You’ve probably had just about enough of the preseason. Vanilla schemes, zero game planning, season-ending injuries with no impact on the standings, yet in-season prices for tickets, parking, and all-around fandom – we could do without it. And that – along with increased profitability – is why the NFL is expected to lengthen its regular season schedule to 18 games, robbing two games from the preseason in the process, within the next few years. But there’s also a reason why they’re leaving two preseason games intact. Training camp and the exhibition games serve an important purpose, preparing players mentally and physically for the coming season and enabling coaches to whittle their rosters down to 53 players.
NFL Training Camp & Your Money
Much of this process is about pure competition, as a large group of the most talented individuals in the world compete for a finite number of available positions in their chosen industry – a capitalistic machine in and of itself. Much is also about fundamentals, as teams work to build a strong base in technique and scheme on which to build throughout the season and organizations chase championships and the more attractive balance sheets that come with them. All of this – from the high cost of attending an NFL game to the importance of fundamental-based preparation to competitive success – is directly applicable to our lives, and our personal finances in particular.
As consumers, we operate in a high-stakes environment, where money management mistakes can lead to credit score damage, debt, and even bankruptcy. We also need practice if we are going to perform at the highest possible level. Unfortunately, too many people operate without the basic financial literacy skills needed to effectively manage their personal finances. For example, only 2 in 5 people have a budget and 40% of grade their financial know-how at a “C” level or below, according to the National Foundation for Credit Counseling. It’s therefore no wonder that the average household has more than $1,600 in credit card debt or that outstanding student loan balances exceed $1 trillion.
So, as you watch the last few episodes of Hard Knocks and anticipate the start of the regular season, why not take yourself to Personal Finance Training Camp? Getting back to the fundamentals of responsible money management and drilling some positive habits will help get you into shape for the busy holiday shopping season, Tax Day, and the various other financial hurdles that await all of us.
Devising a Financial Training Camp Structure
We turned to a number of leading financial literacy experts for advice on the best ways for consumers to shore up their financial fundamentals. In doing so, we made sure to ask them what financial lessons we can learn from professional athletes as well as from NFL owners – who are among the most successful businessmen in the world. Their advice, which you can read in full below, boils down to 8 main tips:
- Set Goals – Professional athletes are constantly working toward goals – whether it’s a personal goal like cutting a certain amount of weight before the start of the season or a team goal like making the playoffs. Doing the same thing with your finances will give you performance incentives (e.g. “If I save this much, I will treat myself to dinner at a nice restaurant) and much-needed perspective (e.g. “I need to save X amount if I am going to retire in Y years”).
- Consume Modestly – It’s an obvious and simple notion: You shouldn’t spend more than you bring in each month. Unfortunately, far too many of us can’t seem to live by it. Just check out the current credit card debt levels. "Thinking about the salary cap as a mechanism to spend within your means,” can be helpful, according to Roland Gau, a marketing professor from the University of Texas at El Paso. “One idea may be to give yourself a ‘salary cap’ for your ‘fun’ spending (dining out, concerts, vacations, etc.) - in the months that you overspend on ‘fun,’ you not only have to make it up in subsequent months, but you should also charge yourself a ‘luxury tax’ to fund less-fun items (additional payments on the mortgage, college funds, etc.)".
- Maximize Savings – One of the biggest pitfalls for athletes is failing to realize that their prime earning years must support them for the rest of their lives. With people living longer these days, that notion surely applies to the rest of us as well. We can’t rely on Social Security to support us post-retirement, so we need to stash money away on a regular basis before then. Deanne Butchey, a lecturer in finance at Florida International University, recommends that you "save money regularly out of every pay check and a larger amount out of bonuses."
- Stick to a Budget – "If you aren’t in the habit of doing a monthly budget, definitely start," Gau suggests. There’s no better way to determine how much you can afford to spend each month and on what. The best way to create a budget is to make a list of your recurring expenses in order of importance, calculate the total amount, and cut whatever you can’t afford. In doing so, don’t forget to account for debt payments or the recreational activities that keep you sane.You should also review your spending and payment habits every month to check your progress. Gau recommends, "Every so often (maybe once every couple months), looking at your bills, and seeing how closely you are staying to your budget, and seeing if it’s worth revising your budget."
- Review Your Financial Accounts – Take advantage of your right to free copies of your credit reports every 12 months. Doing so will enable you to get a sense of your credit standing and spot potential credit report errors or signs of fraud. "One of the biggest issues facing consumers today is identity theft and how it impacts credit scores,” Butchey says. “Athletes are especially vulnerable since much of their personal information can be easily accessed (through public search engines) and they are known to have multiple addresses. It is critical that consumers in general pull their free credit reports from the three credit reporting agencies every four months."
- Thoroughly Vet Financial Advisors – We’ve all heard the horror stories of athletes handing over control of their finances to unqualified or unscrupulous individuals who steal or swindle away all their money. Since you don’t want to find yourself in that unfortunate situation, make sure to always look into someone’s background, qualifications, compensation method (salary or commission), etc., before taking financial advice from them or allowing them to manage your money. It’s actually far easier to do so now than in the past, as you can read reviews on financial advisors as well as other financial companies and professionals online.
- Invest Conservatively – Responsible saving and responsible investing go hand in hand. In order to secure your wealth for retirement, Brian Goff, a professor of economics at Western Kentucky University, recommends that you, "Consume less than your income and put the difference in diversified stocks and long-term bonds and leave it there.” Thomas Rhoads, an economics professor at Towson University, adds that, “while now is a great time to borrow with interest rates as low as they are, consumers are foregoing a lot of future consumption possibilities by spending so much of their income now and not realizing the large gains the stock market is making now."And while professional athletes have defied the odds in their professional careers, you shouldn’t follow their example of gambling on long-shots from an investment standpoint. "As athletes are naturally competitive they seek to hit the home run with their investments, but homeruns are very rare in the investment world,” says Craig Depken, a professor of economics at the University of North Carolina, Charlotte. “Rather than trying to hit the homerun, individuals would do better to be patient with their wealth creation."
- Always be Innovating – The NFL and its owners are constantly innovating, exploring new revenue streams (think NFL games in Europe and Canada) and considering ways to safeguard the league’s financial future (e.g. improving the in-stadium experience in light of home viewing options, addressing pressing health concerns). We can all do the same in our own lives by figuring out ways to make ourselves more marketable, developing new skills, bringing our small businesses to new audiences, etc. Getting comfortable with the status quo is a surefire way to avoid growth.
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