The big reason that professional athletes end up broke

Actors, athletes, lottery winners all have special issues that are different from people who make money in more conventional ways.  First, they are often unprepared for sudden wealth.  Second they may have only one big payday or a short earnings life.  Third, they believe the money can’t run out.   Fourth, their fame attracts vultures.

From the December 2012 issue of Financial Planning magazine.

“You’re from Arkansas, so mama’s got to have a house, because she gave up everything,” Hearn says. “Then the posses start forming, all the hangers on — people that hang around you because you’re famous and you end up picking up the tabs. And the tabs get bigger and bigger.” Inevitably, there will be a dad or cousin who thinks he knows a whole lot about investing. “If  that person gets involved, the money can disappear faster.”

This is why psychology has so much to do with wealth preservation and wealth creation.

Tagged , , ,
%d bloggers like this: