Big-earning athletes and artists tend to lose their money at an alarming rate. Studies suggest that 60% of NBA players and 78% of NFL Players file for bankruptcy within five years of retirement. Major League Baseball (MLB) players fare only slightly better, filing for bankruptcy four times more often than the average U.S. citizen. Regardless of how one comes into money, big cash flows can paper over reckless behaviors for a period of time. If the big cash flows persist for many years then some recipients may get away with repeated capital losses and waste and still have enough to stay solvent. More often than not though, bad habits usually earn their desserts eventually, often once incomes turn down and sometimes even before. As Earnest Hemingway wrote in The Sun Also Rises: “How did you go bankrupt?” “Two ways, gradually and then suddenly.”
Well-worn reasons are typical human behaviors that transcend nationality, race, sex, background or education: overspending, aggressive “investment” bets, poor financial advice and reckless or sometimes fraudulent financial managers. Often it is all of these factors that lead to financial failure.
This clip of two sage professional athletes offering their financial advice is wonderful to witness and should be shared far and wide to as many people as possible. Not what the CNBC folks (financial product pump and dump entertainment) were hoping they would say of course…I would add to their list of advice: “steer far clear of the vast majority of financial advisers sales people”.
Hall-of-fame quarterback Steve Young and current San Francisco 49ers QB Colin Kaepernick both offer their idea for what athletes need to do with their money.Here is a direct video link.
