Professional athletes rarely have much in common with the average working person. But when it comes to financial matters and the potential for bankruptcy, they are more similar than you might think.
When an athlete declares bankruptcy, the first question on the publics mind is where all of the money went. And while spending does play a large part in why professional athletes go bankrupt, the larger issue is lack of planning. The media prints accounts of the excesses of professional athletes, cars, homes, nights out with friends, and even divorces and child support. Even the failed investments become public knowledge. So, with all of those differences, professional athletes cannot possibly have any similarity to a recent graduate entering the workforce, right?
Like a professional athlete, the college graduate goes from virtually no income to suddenly having one, albeit a considerably smaller check than the average professional athlete receives. Once they have that money, when everything was tight before, the graduate or athlete now wants to spend some of it on the things they could not afford previously. This is the second similarity because that temptation is what gets grads and athletes into trouble. Spending everything you make in a month leaves you vulnerable to emergencies; without the foresight to resist the call of the mall or gadget store both the grad and the athlete will find themselves in trouble at some point down the line. And that trouble comes in many forms, whether it is a workplace injury, legal issue or even car trouble; with the sports star these difficulties tend to be on a proportionally larger scale than the average college graduate.
Step 1: If you have questions, ask a professional
One of the biggest problems that professional athletes face is knowing how to manage their money. If you have never dealt with large sums of money, or even just the amount that you have in your savings account, you may need help deciding how best to protect it. Consider how many athletes hire family and friends to be their accountant, or their manager. Would you do that with your new paycheck? Probably not, unless they manage money for a living. The key to financial success is good advice from a reputable source.
Step 2: What if?
Injuries, legal trouble, and medical emergencies happen to everyone and when they do you may need to come up with the money to take care of it. By placing a certain amount aside every month you can protect yourself from these unpleasant surprises. Bankruptcyoften happens when you have no way to make your payments; if unexpected things happen and your income is already promised to other expenses you will most likely find yourself in an uncertain situation. If that happens, the best thing to do is consult a bankruptcy attorney who can help you determine the right path for you to take.
Step 3: If it sounds too good to be true, it is.
Once the money is coming in, athletes discover that family and friends have all kinds of ideas about how to invest. If you have people telling you about this great idea for an investment, do a little homework and make sure that it is the best thing for you. Everyone wants to make money, but if you invest make sure that it is money you can afford to lose. The last thing you want to do is squander your paycheck on something from which you will receive no benefit, whether financial or otherwise.
The best thing to do is avoid bankruptcy. If that is no longer possible, the next best thing is to consult an attorney who will help you get everything straightened out. Hopefully learning from what some pros do or do not do will help you avoid their pitfalls.
Elyse Levin interns for The Cohen Firm, a bankruptcy law firm in Irvine, California. For further information regarding bankruptcy please contact Isaac Cohen, Esq. at 949-900-6700 or at firstname.lastname@example.org. Learn more about The Cohen Firms bankruptcy services by visiting their website www.thecohenfirm.com