It is important for professional athletes to engage in financial planning because they have the potential to earn a lot of money. However, their careers often last fewer years than others, and the career can end quickly with an injury. By planning for the future, they can make sure that they have financial security for life.
Although many professional athletes receive a large paycheck, it could be short-lived due to unknown factors such as injury or even performance. It is important to save as much as possible from the beginning so that they can support themselves and their families for the rest of their lives. By transferring it to savings and investments and setting a budget for living expenses, they won’t miss it.
It is always harder to save money when it is in the account and ready for spending, and it is tempting to buy extravagant things that they couldn’t have in the past. However, they can still live a fantastic lifestyle while saving as much as they can. Some athletes are only paid during the season, and they need to make it last throughout the year.
Strategies to Minimize Taxes
By planning and coming up with strategies to minimize taxes, athletes can save more of their money. First, they should choose the appropriate domicile. Choose a home state such as Florida, Texas, or Tennessee that has no state income tax.
They also need to consider the tax impact of paying taxes to states where they play. Some states have a tax for road games, but they can receive a credit in their home state. However, if their home state has a higher tax rate, they may owe additional.
They also need to understand that a signing bonus has tax implications. This applies in their state of domicile, and if they live in a state without a state income tax, they can save a great deal of money.
There are also a number of itemized deductions to consider, such as expenses related to appearances and more. By taking these steps, they will be able to count on stretching their salaries to last their entire lives