Summary:
This article talks about how high paid professional athletes becomes broke in just a few years after retirement. The salaries of NBA players are all in the millions range. That may seem like a lot of money, but after tax reductions, anyone would be amazed at how much money gets cut off of the paycheck. Many of the athletes that go broke are all big spenders so it's no wonder they get broke so quickly. According to this article, some of the things that these athletes blow their paychecks on are cars, which is a very poor investment decision due to the fact that its value depreciates. Another reason why the athletes don't have enough money left after retirement is that an athletes career is short-lived.
Connection:
This article relates to cash outflow and inflow. These athletes are aggressively spending large sums of cash without thinking of the consequences. The mounds of cash that the NBA players are dishing out to buy unnecessary products are going to waste to buy things like vehicles and electronics, which as stated in the article, are poor investments because they amortize. Also, due to taxes, the paycheck the players receive are deducted immensely, and not only that, since the careers of basketball players are short-lived, its hard to save up enough money that will support them for the rest of their lives. Most basketball players' cash inflow is inferior to the amount of their cash outflow.
Reflection:
I find this article quite shocking. Most people would expect superstars like professional athletes would have easy lives as a result of their financially enormous paychecks. It wouldn't be surprising that the athletes spend a large portion of that money sometimes, but its quite surprising to see that not even the money the athletes initially saved up could cover them for a few years in the future. This article has taught me that although you may seem to have a lot of money at hand initially, due to bad financial decisions, that money could go to waste quickly, rather than being put into good use: into good investments and savings.
I am also quite in shock with this article. Professional athletes ( in NHL, NBA, NFL, MBA, etc) make million and million of dollar each year, even after tax reduction. I guess many athletes run into financial problems is that they retire at a early age compare to an average working person. After retirement, athletes barely get any inflow of cash and their out flow of cash becomes greater than their in flow;therefore, they will become broke. I don't find it surprising that athletes spent most of their money on cars. I remember watch a TV interview of the best hockey player Alex Ovechkin. He spent a lot of money on a very expensive car which is described by the funny money man as one of the biggest money loser item.
ReplyDeletehaha well said, its funny when i hear stories such as this. I guess when it comes to money saving and money management, "Ignorance is Bliss?". Those athletes, with their large paychecks, are probably living their lives and don't have enough time to think about how to manage their money for the future. Maybe they should hire a professional accountant or a budgetor (is this a word?). Having a lot of money can blind you of what is the right thing to do, for example: to purchase a really nice car for looks and enjoyment, or purchase long term saving and investing options? It's a hard decision.
ReplyDeleteI am moderately shocked at this discovery you have made from this article. It is no surprise that their cash flow will significantly decrease after retirement. Since most athletic retire at such a young age compared to the average full time job, and the fact that many athletic like to ‘blow’ their cash on a lot of things that depreciate so quickly, it is no wonder why they are broke within a few years of their retirement. This also solves the mystery of where the stereo-typical view of athletes being empty headed comes from – though there are many athletes who ‘have a brain.’ This is why intelligent athletes have a steady job as well as pro-athletes.
ReplyDeleteHey there Hoy Hoy ;) I think you've got a great article here look at how many comments you're getting! Anyways, what I want to say is that I on the other hand was not very shocked when I read this article. In fact I thought it was totally normal. Athletes that retire would usually 'blow' there cash like you have mentioned in your article. This is not just because they are big spenders but also it is due to the fact that they have nothing else to do but to go out and spend money. Therefore, what is the first thing that comes to their minds? What else? Of course luxury goods! Cars, houses, clothing, electronics, etc. However, they don't think before they buy and as a result their cash flow goes downhill. Not just because they were spending their cash recklessly but they buy assets that depreciate in value. Altogether great article and Hoy Hoy I better see you next class.
ReplyDelete