly
1. Pause Before You Spend. It’s easy to feel like you need to spend as soon as you get a large sum of money, but one of the smartest moves you can make is to pause. Before making any big financial decisions, take a step back, evaluate your situation, and create a plan. This prevents impulse purchases and allows you to think strategically about how to use the money effectively.
2. Pay Off High-Interest Debt. This doesn’t sound or feel exciting, but if you have credit card debt, student loans, or other high-interest obligations, paying them off first can be a game-changer. High-interest debt can eat away at your financial future, so eliminating it early can free up more money in the long run. Think of it this way- why spend months-years paying off debt + interest, when you can start paying yourself back sooner?
3. Save for the Future. Consider allocating a portion of your money toward savings. A good approach is the 50/30/20 rule:
- 50% for necessities (rent, bills, debt repayment)
- 30% for discretionary spending (travel, entertainment, shopping)
- 20% for savings and investments (emergency fund, retirement, or other long-term goals)
Additionally, building an emergency fund with at least three to six months’ worth of living expenses can provide financial security and prevent you from relying on credit in tough times.
4. Invest in Your Future. One of the best ways to make your money work for you is by investing. Consider contributing to:
- A 401(k) or IRA for retirement savings
- A brokerage account for long-term investing in stocks, ETFs, or index funds
- Real estate or other assets that can generate passive income over time
Investing may seem complicated at first, but working with a financial advisor or learning the basics can help you grow your wealth responsibly.
5. Plan for Taxes. A sudden influx of money might come with tax implications. If you sign a pro contract, receive a bonus, or get a large financial gift, set aside a portion for taxes to avoid surprises during tax season. Consulting with a tax professional can help ensure you stay compliant and maximize deductions.
6. Treat Yourself—But Set Limits. Enjoying your hard-earned money is important, but do so responsibly. Set a percentage of your windfall for discretionary spending so you can buy something meaningful without derailing your long-term financial goals.
7. Seek Professional Guidance. If managing large sums of money feels overwhelming, seek help from a financial planner or advisor. A professional can help you budget, invest wisely, and create a strategy tailored to your specific needs.
Athletes are no strangers to discipline, and that same mindset applies to financial success. By managing a large sum of money responsibly, you can set yourself up for long-term financial security, avoid unnecessary debt, and build lasting wealth. Whether it’s a pro contract, a signing bonus, or a financial gift, smart money moves today will create a stable and prosperous future.