By Patrick Kerney
NFL Player Engagement
Seize the day! Tomorrow isn’t promised! You’re only young once!
I couldn’t agree more. There is fun to be had now and most of us have the money to enjoy almost all of it. Often times we grow tired of hearing people telling us to save our money. They don’t know what it’s like to have all the purchasing and entertainment options that we do. Then again, with so many people saying it, maybe we should think about why they do so.
The fact of the matter is that if, for instance, a 2013 rookie makes the minimum salary for six years, he will make over $4.3 million in salary and benefits (before taxes). For many of us, this will be a high percentage of our life’s income. We had all better make sure it’s around to cover a high percentage of our life’s expenses. If it doesn’t, simple math kicks in and we have nothing to exchange for goods and services. All of us have witnessed poverty to some extent. No matter how we cut it, it’s brutal. It’s particularly brutal and psychologically crippling if one arrives there after tasting the high life. Some very tragic stories both inside and outside the NFL family had their unravelling come about because of this type of fall.
If the emotional appeal isn’t for you, let’s look at broader themes. What kind of expenses are we talking about? Most, if not all of us either have or want to have children. The fact of the matter is that children are expensive. They’re expensive when they’re babies and they grow more expensive every year. Formula and diapers turn into cell phones and designer jeans. Children’s books and stuffed animals turn into college tuition and car insurance. Then there is inflation. No one knows how high it will be, but rest assured it will exist and it will make these items more expensive over time.
Let’s think about stress. When we’re young and single, not having a lot of money (or at least living like we don’t) isn’t ideal, but we can hack it. After all, we just left college life where we split rent and utilities with three friends and ate Oodles of Noodles twice a day. That wasn’t terribly stressful, right? When it’s just us to worry about, life is easy. When a family enters the picture, stress will come. Guaranteed. The more we save today, the easier time we will have in managing the stress of raising children.
There is also a great deal of opportunity to capture by saving early. It’s hard to realize when we’re playing and the big game checks are rolling in, but our benefits package has the potential to accumulate a massive amount of wealth for us… if we’ve saved our money. By responsibly saving, we don’t need to take our annuity at 35, our 401k at 45 or our pension at 55. The return on deferring these benefits until we have to take them per government or CBA mandate is nothing short of phenomenal. Tax-deferred investing, such as takes place in our 401k and Annuity, often represents the best investment opportunity we will have in our lives. Think of them as investing with the leverage of a 0% interest loan from the government. The great part about this loan is that it doesn’t have to be paid back until we take the money out and we get to keep most of the growth it experiences through investment. If we pay a total of 45% in taxes every year, this loan essentially allows us to invest $.82 of the government’s money for every $1.00 we and our club match invest. The longer we can afford to keep out this “loan,” the better.
No one can force us to save. We’re grown men and it’s our hard earned money. That said, there is an upside to saving that we need to weigh against our current decisions.