ESPN recently aired a special documentary on its 30 for 30 show called Broke.
The documentary focused on professional athletes who make millions of dollars during their short careers, but lose it all a few years after retiring.
The rich professional athletes ended up going broke and filing for bankruptcy for many of the same reasons why some members of the general public end up losing all of their money.
Many debtors file for bankruptcy for reasons completely out of their control. An unexpected illness, catastrophe, or loss of a job all reduce the amount of income an individual can bring in and the amount of debt an individual can repay.
However, there is a group of debtors who have made some financial mistakes that caused financial ruin. Spending beyond your means, or purchasing what you want and not necessarily need are ways to lose large amounts of money, quickly. This is particularly true in the American consumer culture, which emphasizes spending over saving. Further, some debtors, including athletes, meet the wrong people who convince them to make unwise investments.
Where the general public and professional athletes differ, is that professional athletes generally make their money at a younger age. Some athletes turn professional right out of high school, and the mere age of 18. At this age, not many people understand the value of money. Moreover, many professional athletes grew up without much money. Once they turn professional, they can make $200,000 per week or even more. With paychecks this large, there is a sense that money is not an object and paychecks will never stop coming, so money will never be an object. The reality is that athletes are usually forced to retire before the age of 40, when most of us are just starting to ascend up the career ladder.
The more money you have, the more you can spend. The consumer culture of spending is even more exaggerated at the professional athlete level. They strive to buy more cars, more expensive cars, more homes, bigger homes, and more expensive jewelry. Broke also showcased athletes supporting up to 16 friends and family members, baby’s mothers, and purchasing items to outdo their teammates.
Although the general public’s lives may be vastly different from the lives of professional athletes, we can learn from their mistakes. Saving and planning can help ensure a comfortable financial life.
Even if debtors are living within their means, it is not enough to avoid financial difficulty. It is necessary to save well. Savings can help curb the effects of disasters beyond the debtors control like injury, sickness, or loss of a job. Saving will necessarily ensure that the debtor does not overspend or consume all of their income.