What a 1st Round NFL Draft Pick Should Do With His Money

With the NFL draft being in Chicago this week I thought what a fun way to look at the personal finance of an NFL rookie and provide a little guidance and research on what might be a good idea on what to do with his money. Since the draft will be held in Chicago this year let’s use the Chicago Bears as our example of personal finance madness.

According to Overthecap.com the Chicago Bears with the 7th pick in the NFL draft, the expected value of his first NFL contract is estimated below. My understanding is that some of the numbers can change including guaranteed money, but these numbers are similar in nature to last year.


Well Mr. Chicago Bear congratulations you have been drafted and signed quite a lucrative contract, all of your hard work has paid off. In your 1st year you will be paid a signing bonus of approximately 8.9 million dollars while being paid 2.675 million in salary. Based on last year’s NFL draft this is a pretty safe assumption to assume that all of the money will be fully guaranteed for the next 4 years of your NFL contract.
Even with the big money that you are getting the bad news is everyone is getting some of “your” money as well; starting with the Federal and State government taxes*. Plus we can’t forget about the lawyers, agent, and everyone behind Team 1st Round Pick, they will be taking an estimated 3% of your money off the gross/before tax, which is a cool $700,000 of your contract.
I do have some good news for you. During your first year of playing in the NFL you will make 6.5 million dollars after tax, probably a complete 180 from your days of eating at the college cafeteria and not having a car.




What’s next? Let’s spend some $$$$, well let’s slow down a little, I know it’s hard to remember since this is new money, but these next 4 years of income need to last the rest of your life. I know you want to take care of your mom and dad, friends, mentors, but just remember this money is for the rest of your life, protect it. Let me share a couple things we are not going to do with the money, so let’s get that out of the way.

Buying Mom and Dad their big dream house
• Buying everyone a brand new Mercedes
• Buying a house you saw on MTV Cribs
• Bling, Bling, jewelry for me and jewelry for everyone

So what am I going to with my money? I’m glad you asked.

Pay Yourself First

If it’s one thing I have learned from my experience with personal finance is the way to win is to pay yourself first. According to a Fox Business report on Retirement Benefits in the NFL, along with a pension that you accumulate for each year of service, the NFL Player Second Career Savings Plan offers a 401 (k) type plan, best news of all is they provide an employer match of $2 for every $1, with a maximum match of $24,000 in 2014 and increasing each year. Assuming a 2015 Contribution of $25,000, you then receive a matching $50,000 for a total investment of $75,000, which is a 200% return on your money. Pay yourself first. I didn’t touch on the tax savings as I am not a tax professional, but it saves you money on your taxes as well.
You are probably thinking that’s only $25,000 out of over 6 million dollars, what about the rest of the money? We are still looking to pay ourselves first, let’s get to it.

Live on Less

I’m going to ask you to do something that most working people in the US cannot do, but you are not most people you have worked your tail off to get here and sacrificing a small amount of money today for the future is something you have done throughout your life working towards lifelong dream of the NFL.
We are going to invest 50% of your income, right off the top every year***. I want to make the calculation simple so I subtracted our 401K contribution after tax instead of pre-tax to make my calculations easy. Let’s take a look and see what we have.

I want everyone to look at the total saved after just 4 years, by simply paying yourself first and living on less. This is money you have saved for the rest of your life, imagine this for a second. Let’s say you didn’t invest the money in stocks, bonds, real estate, your friend’s business, nothing. You put it in a checking or savings account earning zero. From age 26-62, you would have an annual salary of $174,939.83**.

So how do you feel about living on $175,000 a year for the rest of your working life? Sounds pretty good right, that is what makes it important to save and pay yourself first.

Have Some Fun

All this talk about saving and investing might have bored you, but it’s important. Your probably wondering when you can start having fun, the answer is right now.nfl4
I want you to take 10% and spend it on whatever you want each year. If you want that nice Cartier watch, a fancy looking Escalade, a trip with your family and friends, I want you to do it. Just remember that once that money is gone, that’s it. If in year 1 you want to buy a $300,000 car, go right ahead, but remember then it’s no watches, trips, nice suits, you only get that fancy car.

Emergency and Life Happens

You never know what is going to happen in life, that’s just the way it works. Murphy’s Law, a sue happy nation, or an unexpected injury. We all know that things happen and I want you to be prepared so we are taking a little out each year for the unexpected and it’s going to be the same amount as your upcoming living expenses, 20%. This includes disability insurance right off the top, because remember the NFL stands for Not for Long, which is why we are protecting our assets and preparing for tomorrow.

Living Smart, Not Living Large

We need some place to live; it’s just not going to be living next to Brad Pitt and Angelina Jolie. I want to advise you to rent in your first year, get a feel of where you want to live. Do you want to be near the practice facility or maybe away from it all in the suburbs? These are questions you should be asking yourself especially in your first year at a new job in a new city. Either way we have a housing expense that is equal to 25% of our pay, after tax and after paying ourselves first, which comes to a total of $780,361.31, if you rent and don’t need much that first year, we can save this for the following year and buy a house, we just need to decide where.nfl5

Another suggestion on the housing front, I would look to buy a home in a state without any state taxes, I hear Florida is nice this time of year. In the next coming years we have set aside the same 25% of your salary for things like taxes and insurance, boring I know but the IRS takes away houses for not paying taxes, live smart, not large or the IRS could be visiting you soon.

