Most celebrity finance stories are super depressing and usually include the following phrases in the headline, “Files for Bankruptcy”, “Lost Millions”, or “Spent Entire Fortune on”. When I find one I like (i.e. Jason Brown leaving NFL millions to start a farm), I like to highlight them. I do it for the kids (and adult kids). ;-)
The latest one I crossed struck a chord with me, because it lays out a financial success path example for not only other professional athletes, but each and every one of us.
Ryan Broyles, a wide receiver for the Detroit Lions, was drafted in the 2nd round in 2012. He’s heading into the final year of a four-year rookie contract of $3.6 million (only $1.422 million was guaranteed when he signed).
Just after being drafted, he met with a financial advisor and took what he learned to heart. Broyles set a modest annual budget of $60,000 for his family (wife and 1 child), takes advantage of an NFL 401K match (the NFL really does this?!), and invests the remainder. He and his wife drive humble Mazdas (no offense to all you Miata lovers out there).
Good on you, Mr. Broyles.
Not only is Broyles thinking about his family’s future, but he’s thinking about others as well. From ESPN,
“Broyles immersed himself in the financial world. In March, he went to Washington, D.C., with New Orleans running back Mark Ingram to speak to students about financial planning. He worked with VISA and the NFL on promoting a Financial Football video game in classrooms to help teach financial security and planning in both D.C. and his home state of Oklahoma.”
Doubly good on you, Mr. Broyles.
Having made it through 3 of the 4 seasons on contract, Broyles has approximately collected about $2.7 million of his $3.6 million deal. Assuming he keeps his money invested, achieves a modest rate of return, and keeps spending at or below $60,000 annually (adjusted for inflation). At age age 27, on a modest rookie contract, he never has to work another day in his life.
Professional athletes should take note – only guaranteed contract money is guaranteed. Every athlete who makes it to the pros has been told endlessly how great they are to the point that they probably all believe they are the best. The reality is, everyone else has been told the same thing and only a few end up sticking over time. Making it to the pros is rare, but surviving and thriving is even rarer. Injuries, bad luck, poor performance, one memorable mistake, management or a coach who doesn’t like you, or simply the bad luck of being behind a superstar on your team at your position are all it takes for one to be permanently relegated to the bench. If you don’t succeed and get a much more lucrative second contract, you’re out of a job. And I have to think that employers aren’t exactly jumping to hire failed professional athletes with questionable collegiate education experiences.
As an NFL player wisely choosing to spend just a tad over the median household annual expense level (of $51,100), Broyles has wisely chosen to live indefinitely on his guaranteed money. Both he and his wife never have to work again if they choose not to. Any contract extensions is icing on the cake (and could bump his annual budget higher). As a result, he’s completely taken the debilitating stress and pressure off of himself to succeed,
“When I come to work, I don’t think about the money, man,” Broyles said. “I can tell you that, without a doubt. There might be some guys that do but I put myself in a position where I come out here and have fun. I don’t have that pressure, you know what I mean. My wife has no worries. My child has no worries. For the most part, I can help my family, you know.”
But, I didn’t write this article with a professional athlete audience in mind. My guess is that 0.0% of 20somethingfinance readers will make the NFL, NBA, MLB, NHL. That doesn’t mean there isn’t something valuable to take away from this story.
Broyles is a contributor, but not a bonafide superstar and could very well not get a second contract. $1.422 million in guaranteed money (about $1.5M is needed to live indefinitely off of $60,000) is an amount that many of our households could easily eclipse in under 2 decades of work. Broyles cracked the equation. You may have slightly different variables in your equation (i.e. # of years to get there, annual budget), but you can crack the equation as well.
And $60,000 in expenses, while very modest for professional athletes, is still quite a bit! My wife and I have lived like royalty off of less than $30,000 for years in one of the most expensive housing markets in Michigan. Theoretically, we only need half as much as Broyles to hit our crossover point and achieve financial independence at our expense levels. Broyles can afford to go higher, so that is not a knock on him.
The path to endless financial success is really pretty simple:
- Figure out how much you spend.
- Drive those expenses lower.
- Figure out how much you need to cover those expenses.
- When you get there, be wary of the endless pursuit of more money and enjoy life.
That’s really all you need.
Patrick Pichette Retires Early, but Far Later than Necessary
Awesome! Finally after all of these depressing (not you, of course just the times I guess) stories one that really hits you in the feels. So happy that there are young guys in the league(s) who are paying attention and choosing to run like hell from the lifestyle that so many of their teammates have chosen. Great highlight, G.E.!
While reading the article, I couldn’t help but wonder if his teammates make fun of him for being “frugal” or “cheap”. While they all drive around in and flaunt their money, and he’s driving his very reasonable mazda and eating at Subway or Chili’s. :)
*drive around in fancy luxury cars
Wow I love that the NFL has a matching 401k program. Did not know that…Refreshing to read a professional athlete taking accountability for their finances and future. Hope more athletes see this article
Very inspirational post, many people could learn a thing or two from Ryan Broyles. Financial independence is my goal to and while I wont be able to reach this status as fast as Mr Broyles it’s stories like these that keep me inspired. Thanks for sharing.
What I would do if I had a career like that (where I made $1M+ a year for a limited # of years) would be to take most of it and buy annuities. Guaranteed paycheck for the rest of your life (and your spouse’s and kids’ if you want).
Annuities are the worst investment product available. Sky high costs, lower than ever interest rates. You’d be better off just spending your money than investing in annuities… at least you’d beat inflation which annuities won’t.
Good for him to have the sense to listen to his financial advisor and to live on a modest budget. It also makes me wonder if there are predatory types of advisors that are going after these athletes.
Thanks for sharing G.E.
A lot of professional footballers back home in England could learn from this motivating story. Who knew the NFL has a 401K programme in place?!