Insider Advice for Teens: What Pro-Athletes Don’t Know About their Money
By Dr. Robert L. Lawson
Adults should make it their business to teach young people that
it’s not how much you make that ultimately determines your financial success in life but rather, what you do with what you make. How you handle your finances is a critical component in whether you ever become successful or not.
Here’s a perfect example of what I mean. Recently, I was reading an article about a professional athlete who had earned over $52,000,000 in his career. Obviously, that’s an astronomical amount of money. However, because of poor investment decisions
and real estate deals gone bad, this individual was on the verge of
filing for bankruptcy. He was due to sign another professional contract for approximately $1. 5 million additional dollars and wasn’t sure if that was going to transpire or not.
Shouldn’t that be a lesson for all of us average folks, especially our youth? What should we be teaching them? What we should be teaching them is that a person who earns an average salary say of $40,000.00 a year and invests wisely and develops a good savings habit can manage his/her life more effectively and have more money in the end than someone who is a multi-millionaire who doesn’t handle his finances wisely. It’s a powerful lesson for all of us. We should be paying close attention.
Statistics shows that 78% of professional athletes are usually bankrupt two to three years after retirement. How could that be prevented?
Here are a few tips, strategies and ideas on effective ways to handle your money.
• Cash is king—not credit.
• Learn to set aside a portion of everything you earn. Always pay yourself first.
• When you pay cash for something that means you won’t have to worry about bills and interest payments that come due each month.
• Fiscal responsibility means that when you miss a payment, it just makes things worse because you get charged additional fees and adds to your debt liability.
• When you put something on a credit card that means you’re going to pay more for it in the long run.
Here’s a specific example. Let’s suppose an individual is making a minimum contribution of $82.00 as payment on a debt of $8, 225.12.
Let’s say that the interest rate on that debt is 24%. At the rate of $82.00 a month, it would take 20 years to get that debt paid off.
It is imperative that young people understand at an early age that even though there are positives to having credit cards there are also negative consequences associated with owning credit cards.
Here’s the point. It may not look like much but if students only make that minimum payment each month, what is owed can be dragged out for years. If they could get themselves into a financial position where they could pay an extra $40.00 a month, they could relieve themselves of that financial burden in three years and save over $3,000.00 in interests costs.
The bottom line is this. The faster you are able to resolve your debt, the sooner you can put more dollars into your own account or pocket instead of someone else’s. Fiscal responsibility can affect your credit score, a job application, a car loan approval, and more. Debt might take just a moment to incur but a lifetime to eliminate.
Dr. Robert Lawson, the author of recently released Dare to be a Millionaire, is a graduate of the University of Rio Grande in Ohio, Marshall University in West Virginia, and Nova Southeastern University in Florida with degrees in English and Educational Administration. He is the recipient of the University of Rio Grande’s Most Distinguished Alumnus Award as well as a recipient of the Ohio Speaker Forum’s Distinguished Service Award. Dr. Lawson has appeared on numerous television shows, radio programs and in such nationally known publications as USA Today, Black Enterprise Magazine and has also been mentioned on the 700 Club.
The author of five books including Dare To Be A Millionaire, Dr. Lawson has over 30 years of administrative and teaching experience and currently serves as a full time educator at Georgetown Jr./Sr. High teaching English, Leadership and poetry. He is also a consultant to Ohio University on such subjects as Motivational Empowerment, Leadership, and Diversity, and has presented for many professional organizations including Bank One, Leadership Portsmouth, workforce development organizations, human service organizations, and COAD. Dr. Lawson resides in Portsmouth, OH, with his wife, and is the proud parent of three sons.
Dare to be a Millionaire is now available for purchase at Amazon.com, and other online booksellers.