Shortly after the end of their career, many footballers experience financial problems. Statistics show that 60% of all footballers in the English Premier League experience financial problems within 5 years after hanging up their boots. All too easily the financial problems of elite sportsmen are blamed on wrong investments, a lack of financial knowledge or a bad entourage. Of course it happens that footballers are seduced/mislead to make wrong investments. Sometimes the entourage plays an important role in this. And often it are these (mostly spectacular) stories of fraud or investments that have gone horribly wrong that make the headlines.

However, practice has taught us that usually the causes of the financial problems of most elite sportsmen are far less spectacular. In this article we revert to the, in our view, most important basic rule that will prevent the majority of footballers’ financial problems. The rule is: curb your spending.

It might seem obvious and possibly even unnecessary to mention this rule. It is only logical that you have to curb your spending to build a big enough capital. It might come as a surprise but our experience has taught us that it soon becomes a problem if a footballer is unable to curb his spending.

Where exactly does it go wrong? Not overspending should be a very normal and easy rule to follow. However, the problem is situated on various levels:

• False feeling of (adequate) saving

Young footballers earn a lot of money. Even if every month they spend big on the latest mobile, a nice car, presents for the family, etc. at the end of the month they still manage to save (a lot) more than their entourage of family and friends. By spending so much every month and still being able to save, a false feeling of security is created. Particularly if one is able to save thousands of euros more than others, one gets this impression.

Why does this create a false feeling of security? Footballers don’t stop to think enough that after their career they need the capital to last a long time because they will be without any income over a long period. To maintain their existing standard of living from the age of 35 (pensionable age) to 85 (death), they need to have built up a far greater capital than they thought.

In other words, footballers underestimate the built up capital needed to maintain their standard of living after the age of 35. Saving a couple of thousands of euros more every month than their family, is usually not enough. The majority of footballers thinks an amount of 1 million € is more than enough to spend 10,000 € every month for the rest of their lives. This is a big misconception. A footballer who turns 35 today and wants to spend 10,000 € every month until the age of 85 needs roughly about 6 million € on his account (assuming it is not invested and there is no inflation). This is (a lot) more than footballers expect.

• Social pressure

It is very difficult for a footballer to curb his spending. The majority of his colleagues doesn’t think in the long term and likes to spend. The newest cars on the club’s parking lot, the latest gadgets and the most exclusive trips, etc. create a (wrong) picture that there is enough money to burn. The others are doing it, so why not? This feeling is reinforced by the footballer’s entourage. A footballer’s entourage often expects a certain image and pattern of spending that belongs to his status as elite sportsman.

It is not easy for a football player to not give into this. Without being aware of it, one’s pattern of spending adjusts to the entourage’s expectations. After some time the perception is created that the level of spending is normal and justified. However, in most cases this is not the case. The built up capital, as already indicated, is probably not big enough for a carefree retirement.

In the changing rooms the wildest stories do the rounds about the most fantastic investments, exuberant salaries and the most exclusive parties. It requires a strong personality to not be curious about this and not take part. This is a very normal and human process.

• Downsizing one’s standard of living

If you have been used to a particular standard of living for many years, you will want to maintain this standard of living. However, after time many realise their built up capital is not enough. At that moment it is very difficult for an ex-footballer (and anyone else for that matter) to downsize their standard of living.

It is much easier to maintain a slightly lower standard of living during your active career (but which is still very high) than to drastically downsize it when you hang up your boots. For most this is very painful. Not just for yourself but also for your entourage who have certain expectations in this field because the entourage expects the (ex-)footballer to maintain their (high) standard of living. This hinders the process to downsize one’s standard of living and psychologically it is not easy to accept. Footballers live in a world where perception and appearance play a key role. The public also has an outspoken opinion about the average footballer which means it is not straightforward to adjust the expectations as a function of one’s own needs.

• Danger of substantial contract improvements

A top footballer’s salary is prone to sudden substantial increases. A contract of 20,000 € net a month can easily go up to 100,000 € net a month following a transfer. Footballers may be tempted to spend substantially more as well. A new car, a bigger house, often a new watch, etc. At the end of the month you barely notice these extra expenses. The salary may have more than doubled which means, despite the increased expenses, about the same amount can still be saved. Again the pattern of spending increases and you are not aware of it. And the required capital when you retire has also become substantially greater.

For these reasons curbing one’s expenses is probably one of the biggest challenges for a footballer. Footballers want to live comfortably too though. You like to go to a restaurant, buy new clothes regularly and possibly go to an exclusive party once in a while. And it is not always fun to have to curb your expenses. Due to the pressure on and off the pitch, you want to enjoy yourself too of course. Often that costs money.

To meet this, Stirr proposes its clients to earmark a monthly budget for this purpose. Footballers can spend this entire monthly budget on private expenses such as clothes, restaurants, bars, etc. The aim is to maintain this monthly budget when the footballer hangs up his boots. In other words, this monthly budget needs to be determined so that the footballer can maintain it from the age of 35 and the rest of his life.

For this monthly budget we create a special account (the so-called “leisure account”) to which a credit card is coupled. The limit of this credit card is the agreed monthly budget. If the limit is exceeded during a particular month, the footballer knows he has spent more than was agreed. In this way, this system encourages the footballer to curb his expenses.

This system ensures a football player only lives off his monthly budget (and not off the total net-salary). And the footballer also becomes aware after time that the monthly budget is gone sooner than expected. This prevents them from making extravagant costs. Everything that is saved can be put on a separate account which is used for (preferably ‘safe’) investments.

Conclusion

For most footballers the financial dangers are more on a psychological (spending more money than necessary without being aware of this) and social level (group pressure of colleagues and entourage) than on an investment technical level (bad investments). Although earning a lot of money at a young age implies temptations and dangers, it chiefly offers amazing opportunities in terms of investments and capital accrual. The sooner you start to save, the bigger the capital at

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