It’s easy to think that only “average” income earners need to create a budget to be financially competent, but that’s definitely not the case. According to a story on CNN’s Money website, NFL players are susceptible to finishing their careers flat broke. Now, this isn’t new “news”, but what’s current is that teams are now pushing for new players to set a budget and live within their means.
What a concept!
Just as people who live pay check-to-pay check know that any emergency can send you into financial ruin, NFL players may be more at risk, considering that many of their careers are short-lived. Their income can disappear due to injury or getting cut from the team. NFL players are also more susceptible to living the illusion and trying to keep up with appearances which can lead them down a path towards bankruptcy. Going from not earning anything in college to a hefty monthly salary can put dollar signs in just about anyone’s eyes.
*Side note: Another group of people who often end up broke are lottery winners. A sudden change in terms of wealth seems to skew their perspective of what’s affordable and for how long. Over extending themselves, lottery winners often lose sight of how much they’re spending and, within a few short years, end up in a worse financial situation than in which they started.
Ignorance + money = financial trouble.
The lesson: everybody needs a budget…and needs to live within their means.
Let’s convert this from an almost inconceivable salary to a more middle class income and see what it means, exactly:
- Housing – Don’t over extend yourself on your house. A $2K/month mortgage might be easily affordable on a dual income, but if one person loses their job, it might be more difficult to pay each month. Solution: buy a house that you can easily afford on one income, or stash away a hefty slush fund just in case.
- Cars – Drive a reliable, older model. Maybe I’m just not a car nut, but I truly don’t understand why people purchase cars equal to an annual salary. A car gets you from point A to point B, period. Solution: buy a reasonably priced car and drive it for many years to come.
- Choose what’s important to you – Spend money where you get the most personal benefit; that could mean travel, food, pets, etc. I spend more on groceries than an average person, but quality food is important to me, where travel falls further down on my list of wants. Solution: spend money where you feel you’re getting the most benefit.
- Spend less than you earn – Easier said than done, but not so difficult if you have a budget. Calculating your expenses and income, setting aside a portion for savings and investments, and recalculating when things change is key. Solution: prepare a budget.
It’s not rocket science, just basic math skills and a little bit of common sense.
Have you experienced a windfall that made you lose your financial senses? Do you budget?