Making a lot of money in a short period of time doesn't guarantee lifelong wealth — even for some of the most successful professional athletes. An estimated 60% of former NBA players go broke within five years of departing the league.
While getting a lot of money all at once may seem like the solution to your problems, there can be a "certain impulsivity" that comes with it, Susan Bradley, a certified financial planner and founder of the Sudden Money Institute in Palm Beach Gardens, Florida, told Grow earlier this year.
Here's how LeBron James, Alex Rodriguez, and Amobi Okugo invested, saved, and spent carefully to help make their peak earnings last over the long term.
NBA star LeBron James is one of the highest paid athletes in the league. He's earned $89 million in salary for the 2018-2019 season, with $53 million of that coming from endorsements. James, 35, signed a four-year, $153 million contract with the Los Angeles Lakers in 2018 and received his first endorsement check from Nike back in 2013.
At the same time, James has chosen to think about the future and make smart choices with how he spends, saves, and invests his money.
"LeBron took that multimillion-dollar Nike check, deposited it, and came out with maybe $2,000 in cash," James' former PR manager Chris Dennis told ESPN. "He never spent or indulged in a frivolous manner when the money came."
Though he could have chosen to live lavishly, he decided to be more careful. James calls himself the cheapest player in the league. "I'm not turning on data roaming. I'm not buying apps. I still [have] Pandora with commercials," James said in an interview with ESPN.
When anyone comes into a large amount of money, it's tempting to up spending accordingly. "People get a quick lifestyle creep," says Lazetta Rainey Braxton, founder and CEO of Financial Fountains. "They get a big amount of money and are ready to go from zero to 100."
And someone told they'll be making big money may also start thinking about all the fun things they can now buy. "Entering into an employment contract paying millions can inspire huge dreams and lofty goals," says Erika Safran, founder of Safran Wealth Advisors in New York City.
James, though, knows that there is more value in planning out his financial future — because if you want a good life in the long run, you have to plan for it yourself.
"I know there will be more time of my life spent off the floor than on the floor," James said in a video series by Uninterrupted, a digital platform that he co-founded in 2014. And he knows that making smart choices around money can help wealth grow, and last, for decades.
In 1993, at age 17, the former Yankee signed a three-year contract with the Seattle Mariners for $1.3 million plus a $1 million signing bonus. Rodriguez went on to sign a 10-year, $252 million contract with the Texas Rangers in 2000. At the time, it was the largest contract in MLB history.
Rodriguez needed his money to sustain him for decades. "You're going to make probably 90% to 95% of your lifetime income from age 20 to 30, and you have to ask yourself, 'What's going to happen from age 30 to 80?'" Rodriguez told CNBC Make It earlier this year.
Your future self will thank you if you start saving early. "You have an incredible opportunity if you're frugal and you're smart and you put your money away early," Rodriguez said.
"The ability to have compound interest over 20, 30, 40 years — you can be a very wealthy young person in a very short period of time."
For soccer player Amobi Okugo, finding role models with successful money habits was hard. After going pro in 2010, Okugo was making a guaranteed salary of $158,000 a year with the Philadelphia Union, including bonuses annualized over his contract, according to sports contract site Spotrac.
Instead of splurging, Okugo put his signing bonus into a certificate of deposit (CD) for a year while he learned more about both professional soccer and personal finance.
"It's important to get your bases in order and figure out your strategy," Okugo told Grow earlier this year.
"Analyzing your current financial situation even before the windfall can make all the difference," says Braxton. "Consider how you want to live and how a large sum of money will factor in."
Remember to think about the future, too. "Balance your short-term lifestyle with your long-term security," says Safran.
This article has been updated to accurately reflect LeBron James' earnings.
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