What Can You Afford?
Answering this question helps set you up for success in your financial life. On the surface, it seems quite simple. There are countless articles, studies, and opinions that help people make savvy buying decisions ranging from the mundane to dream houses. Unfortunately for athletes, it is a different ballgame. Basing spending habits off an athlete’s salary is a recipe for disaster.
According to data gathering firm Statista, the average salaries for the four major sports leagues range from $2,690,000 million for the NHL up to $8,320,000 for the NBA. Most professional teams only pay players during the season which only magnifies the per check number for athletes. The average player is earning six figures per paycheck. This sum allows you to buy nearly anything. Want to buy a new car, great. Want to put a down payment on a house, approved. Want to buy a Rolex, no problem. These large checks create a false sense of security for players. To compound the issue, these checks are usually year to year with no guarantee of future income.
So how do we decide what an athlete can afford? The key here is distinguishing between needs and wants. You need a car. You do not need a Ferrari. You need a place to sleep. You do not need a 6,000 square foot house. You need shoes. You do not need Gucci loafers. This is not to say that you should not reward your success with things that bring you joy. This is to illustrate the difference between a one-time purchase and a lifestyle. A one-time purchase is just that, one time. A lifestyle is a sustainable way of living that can continue. Building a budget based on your needs provides an excellent starting point for athletes.