Investing 101

How to Go From Struggling Financially to Thriving

In 2009, wide receiver Darrius Heyward-Bey was taken No. 7 overall by the Oakland Raiders.

He’s from my neck of the woods in Maryland, so I’ve always rooted for him… even though he’s been with the Pittsburgh Steelers the last several years.

Now, it’s long been argued that he shouldn’t have been drafted that high.

But he ran a 4.3-second 40-yard dash at the NFL combine, the fifth fastest of all time. And the Raiders’ owner at the time, Al Davis, had a thing for tall, speedy wide receivers.

Don’t worry, this isn’t about football.

This isn’t about how Heyward-Bey proved all his doubters wrong and had a Hall of Fame career… because he didn’t.

He’s never posted numbers worthy of where he was taken in the draft.

He doesn’t have a reception this year and has been largely relegated to special teams. In the Pittsburgh Steelers season opener, he played only one snap. Last year, he finished with just two receptions for 47 yards, though he did score a touchdown on a 29-yard reverse in Week 17.

So this isn’t about overcoming the haters or the doubters to succeed.

This is about something else… something we rarely discuss in terms of athletes. It’s about being financially smart… about planning for the future and understanding how big of an impact small sacrifices can make.

Now, because Heyward-Bey was drafted so high, he got a sizable rookie contract with the Raiders. We’re talking $30.3 million for four seasons. He then signed a $3.8 million three-year deal with the Pittsburgh Steelers.

And today he still has almost all that money.

His mother has been a certified public accountant for 20 years. He said he grew up knowing what to spend his money on and what not to. And when Heyward-Bey signed his big rookie contract, the two set up a monthly allowance for him.

His money was invested. As his accountant and financial advisor, his mother sends him a report showing him his inflows and outflows every Tuesday.

As the years have passed, his monthly stipend has grown along with his investments. Plus, he’s learned that making sacrifices is easy… He doesn’t spend what’s allotted each month. He doesn’t care about keeping up with the Joneses or impressing anyone. He even cancels the cable in his California home for half the year because no one is there to watch it.

That’s a man after my own heart.

And it’s the type of story I love to read, particularly since 80% of retired NFL players go broke within the first three years of leaving the league.

Just let that sink in for a moment…

The average NFL salary is $2 million per year. Even if we use the median of $750,000, it’s still an impressive income.

Yet 8 in 10 players go broke within three years. And the reasons aren’t any more spectacular than what plagues the rest of the country.

Total U.S. household worth topped more than $100 trillion this year for the first time ever.

That’s a level of wealth every country on this planet can be envious of. There is no nation that comes close to that number.

The stock market is at all-time highs. And new millionaires are being created at a record pace.

But at the same time, 75% of Americans are classified as “strugglers” by the Federal Reserve.

They have no savings.

No safety net.

They live month to month and are unable to cobble together any sort of carryover from one year to the next.

Most Americans don’t have $1,000 in their checking accounts. If there were an emergency, one that cost $500 or $1,000, 61% wouldn’t have the cash on hand to cover it.

That means they can forget about saving or planning for retirement. And investing is a pipe dream.

We all know people like this, regardless of their income level. In fact, I know many people who fall into a category I refer to as “The $100,000 per Year Millionaires.” These are people who make good – even great – annual incomes but are constantly broke.

They live a lifestyle 10 times more lavish than what their salaries can support. They could live happily and comfortably if they stayed within their means, but they can’t and/or won’t.

They’re like so many NFL players who think the good times are never going to end… that the money and credit are infinite. Those debts are problems for their future selves to grapple with.

And just as we saw in the last financial crisis, when the next one hits, they’ll lose everything… their homes, their cars… all of it.

Now, if the U.S. comprises 75% “strugglers,” then the other 25% are “thrivers.”

Yes, some of the 1% are included in this “thriver” category.

But the majority aren’t.

These are people who – no matter their income level – always have money tucked away. They’re always on top of their expenses and steadily accumulate wealth year after year after year.

Here’s the other piece to consider…

The U.S. is now home to 13.6 million millionaires, or 41% of the entire world’s population of individuals worth $1 million or more. That’s more than the next eight countries combined.

The problem is… most of them don’t feel rich.

Is that because $1 million isn’t what it used to be? Or because no matter how much we make, it never seems to be enough?

If you aren’t a “thriver,” then you have some serious reflecting to do.

If a multimillionaire football player is prudent enough to turn off his cable for six months a year – not because he can’t afford it but because it makes financial sense – then what can you change?

Successful investing must begin with successful saving.

Where can you start to go from struggling to thriving? Let me know by leaving a comment.

Good investing,