Baseball players, among other sports figures, are often glamorized in the media. Signing big contracts, advertising deals driving around in expensive cars are all part of the game.
All too often , fame and fortune can quickly disappear
Here are some gems shared by Eric Sogard, a famous baseball player that anyone can use to set themselves up for finanacial success.
1. Set and stick to a budget.
Simple advice, right? Still, it applies to everyone.
Meet with your financial planner two or three times a year to review Your spending and goals. All too often, we’ve sat down and I didn’t realize we were spending that much on a monthly basis, and it just kind of opens my wife and my eyes.
Always live within your means, (spend less than you earn and put Aitken away on the sideboard! and keep a close eye on expenses.
Checking in occasionally with a financial planner might make sense if you don't have the time, or the tools, to tackle this on your own.
2. Learn from those who came before
78 percent of former NFL players are bankrupt or under financial stress within two years of retiring and 60 percent of ex-NBA players are broke within five years of leaving the court. To avoid that fate, seek out advice from teammates who’ve been around the league longer.
“We’re all in the same situation as ballplayers, we all have the same goal -- we want to continue to make money and invest smartly,” says Sogard
Consult those who have been down your path before, learning from both their successes and mistakes. More than likely, someone close to you has faced a similar financial or business decision.
3. Plan for when there’s no money coming in.
Baseball is a summer game and for the players, it’s not unlike a summer job.
“We only have an income for six months, so you really have to be smart and save up for that offseason,” says Sogard. “If you’re going to go spend all the money you make during the season, you’re going to be stuck in the offseason thinking of what you have to do for money because you blew it all.”
Take this into account when planning both for the next year and the next 50.
Set aside at least six months’ living expenses in an emergency fund. If your business takes a turn for the worse, you'll want to avoid leaning on credit lines or falling into debt.
4. Make your assets work for you.
As soon as he signed his first big-league contract, Sogard bought a house in his native Arizona.
"It’s been a great decision. I’ve been able to rent it out since then, and it’s been a cash flow coming in,” he says. “As I look back on it now, that’s the smartest thing I’ve done.”
If you're ready to invest, consider assets that provide long-term cash flow. Options like rental real estate and dividend-paying stocks can provide income throughout retirement.
5. Lean on a team of trusted advisors. In addition to calling on his dad, Sogard sought out a financial planner to help manage his money and provide a financial education. His financial planner serves as a guard against suspect investment ideas and offers counsel—because even major league ballplayers need guidance.
You could make $100 million a year but if you spend $120 million a year you’re eventually going to end up broke.”
Know what you don’t know (or have the time to handle), and find trustworthy specialists to fill in the gaps.