The Modern Day Athlete: Three practical steps to ensure generational wealth for NFL and NBA players

Professional Athletes
Yannik Cudjoe-Virgil

In the book “Rich Dad, Poor Dad” by Robert Kiyosaki, there is one quote that always stood out to me, and continues to be a catalyst for my decision making process - when it comes to finances. Kiyosaki said, “Most people fail to realize that in life, it’s not how much you make, it’s how much money you keep.” How can this quote be so short, but yet, so profound? To me, I have interpreted this to mean that true wealth is created by the ability to strategically preserve it over time.

In today's world, professional athletes have the opportunity to secure hundreds of millions of dollars in earning potential for both themselves and their families. Historically, statistics have shown that many professional athletes in the NFL - or even in the NBA, face difficult financial hardships just 2-3 years of exiting or retiring from their respective sport; And many athletes may not have developed the financial acumen that is necessary to protect and grow their wealth. As a former NFL player, transitioning from being a “broke college student,” to signing a seven-figure contract, comes with an immense amount of responsibility and financial fitness to absorb such a drastic change in your life. Like many professional athletes, I can remember asking myself “what is the first thing I will buy when I receive my check.”

After my retirement in 2017, I realized what the bigger issues were, and why so many athletes lacked the ability to strategically secure their wealth; It is due to the lack of financial education and planning - that arguably, should be implemented in their college curriculum. I began contextualizing these three practical steps below, that modern day professional athletes should implement to ensure they are financially secure after retirement from sports.

Step 1: Secure 

When you first enter “the league,” your main focus should be on increasing income and savings. It’s all about figuring out what fixed costs are needed for you to live a comfortable lifestyle, while maintaining the discipline to live below your means - in order to save as much as possible. Compete on the field and not in the locker room. Don’t let your teammate's financial decisions affect your spending habits. Focus on positioning yourself on the field to secure your second and third contract - where more guaranteed money is available. It’s a privilege to earn that amount of money coming out of college, and this is time to develop a disciplined foundation, in efforts to build long-term financial security for both yourself and your family.

Step 2: Preserve

Once you feel financially secure with enough savings, you want to invest in risk-averse income-producing assets like real estate, that allow you to benefit from cash flow and compound interest over time. This is what I call “patient money.” This step can be started between your first contract and second long-term contract - if you’re comfortable with your finances. The earlier you start, the more fruitful your nest egg and financial future will be. This asset class provides monthly cash flow to offset some of your other “lifestyle” expenses, like travelling for example. In terms of building wealth, you’re not going to see huge gains in the first 5 years, but year 10, 20 and 30 will be significant for your net worth.

Step 3: Grow

At this time you should have received your second long-term contract - and hopefully your third thereafter. This is where you can afford to take a little bit more risk on your investments. Maybe it’s time to start the business that you’ve always been interested in, or explore other business opportunities with a venture capital firm that would allow you to make more aggressive investments. At this time, you can also start to make some bigger lifestyle changes like purchasing a second home, or buying that luxury car you’ve always wanted - which can also be paid for monthly with your cash flow from real estate. However, be mindful and understand that every investment has some level of risk, and your athletic instincts by nature may drive you to bet on yourself, and take great risks financially. Although this mindset can create success, making a catastrophic mistake can be detrimental to your financial health.

In my personal experience of being a professional athlete, it’s my belief that this is a practical step-by-step process that NFL and NBA players can take to become lifetime earners. Creating wealth starts with a mindset shift to build a strong foundation. Too many players mistake being rich for having wealth, and fail to understand that true wealth is in owning assets. As Robert Kiyosaki referenced, “it’s not how much you make, it’s how much money you keep.”