The Importance of Financial Literacy
If you’re a young athlete just starting out, it’s vital to learn the basics of financial literacy. While not an athlete myself, I’d like to share with you my experience so that you can learn from my mistakes and start making smart money moves sooner.
When I got my first job at age 16, I was so excited to have money for myself. I still remember the thrill of knowing I was going to receive a check. But at the time, I had no idea that a portion of the check I was expecting would never make its way into my hands.
After my first check arrived, I went to my mom feeling confused. I remember multiplying $7.25 by the number of hours I had worked. It turned out the check was less than expected due to taxes and other payroll deductions. At the time, I couldn’t believe it. I remember my mom laughing a little, as she had been used to taxes for many years. But financial literacy was not something I was taught by either of my parents.
My first paycheck had to be cashed, as I didn’t even have a bank account — which resulted in me spending the entire paycheck quicker than I’d like to admit. It wasn’t until a few months into my job that I established my first bank account. I treated it like cash, having my first debit card, and I was still quickly spending all the money I earned.
A few months later, I was able to establish a savings account. Then, when I began college, I surrounded myself with great friends and mentors and noticed they were more careful with money. I was fortunate to learn from them that if I didn’t set aside money automatically or have a habit of saving, it could be tough to build up an emergency fund or save for retirement. And so I began taking a small amount out of my paycheck each month to start building my savings account in case of emergencies.
You got to where you are today by building healthy habits and consistently practicing your sport. Just as you need to consistently eat healthy foods in order to stay in tip-top shape, financial wellness also requires maintaining healthy habits that build over time.
Learning financial discipline helped me to create good habits as my career progressed in order to achieve some of the financial goals I had set for myself. You might just be starting out in your career, but you’re going to move on to bigger and better things. Heck, you might be lucky enough to become a professional athlete one day! And with a bigger paycheck comes additional financial complications.
There are resources available to help you learn about contracts, taxes, investing and more. Adopt healthy financial habits early on, and they’ll stick with you as you accumulate more income and your financial situation becomes more complex. No matter the situation, it’s all about building good habits early (just like those that helped get you to where you are today).
Could you use some help getting your finances in order? Creative Planning Sports is here for you. We are fiduciary advisors who specialize in helping professional athletes navigate the unique financial challenges of their careers. As a specialty practice of Creative Planning, our experienced team members include CERTIFIED FINANCIAL PLANNER™ professionals, certified public accountants, attorneys, insurance specialists and more. We help you navigate today’s challenges while preparing for a financially smart future. To learn more, schedule a call.