There’s nothing money can buy that’s bigger than your name — at least that’s what retired NFL star Chad Johnson, who wore number 85 and went by the nickname “Ochocinco,” told Fox Sports host Shannon Sharpe when explaining her frugal spending habits.
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“Why am I driving a Rolls Royce when I’m Ocho? Why am I buying a watch between $50,000 and $80,000? Time is free, so what am I paying ?” he asked on the Club Shay Shay podcast. “There’s nothing I can buy that’s bigger than just my name.”
The former Cincinnati Bengals and New England Patriots wide receiver earned nearly $49 million over 11 NFL seasons, according to Spotrac — and using his unique money mindset, he claims to have saved 83% of that astonishing total.
What makes Johnson’s money management even more impressive? Many iconic NFL stars have gone bankrupt after falling prey to the League’s spending spree culture and other financial challenges like divorce or a career-ending injury.
Ochocinco wore fake Claire’s jewelry, rented only her exotic cars, and flew on low-cost airlines to save money. He even admitted to living in the Bengals stadium for two years so he wouldn’t have to rent or buy a house.
“Everyone is caught in the picture, looks a certain way and is rich,” he said. “It’s useless.”
While your career earnings may pale in comparison to Ochocinco’s $49 million, here are five ways to preserve and grow your wealth to star level.
Understand the game plan
For NFL stars and those of us sitting and watching football at home, one of the first steps to financial security is to “deeply understand your cash flow,” according to Mike Olivia, a registered financial adviser. with the NFL.
It’s essential to know how much money you get, how much you spend, how much goes to debt and taxes, and how much you have left to save and invest.
Olivia said he encourages NFL players to “manage their career as if it were a business,” which means understanding financial statements like the balance sheet, income statements, cash flow and equity.
“What you need (is) to understand how to operate as an entrepreneur. That knowledge is key,” he said — and that level of financial literacy is just as important for the average American as it is for wealthy athletes.
Look now: Moneywise Q&A with NFL Certified Financial Advisor Mike Olivia
Save like Ocho
When it comes to savings, NFL players are way ahead of their fans. Most footballers retire from the League at age 30, well before the average retirement age in the United States of 64, which means they have more time to save and put in work their money.
According to Olivia, the optimal savings rate – the percentage of gross income you can save – is 20%. Yet most people struggle to save even 5% due to day-to-day expenses such as mortgages, insurance, and loan repayments.
“With professional athletes, because they generate so much of their lifetime income in a short period of time, they may be able to save 80% of that income,” Olivia explained.
With so much money tied up in savings, NFL stars can really capitalize on compound interest.
Johnson said no to sports cars and bling to save a large chunk of his career earnings. Like the NFL star, you might want to consider expenses you can say no to.
Make your money work
How do rich people get rich – beyond inheriting money or financial windfalls like freshly drafted NFL players?
“It’s ownership of a business, it’s having an interest in a business (whether it’s yours or another) like stock options, RSUs or any other equity ownership,” said Olivia, who is a senior partner at West Pac Wealth Partners and chief strategy officer at Olivia Team Virtual Family Office. “Or it’s probably going to be real estate or a passive income vehicle.”
“If I think of an athlete in the NFL…how do we create them to use holding tanks or financial vehicles that are beneficial, that generate returns, that are safe (and) liquid so that they have access to capital to then be able to ultimately generate passive income when they are no longer in the League?”
While you may not consider yourself wealthy, it’s still worth accumulating assets (if you can) to help you achieve your long-term financial ambitions.
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play defense
Insurance doesn’t have to be a grudge purchase. It can protect you from unexpected financial losses and help you live with more confidence every day.
With NFL stars, a career-ending injury is common, Olivia said, which is why he advises players to get disability insurance.
“Their income, bonuses, performance-based pay – all of those things can be insured, but a lot of these athletes don’t have the time (to think about personal risk management),” he said. .
“They also think, on some level, that they’re indestructible because that’s the mindset you need to have to get into the League. (But having) protection to play that defense is key. .
Another layer of defense is excess liability insurance. If you are involved in a car accident, lawsuit, or if a guest slips and falls on your property, this coverage will escalate when the liability coverage of your other policies, such as home and auto, has been exhausted .
Finally, life insurance isn’t just useful because of the death benefit – Olivia said it can also be “a wonderful asset class” while you live because of the financial features of many policies. .
Benefit from the advice of a coach
Impulsive financial decisions driven by FOMO — the fear of missing out — don’t always end well.
Olivia said it’s best to take a step back and calculate the risks, perhaps with the help of a mentor or a financial professional.
He gave the example of NFL stars hiring the right CPA firm. “Having the right accounting professional and the right accounting advice is really essential… being able to avoid state income tax – there are ways to do that.”
Legal advice is equally important, he added, in terms of setting up trusts, estate plans and perhaps even prenuptial agreements to protect assets so no one can tamper with them.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.