Money can’t buy anything bigger than your name.Retired NFL star Chad Johnson, who wore the number 85 and went by the nickname “Ochocinco,” explains his frugal spending habits told Fox Sports host Shannon Sharp at the time.
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“Why am I driving a Rolls-Royce in Ocho? Why am I buying $50,000 to $80,000 watches? Time is free, so what are you paying for?” I asked on a podcast. “I can’t buy anything bigger than my name”
The former wide receiver for the Cincinnati Bengals and New England Patriots has earned nearly $49 million in 11 NFL seasons, according to Spotrac.
What’s so good about Johnson’s money management? Many iconic NFL stars fell prey to the league’s extravagant consumer culture and other financial problems like divorce and career-ending injuries. After that, I went bankrupt.
Ochocinco wore fake Claire’s jewelry, leased only exotic cars, and used budget airlines to save money. He also admitted that the Bengals’ stadium was where he lived for two years, so he didn’t have to rent or buy a house.
“Everybody is stuck with the image of being rich with a certain view,” he said. “It’s pointless.”
Your career earnings may pale in comparison to Ochocinco’s cool $49 million, but here are five ways to keep and build your wealth at All-Star level.
Understand your game plan
For NFL stars and those of us watching football at home, one of the first steps to financial security is to have a deep understanding of your cash flow.
Knowing how much money you have coming in, how much you spend, how much goes into debt and taxes, and how much money you have left for savings and investments is essential.
Olivia said she encourages NFL players to “run their career like a business.” This means you need to understand financial statements such as balance sheet, income statement, cash flow, stocks, etc.
“Things necessary [is] Understand how to act like an entrepreneur. That knowledge is key,” he said — and that level of financial literacy is as important to the average American as it is to wealthy athletes.
Watch now: Q&A with Moneywise and NFL Certified Financial Advisor Mike Olivia
save like ocho
NFL players beat fans when it comes to savings. Most footballers retire from the league by the age of 30. This is well ahead of his 64, the average retirement age in the United States.
According to Olivia, the optimal savings rate (percentage of total income you can save) is 20%. Yet most struggle with even his 5% savings due to ongoing expenses such as mortgages, insurance and loan repayments.
“If you’re a professional athlete, you’re generating a lot of your lifetime income in a short period of time, so you could potentially save 80% of that income,” Olivia explains.
With that much money tied to savings, NFL stars can really take advantage of compound interest.
Johnson said no to sports cars and bling to save much of his career earnings, and like any NFL star, it’s a good idea to consider spending money that you can say no to.
make money work
How do the rich get rich? Isn’t it just about inheriting money or getting cash unexpectedly like a freshly drafted NFL player?
“It’s an ownership interest in the business and having some interest in the business (whether it’s yours or another’s) such as stock options, RSUs, or other equity ownership said Senior Partner at West Pac Wealth Partners and Head of Strategy for the Olivia Team Virtual Family Office. “Alternatively, it is more likely to be real estate or a passive income source.”
“When you think about NFL athletes … how do you give them access to profitable, yield-producing, secure savings tanks and financial instruments? [and] liquid like that [they] Will I be able to access capital and generate passive income when I eventually leave the league?”
You may not consider yourself rich, but it is worth accumulating wealth (if you can) to achieve your long-term financial ambitions.
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Insurance doesn’t have to be a grudge purchase. It protects you from unexpected financial losses and allows you to live more confidently in your daily life.
Career-ending injuries are common for NFL stars, Olivia said.
“Their income, their bonuses, their performance-based compensation — all these things can be covered by insurance, but many of these athletes just don’t have the time. [to think about personal risk management],” He said.
“They also think, on some level, that they are immortal, because that’s the mindset they need to be in the league. [But having] Protection to play that defense is key. “
Another layer of defense is excess liability insurance. In the event of a car accident, lawsuit, or a guest slipping and falling on your property, this coverage is enhanced when other insurance coverage, such as a home or auto, runs out.
Finally, life insurance is not only useful for death benefits. Olivia said many insurance policies have monetary features, so they can be a “great asset class” in your lifetime.
get advice from a coach
Ad hoc financial decisions driven by FOMO (fear of missing out) don’t always pay off.
Olivia says it’s better to take a step back and calculate risk with the help of a mentor or financial expert.
He gave an example of an NFL star signing with the right CPA company. “Having the right accounting professional and accounting advice is really important … being able to avoid state income tax — there are ways to do that.”
Legal advice is just as important, he added. Set up trusts, estate plans, and perhaps premarital agreements to protect your assets in a way no one can touch them.
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This article is for informational purposes only and should not be construed as advice. It is provided without warranty of any kind.