Photo: The U.S. Army/Flickr
It turns out Olympians aren’t just fitter than the rest of us—they’re more financially savvy, too. That’s according to official Team USA sponsor TD Ameritrade, which surveyed 254 Olympic athletes. Most of them said that they thought their athletic training contributed to their financial discipline.[In Pictures: 10 Questions That Will Help You Earn More Money]
Their answers also gave clues as to how the London Olympians are likely to spend sponsorship money and other related windfalls that come out of the 2012 Games. If they won the lottery—an event similar to some of their sponsorship deals—just three per cent of respondents said they would splurge. Instead, one in three said they would pay back loans and two in five said they would save or invest it. Almost two in 10 said they would give it away to charity or to friends and family.
The Olympians surveyed already have strong saving habits: More than half said they save money on a consistent, monthly basis through automated deposits, and almost seven in 10 said they are consciously saving for the future. Most said they are financially secure or stable, and don’t need to turn to credit cards to cover costs.
The Olympians also revealed themselves to be a confident group, when it comes to both athletic competitions as well as financial goals. Almost all respondents with financial plans said they were confident they would meet their goals, and two-thirds described themselves as highly-confident. Most said they considered their financial planning skills to be above-average.
That doesn’t mean they don’t have regrets: Two-thirds of respondents said that they wish they had saved more money before the recession, and half said they wish they had “taken more responsibility” for managing their money. But they also are clear on their priorities: Just 9 per cent said they would have spent less on their training.
Olympic fencer Mariel Zagunis, who will compete in London and already holds two gold medals from Athens and Beijing, told TD Ameritrade, “Goal setting, belief in your ability to accomplish your goals, and a systematic, step-by-step plan to reach those goals are inherent parts of being successful, really in anything you do. In my case, that’s fencing, but I employ the same strategy in many other aspects of my life, including my finances.”
The TD Ameritrade survey suggests that Olympians are better-prepared than other celebrities to navigate their uneven earning spikes. Pop stars like Britney Spears and actors such as Nicolas Cage have famously made poor financial choices. Part of the problem seems to be that celebrities have a tendency to spend their windfalls instead of saving them for lower-earning periods, and they fail to anticipate those leaner times.
“The most common mistake that celebrities… make is ridiculously high spending in their newfound financial success,” says Tim Maurer, coauthor of The Ultimate Financial Plan. Celebrities often expect their high earnings to continue, but in reality they often have short careers, marked by bursts of high income. That means they need to spend much more modestly than their last paycheck would allow in order to make that money last, says Maurer.
When Michael Phelps won eight gold medals in Beijing, he automatically earned $1 million for his accomplishments through his contract with Speedo, and his agent told the Wall Street Journal that he expects Phelps’s performance in Beijing to earn him $100 million over the rest of his life. (He was already earning $3 million to $5 million a year from endorsements.)
At the time, Alby Salaman, chair of Holland & Knight’s private wealth services group for the mid-Atlantic region and lawyer to several NBA and NFL players, described what Phelps should do to protect his money. He said the first step is to hire the right people, including financial advisers, lawyers, accountants, and possibly an insurance agent, just in case an injury hurts his future earning power.
Then, Phelps should pay off any debt, and avoid taking on any new debt, said Salaman. Many celebrities run into trouble by taking on massive mortgages instead of purchasing homes with cash, for example.
Another risk for celebrities and Olympians, says Salaman, is that they are often approached by friends and family members who ask for money or for investments in various projects. And while it might be unromantic, Salaman recommends a pre-nuptial agreement for anyone going into a marriage with such significant amounts of cash.
Sounds like good advice for any of the stars that emerge out of the London Olympics, too.
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