There’s nothing bigger than your name — at least that’s what retired NFL star Chad Johnson, who wore the number 85 and went by the nickname “Ochocinco,” told Fox Sports host Shannon Sharpe when explaining his frugal spending habits.
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“Why am I driving a Rolls Royce if I’m Ocho? Why am I buying a $50,000-$80,000 watch? Time is free, so what am I paying for?” he asked on the Club Shay Shay podcast. “There’s nothing I can buy bigger than my name.”
The former wide receiver for the Cincinnati Bengals and New England Patriots earned nearly $49 million over 11 NFL seasons, according to Spotrac — and with his unique money mentality, he claims to have saved 83% of that amazing total.
What makes Johnson’s money management extra impressive? Many iconic NFL stars have gone bankrupt after falling prey to the League’s extravagant spending culture and other financial challenges, such as a divorce or a career-ending injury.
Ochocinco wore fake jewelry from Claire’s, only leased his exotic cars, and flew 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 up in image, looking a certain way and being rich,” he said. “It’s pointless.”
While your career earnings may pale in comparison to Ochocinco’s cool $49 million, here are five ways to maintain and build your wealth at an all-star level.
Understand the game plan
For NFL stars and those of us sitting at home watching football, one of the first steps to financial security is to “understand your cash flow thoroughly,” according to Mike Olivia, a registered financial advisor with the NFL.
It’s essential to know how much money is coming in, how much you’re spending, how much is going to debt and taxes, and how much you’ll have left over to save and invest.
Olivia said he encourages NFL players to “run their careers as if they were a business,” which means understanding financial statements such as the balance sheet, income statements, cash flow and equity.
“What is necessary [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 to the average American as it is to wealthy athletes.
Watch now: Moneywise Q&A with NFL Certified Financial Advisor Mike Olivia
Save like Ocho
When it comes to savings, NFL players have an edge over their fans. Most football players retire by the time they are 30, well before the average American retirement age is 64, meaning they have longer to save and put their money to work.
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% because of current expenses such as mortgages, insurance and paying off loans.
“With professional athletes, because they generate so much of their life’s earnings in a short amount of time, they can save maybe 80% of that income,” explains Olivia.
With so much money tied up in savings, NFL stars can really take advantage of compound interest.
Johnson said no to sports cars and bling to save much of his career income. Like the NFL star, you may want to consider expenses you can say no to.
Put your money to work
How do rich people get rich – besides inheriting money or raking in a cash windfall like newly drafted NFL players?
“It’s owned by a company, it has an interest in a company (whether it’s your own or someone else’s), such as stock options, RSUs, or some other stock ownership,” said Olivia, senior partner of West Pac Wealth Partners and the head of strategy at the Olivia Team Virtual Family Office. “Or it’s probably real estate, or a passive income vehicle.”
“When I think of an NFL athlete… how do we create it so that they use storage tanks or financial vehicles that are beneficial, that generate revenue, that are safe [and] liquid so [they] have access to capital to eventually generate passive income once 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.
read more: ‘Hold on to your money’: Jeff Bezos issued a financial warning, says you might want to think about buying a ‘new car, fridge or whatever’ — here are 3 better recession-proof buys
Play defense
Insurance doesn’t have to be a grudge. It can protect you from unexpected financial losses and help you face everyday life with more confidence.
End-of-career injuries are common among NFL stars, Olivia said, which is why he advises players to get disability insurance.
“Their income, bonuses, performance-based compensation – all those things can be insured, but many of these athletes don’t have the time [to think about personal risk management],” he said.
“They also think on some level that they are indestructible because that’s the mentality you have to have to make it to 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, a lawsuit, or a guest slips and falls on your property, this coverage will increase when the liability coverage of your other policies, such as home and auto, is exhausted.
Finally, life insurance isn’t just useful because of its death benefit — Olivia said it can also be “a great asset class” while you’re alive because of the financial features that many policies have.
Ask a coach for advice
Spontaneous financial decisions driven by FOMO – fear of missing out – don’t always end well.
Olivia said it’s better to step back and calculate the risks, perhaps with the help of a mentor or financial professional.
He gave the example of NFL stars who hired the right CPA company. “Having the right accountant and accounting advice is really essential…being able to avoid income tax – there are ways to do that.”
Legal advice is just as important, he added, in terms of setting up trusts, estate plans and perhaps even prenuptial agreements to protect assets in a way that no one can touch them.
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This article provides information only and should not be taken as advice. It comes without any kind of warranty.
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