By Constantinos Massonos
A crucial part of professional athletes’ lives is their ability to take optimal financial decisions at different stages of their careers, in order to build their wealth and sustain their lifestyle after the end of their playing days.
Money management is, of course, important for any average person, but is particularly critical for a professional athlete, bearing in mind the special nature of the athletic profession, in particular its relative short duration.
The relationship that a person has with money is shaped very early in their lives. Typically, people learn things about money, like what it is, how to deal with it and how to feel about it, by observing and imitating the closest people around them: their family.
But leaving financial education to the discretion of sometimes unequipped parents with perhaps a low level of financial literacy, is not the most efficient way to help children acquire the knowledge and skills, which will help them build responsible financial behavior. Financial literacy education should be a part of any school curriculum on a long-term basis in order to be efficient.
It is never too early to start teaching children basic personal finance, as that can define their financial future and help them avoid various money mistakes later in life. As early as the age of three, children start to interact with others, learning critical social and emotional skills and also begin to develop interests that might stay with them throughout their lives. This is also the time when children begin to form their lifelong money habits. These habits can be developed by encouraging children to have personal economic experiences, such as receiving pocket money or depositing money in a piggy bank.
By the age of six, children are able to understand that you can use your money not only by spending it, but you can also save it, invest it or donate it. By comprehending the use of money, they can start learning to plan ahead and budget and rely on themselves to make decisions, for example, saving up money by doing chores for buying a new bicycle.
Between the age of twelve and adulthood, teenagers should be aware of concepts, such as the difference between emergency funds and savings, know how to differentiate between their wants and needs and, most importantly, they should develop critical thinking in order to avoid traps leading to irrational spending decisions. Young athletes should be ready to manage the money they receive when signing their first contracts and be able to understand basic financial concepts included in them.
New generations are growing up in an increasingly financially complex world, where they will eventually need to take charge of their own finances. The Covid-19 Pandemic has further highlighted the pressing need for early financial education, as it has exposed the financial weakness and unpreparedness of people, including athletes, who had to use their savings to survive the financial effects of the Pandemic.
More and more stakeholders are reaching the conclusion that adopting good financial habits at an early age is among the building blocks of long-term financial wellness and sports bodies, schools and universities should prioritize implementing financial literacy programmes.
For more information on designing and implementing the right financial literacy programmes for athletes and sports organizations, log onto ‘www.moneysmartathlete.com’.