Dear footballers: How to look after money

 

Let me begin by sharing a cautionary example. A football client of ours told us about his team-mate, who wanted to add a pool to his house because he found out everyone else had one. No expense was spared. He spent seven figures on this project and, naturally, was eager to show the results to everyone. He was very happy and smiled a lot, until some of his friends pointed it out to him that they had the same work done for about a tenth of what he had paid. He wasn't only outrageously paid, but he couldn’t even learn to swim.

The best thing you can do for your long-term financial well-being is to take the time to monitor your finances. These budgeting tips can help you make money work harder.

Stick to your budget

For most players, the hard truth is that once you lose it, you cannot get it back.

The UK's life expectancy average is well over 80. It is therefore possible that your earnings in the next few months will not be enough to cover you for the coming 50 years. It may seem obvious. However, it's important to start planning now. Create a budget each monthly, monitor your spending, then save the rest for future needs.

We were able save a footballing client thousands of pounds by going through his standing orders, and cancelling those that were not required. After only a few hours working with one of our colleagues, he managed to reduce his spending without having to compromise on his lifestyle.

It may not be enough for some players to cancel several direct debits. If you are dealing with debt issues, you must first acknowledge the problem and seek out advice. You're not the only one. Many athletes have become indebted by living a lifestyle not compatible with their earnings. You can usually get on the road of recovery by seeking honest and objective advice.

Make sure your finances meet tax efficiency

A clever tax-avoidance strategy may sound too good to be true. If you choose something too extravagant in today's political and economic climate, it is likely that the taxman will be upset and you will appear on the front page for all the wrong reasons. Jimmy Carr was an example of this.

Get the basics right. For example, ensure that your pension contributions are maximized. Pensions are likely to be eligible for tax relief of up to 50 percent in the current tax season.

If you are ready to make a bet, you may consider investing in a fledgling company in a tax-efficient manner and legally through a Venture Capital Trust(VCT), Enterprise Investment Schemess (EIS), Seed Enterprise Investment Schemess (SEIS). These provide income tax relief that ranges from 30% to 50%. Many also offer the possibility of deferring some of the capital gains tax.

It may also be tax efficient to place savings and investments under joint names or the sole name of a spouse so that income is subject to lower taxes. Remember that you will lose your right to the investments you have transferred.

As we saw with David Beckham, charity can be both tax-efficient and positive. It may also increase earning potential.

Diversify wealth

Instead of focusing your attention on one place, split your cash across a range of assets. The best way to ensure stability and security is to spread the risk. Footballers love to invest in real estate. Do not try to keep all your eggs in a single basket.

Give it away

Some of the players have created their own trusts. As we have seen recently with David Beckham's charity giving, it is both tax-efficient and can increase earnings by a considerable amount beyond the money given.

Even though financial management is generally common sense, the variety of options available can be overwhelming.

Consider these tips

Even though financial management is generally common sense, the options are often overwhelming. It is worth it to have a competent accountant to manage your finances. For recommendations, you can ask the trade associations for help or ask friends.

You can't afford not to take care of your money regardless of whether you earn PS500 per semaine or PS250,000. If you have any questions regarding the content of this letter, or about any financial concerns, please don't hesitate.