The standard career path to top-level professional rugby takes you through the junior levels and club academy, before getting into the senior squad. As a result, it is likely that the professional contract you sign will be the first time you have earned a substantial wage.
It could be tempting to make the most of your new wealth, and buy all the things you have promised yourself, and perhaps your family and friends, during your rise to the top of the domestic game.
While there is nothing wrong with enjoying your money, it is important to work with a financial planner. That way, you can look ahead to the future, rather than simply living for the moment and spending everything you earn.
Read on for a cautionary tale about a basketball star who went to extremes of spending when he signed a new contract. You could apply the valuable lessons he learned to your own circumstances.
How to spend $1 million in 30 minutes
Shaquille O’Neal, commonly known as “Shaq”, rose to basketball fame in the 1990s and became one of the biggest names in the sport. His remarkable height and weight (more than seven feet tall and 325 pounds) mixed with rare athleticism made him almost unstoppable on the court.
His larger-than-life personality and knack for making headlines meant he was a fan favourite. However, early in his career, he also had a weakness for spending all the money he earned very quickly.
According to Yahoo, Shaq was once sent a cheque for $1 million by a trading card company he had signed a deal with. He managed to spend the whole amount in just half an hour.
His binge started with a new Mercedes-Benz, which prompted his parents to ask where their cars were. So he went back to the showroom and bought them one each.
He then purchased designer suits and expensive jewellery until, after 30 minutes, all the money had gone.
A bank manager taught Shaq a crucial financial lesson
The next day, Shaq received a call from his bank manager, who had seen the sudden activity on his account.
The manager pointed out that, like anyone with a high wage, Shaq needed to learn how to manage his money. This not only meant reigning in his day-to-day spending, but also ensuring he secured his financial future.
The manager stressed that it was not necessarily a case of spending less, but more about understanding the financial landscape in which you are working.
For example, he pointed out that the Inland Revenue Service would want at least a third of that $1 million.
Sadly, not all professional sportspeople have been given this advice. There have been many examples of people spending all they earned, while not being lucky enough to get the same call Shaq did.
A good salary will provide you with specific challenges
Few, if any, professional rugby players earn close to the lucrative salaries enjoyed by top sportspeople in the US.
However, from signing your first professional contract, to increases in salary and other income such as sponsorships and endorsements, guidance with managing your finances could be very helpful.
You will also know that your playing career is finite and could be cut short by a serious injury.
That is not to say you should live a life of frugality and never enjoy yourself.
A new car, nice house, and luxury holidays are all rewards for the hard work you put in on the pitch and in the gym. However, you also need to prepare for your financial future.
The key is to find the right balance that means you can enjoy the present, while also having the peace of mind that comes from knowing you are taking care of your future.
The story of Shaq underlines the importance of financial advice
Without a long-term financial strategy, you could be unprepared for a change in your earnings when your playing career ends.
This could result in you building up debts, and not being able to enjoy the sort of lifestyle that would normally be commensurate with your income.
You may also miss opportunities to build wealth during your playing career, when your earnings are significant.
That is why we would strongly recommend that you work with an experienced adviser to ensure you have a robust financial plan in place.
They will help you prioritise how you use your money, and ensure you address such issues as:
- Managing your income and expenditure
- Having an effective investment strategy in place to grow your wealth
- Making sure you are prepared in the event of any financial emergencies, such as a long-term injury
- Putting plans in place for your second career.
By adopting a disciplined approach to managing your finances and controlling your outgoings, you can build long-term financial security for yourself and your loved ones.
Furthermore, an adviser will help you review your financial position each year to ensure you are on track to meet your goals, or if you need to make any adjustments to your plans.
Get in touch
If you have any queries about managing your money and planning your financial future, please get in touch.
You can email enquiries@dbl-am.com or call 01625 529 499 to speak to us today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.