Last week, the 2017 NFL minted a new class of overnight millionaires, and I’m sure more than a few unwise purchases have been made since. Now, you may never sign a four-year, $30 million contract with the Cleveland Browns, but you very well may receive an inheritance or, in the case of almost all doctors, go from making $50,000 to $500,000 after residency.
With that comparison in mind, I thought it would be fitting to share some lessons that Mark Doman, a financial advisor who specializes in serving NFL players, recently gave to GQ magazine. If they are simple enough for a 20 year-old, millionaire athlete, they should be simple enough for us all:
Lesson 1: Triage, triage, triage
Separate your needs from your wants, and within your wants—keep it reasonable. One thing that Doman suggests is thinking about leaving room for “shinier” purchases in the future. If you buy your dream home at 25, what’s there to look forward to in the future? Instead, buy a nice home, and then make a plan to save for the dream house in years to come.
Lesson 2: Pay attention to where your money is
Often, individuals will hire a financial advisor after they receive a windfall and leave everything up to them. And that’s a good first move, but it’s even better when you understand what they’re doing with your money. What type of investments do they recommend? Why do they recommend them? How are they paid? Financial education is a large portion of an advisor’s job, so if you don’t understand, it’s because the advisor isn’t doing their job.
Lesson 3: Have an actual strategy
Developing a strategy is what financial advisors do—we create an investment portfolios and financial plans to achieve long-term financial goals. The key to executing a strategy is sticking with the plan and having a long-term outlook. It does NOT entail chasing the hottest stock mentioned in the latest issue of Money Magazine.
Lesson 4: Avoid banking on things that aren’t actually investments
When you come into a lot of money, “friends” will come out of the woodworks. And if they don’t want straight up handouts, they may have some great “investment” ideas they want you to consider. Usually, there is nothing but upside for them, and you assume all the risk. If you do want to indulge them, keep in mind that it is an actual indulgence, not an investment, and you should budget accordingly. In other words, treat it like an expense, not an investment.
Lesson 5: Have some damn perspective
This is my favorite lesson, and it reminds me of a scene in The King of Torts by John Grisham where a bunch of trial attorneys fly out for a meeting, and the youngest among them is embarrassed because his jet is the least expensive one parked in the hanger—Don’t be that guy. Keep things in perspective, and don’t treat life like a competition to spend the most money.
Josh Norris is an Investment Advisory Representative of LeFleur Financial. Josh can be reached at josh@LeFleurFinancial.com.