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Black Athletes And Money
New Orleans, LA–Too many athletes wait until they file their income-tax returns to evaluatethe preceding year’s finances and plan for the next. You should really begin much sooner, though, perhaps before year-end. This will give you plenty of time to analyze what you have accomplished during the season and to plan for what you hope to accomplish in the off-season and next contract year. A checklist of questions might help.
(1) What are your financial goals? Before you do anything with your money, you should decide how you want to spend it. Research and compare prices and incentives before you purchase that brand new car. How much house do you need and how long will you live in it, before making a huge commitment? You should itemize what you have presently, what you need for the year ahead, and what you hope to have ten, twenty, or thirty years in the future.
(2) Over the past year, have you made progress toward achieving your goals?
Have you put enough aside to invest for the growth of your money? You should probably compare the performance of your investments to the goals you’ve established with regard to those investments for the year. The results of this analysis will help you decide whether or not you should alter your investments.
(3) Are any changes about to occur that will affect either your immediate needs or your long-term goals? A change in Teams or Contract, for example, may drastically alter your income and your lifestyle. Other circumstances that may affect your finances might include buying that new house, having a baby, financing an education, or paying for a wedding. Planning at least a year in advance will help you to adjust to these changes financially.
(4) What can you do to minimize your taxes? Remember, you may pay taxes in the states or cities in which you play an away game! Proper tax planning with a Certified Public Accountant is key. A general rule for tax purposes when investing, is to defer income to the next year while accelerating deductions for the present year. To defer income, you might postpone selling assets or you might also purchase Treasury bills or other investments that will mature the following year. To accelerate deductions, you might double up on your charitable contributions, pay your state taxes before year end (if you are not subject to alternative minimum tax), or invest in a tax shelter.
Quite often people (who qualify) will also make contributions to their Individual Retirement Accounts at the last minute for an additional deduction. However, in the long run it’s much better to make your IRA deposits early in the contribution year rather than wait until you file your income tax return for that year to take advantage of tax-deferred compounding.
(5) Do you need any additional help to implement your plans for the future?
A lawyer, an accountant, a stockbroker, or a trust officer can be a tremendous help in any financial matters. If you’re not progressing as you would like, or if you find you don’t have the time to manage your money properly, you might consider hiring a professional. It could be the one investment that makes all the difference.