5 Reasons Why Pro Athletes Go Broke!

5 Reasons Why Pro Athletes Go Broke!

“It’s not (all) our fault!”

After seven years in the NFL, I transitioned to a career as a financial advisor. (1)

The experience has afforded me a new perspective on the situation of professional athletes and their finances.

This is NOT another tale of some 25-year old’s lavish spending. The players change, yet the problem remains. Let’s stop pointing fingers at people, and address the underlying issues.

To all those athletes in pursuit of the “The Dream,” this one’s for you.

You’re told from an early age your talent will deliver a life of enormous fortune. Unfortunately, newfound wealth comes with significant obstacles, even if you make it that far. That’s the story you don’t hear about, and the one I want to uncover.

Here are five of the systematic hurdles before you.

1. Breaking personal finance rule #1

Name a profession from which you can retire before age 30 and still be financially secure? I’ll wait. Any guesses? There isn’t one.

The average career in any professional sport comes to an end at age 26.

You may walk away a millionaire, but that’s hardly sustainable. You are losing the only source of income you’ve ever known.

Retirement is accepting the fact you will begin breaking personal finance rule #1: your lifestyle exceeds your income.

The thought of that unsustainable cash flow should be a reminder to plan with the end in mind.

2. The short-term mindset

Your life has always been cyclical—throw a dart on a calendar, and you know where you’ll be and what you’ll be doing.

Your ability to adapt to a routine, to block out all distractions future and past, has contributed to your success. However, such a mindset can also have an adverse impact on your finances. Your time horizon never gets past next season. You aren’t seeing how your post NFL professional career could/should shape your life plan.

Athletes must begin to see money like training.

No one wakes up at 5:45 a.m. and wins a championship. They wake up and train at that time in hopes it will lead to a championship effort.

Money is no different.

You must begin to save or “train” and invest or “practice” if you hope to have something to show for it.

No matter if you are an athlete or in your first job, you must develop a long term plan for your financial future.

3. The education gap

You’d think a primary mission of America’s education system would be to teach young adults the nuances of personal finance and capitalism. If that’s the intention, it’s certainly falling short.

Your introduction to money comes as a member of the 1 percent, with no knowledge or appreciation of what that means.

That’s not the time to begin an education.

No parent waits for their child to be holding matches before teaching them about fire safety. Put simply, this problem is not limited to athletes.

How are people supposed to live out the “American Dream” if they possess no baseline knowledge of taxes or mortgages or saving for retirement?

If you spend like you signed a $100 million deal, the reality is you will not only go broke but also be in DEBT!

Making education and this knowledge a priority will allow athletes to capture the dream on and off the field.

4. Limited flexibility

Important tools available to others aren’t at your disposal. You experience a similar financial windfall as those who win the lottery, but even they have a deferred compensation option.

The lack of financial flexibility falls under the NFL Umbrella. (2)

Corporate executives can defer their compensation as far into the future as possible, allowing them to manage their lifestyles and save thousands in tax payments. Athletes do not enjoy the same luxury, and will continue to pay the highest bracket of income tax possible.

While access to a 401(k) is a clear positive, young players may be misled to believe $18,000 is all they need to save throughout the year. The amount, which is not even a week’s paycheck, won’t be available for decades and must support 60 years of living!

Each year you spend a certain amount of money—$60,000 or $5,000 per month or $120,000 or $10,000 per month—that represents your annual cash need.

Protecting 5 years of that number, the amount you need in cash on a yearly basis, will give you the flexibility and freedom from depending on getting a next contract! After all, money is meant to bring you peace of mind.

5. Making the transition

How long have you been identified as a jock? How long has the first question anyone asks you been, “How did you play?”

The title of athlete was bestowed upon you before you could drive. Just imagine a doctor, after years of medical school, residency, and an active practice, being told they were no longer a doctor. You’ll likely feel lost, having never considered what’s next. All at once, you lose your focus, your confidence, and your purpose.

The harsh reality is the fans will forget, the team will move on, and even teammates will fall out of touch. It begins to feel like the only nostalgic action you have of the old life is spending like you are still in it.

The other four hurdles will impact this one. Not having a plan; not changing your perception of life; not gaining an education; and not taking advantage of the options you have will all make this hurdle more daunting.

It’s easy for people to say “go get another job.” When you do begin looking for the next job, you’ll be overqualified in life experience and under qualified in actual experience. Peers who have admired you are now years ahead and suddenly the object of your envy.

The crippling question remains: what else are you good at?

I’m not trying to give you an excuse. Rather, I want to introduce you to the difficult dynamics you must navigate.

The system, the one that pushed you to be the best in one realm, has failed to prepare you for the rest of the Dream.

Every athlete knows that a lack of preparation puts you on the path toward failure.

My hope is that you marvel in the fact that your dream is coming true. Take pride in it. But also be humbled by the statistics of how long your dream may last. Begin asking yourselves, “How long can I make my Dream last?”

The dream of professional sports is no longer to walk across the stage as a Rookie, it is now to see the life you have set for yourself and all the game has given you. If you can capture the dream while you are playing, it will reduce the struggle transitioning to and finding what the next chapter of life looks like. 


(1) A free piece of advice: the terms you hear—financial advisor, wealth manager, investment consultant—hold little meaning. Ask everyone two questions: 1) Are you a fiduciary? 2) How do you get paid?

(2) Another tip: most professional athletes should have an umbrella insurance policy.

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To discover more about Jedidiah “Jed” Collins visit JedCollins.com

Pleased to Share

Jed has graciously agreed to contribute more of his Sammyriffic critical thinking to Sammy Rabbit’s Teen, College, and Young Adult Financial Literacy Discussion Panel Number 3. So, stay tuned! Our Panel 3 discussion will be posted in September.

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About the Author

Jedidiah "Jed" Collins is a CFP®, former NFL player, Amazon best-selling personal finance author, speaker, podcaster and creator of the Money Vehicle Course. He is also a husband, father, and a passionate advocate for financial empowerment.