In your first year of the NFL, it’s expected to spend more money on clothes, transportation, going out, etc. When you buy your first home, I’m sure you want to buy a few nice things, plus you are not going to be around all the time to take care of your lawn or your new dog that you purchased all of this takes money, but we are prepared for that, budgeting 20% with your first year’s salary gives you more than enough to upgrade a few luxury items, just remember year 1 is nice, but each year after that gets a little smaller because you already bought your $2,000 suits and your $20,000 entertainment system.

Taking Care of the Family, Just Not the Whole Family

I’ve saved one of the toughest and most rewarding for last. Most people growing up have had numerous people help them throughout their lives. It could have been Mom and Dad, Grandma, or your high school football coach that guided and mentored you along the way. You now make it big and want to share your success with those who helped you. If I had a 9 million dollar signing bonus I would be buying my Mom and Dad a house too.
We set up your family for receiving 20% of your after tax, after you pay yourself income. Feel free to buy your Mom and a Dad a house and if you want them to stop working we can make that happen to, but here’s the thing we can’t do that for everyone. Let’s say you buy your family a home for $400,000, and then you want your parents to stop working, so you give them $50,000 to live off of. There is not much left for your cousins, uncles, youth football coach, and friends growing up. You have to decide who’s the most important and who is in your immediate circle. Once that money runs out, it runs out, even if I left a little room for error.


Congratulations on getting drafted into the NFL, I’m sure you will do great. Just by sitting down and coming up with a common sense plan on where your money is going to go, you are ahead of 99% of those just getting out of college and come into their first job. I know this is a lot of information to think about, but it’s what will keep you a millionaire long after your playing days. I wanted to keep things simple, no talk of stocks and bonds and real estate investments or your cousin’s big business idea that needs your investment dollars. In the end most of what you are going to do with your money needs to be common sense, something that you understand, come to think about the numbers are bigger and the earning time is shorter, but in many ways my suggestions are very similar to those retiring early: pay yourself first, increase your savings rate, have an emergency fund, and keep your expenses low.

What would you suggest for a 1st round NFL draft pick and how he should spend/save his money? Do you agree or disagree with my suggestions?

*39.6% flat rate is used for a simple calculation, along with 3.75% for the state tax, even though athletes pay different tax rates based on where they play and also where they keep residence, I’m not a tax man, so I kept it simple but feel free to check out irs.gov or taxfoundation.org where this information was obtained.
**I am not counting your 401K, Pension, Social Security, or any investment growth and appreciation
***I used after tax dollars because I wanted to keep the calculations and investment talk simple as possible, when we start talking about investments and different tax strategies, we can consider other methods.

19 Responses to “What a 1st Round NFL Draft Pick Should Do With His Money

  • Mrs. Maroon
    3 years ago

    If only they’d be so smart….

    • EvenStevenMoney
      3 years ago

      I’m not sure how I would have handled going from broke to rich, but I hope I would have figured it out and listened to my advisors.

  • This is some good advice! The smart ones will get a financial advisor to handle their money for them. The not-so-smart ones won’t…

    Perhaps it would be wise to inform the new draftees that NFL star Larry Fitzgerald follows a similar approach (I remember reading a quote from Fitzgerald that he tries to save over half of what he earns–smart guy, in addition to his obvious talent!)
    Froogal Stoodent recently posted…How Investing Can Make You RichMy Profile

    • EvenStevenMoney
      3 years ago

      Yeah and Larry Fitzgerald has had a long NFL career, one of the lucky ones. Most guys are in the league for only a few years and it’s over. Half of the money makes a lot of sense.

    • EvenStevenMoney
      3 years ago

      Reading that list, really emphasizes my reason for these guys to just save the money, don’t try and invest the money into something that you don’t understand.

  • Here is a great article about Paul Posluszny and how he did it the right way.

    Fervent Finance recently posted…Anything is NegotiableMy Profile

    • EvenStevenMoney
      3 years ago

      “I knew I wanted to be in something safe and secure,” he said. “A long career isn’t guaranteed. I wanted to have this money for life.” This should be repeated over and over and over.

  • Great advice but 9 out of 10 times this advice falls on to deaf ears. Basically, what you have with almost every pro athlete is a “future homeless” individual. Very, very few turn their name into a brand/business once off the field/court.
    DivHut recently posted…32 Legitimate Ways to Make Money at HomeMy Profile

    • EvenStevenMoney
      3 years ago

      I’m going to be positive and say that every NFL 1st round pick read my article and all will be OK, Happy Friday!

  • Great advice, but all too often these guys end up burning through their cash in no time. Lottery winners can be the same way, they just can’t handle a sudden influx of cash and don’t stop to think about how they can make it last for the long term. They just go out and spend it all assuming there will always be more where that came from.
    Mike recently posted…Verizon FiOS Promo CodesMy Profile

    • EvenStevenMoney
      3 years ago

      It’s a different mindset in the personal finance and FI world as we are all trying to have our money work for us as long as we possibly can.

  • Too bad most of these guys will burn through their cash in no time and living at large. That’s why these professional athletes really need some serious PF education.
    Tawcan recently posted…Financial advice – get in line and stay in lineMy Profile

    • EvenStevenMoney
      3 years ago

      Yeah and a 4 day Rookie symposium isn’t going to get the job done.

  • If I made that much money, I would be out in a year… That’s why i will never be a billionaire, I am out long before that.
    No Nonsense Landlord recently posted…Tenant Deposits, How to Reduce RiskMy Profile

    • EvenStevenMoney
      3 years ago

      I think it has to be more than the money if all of it is guaranteed. I wonder if their is a clause that says you can’t just call it quits because your happy with your millionaire status;)

  • I’m unfortunately going to be boring and agree with you here Steve! I could come up with an elaborate and grand scheme to take over the world with the cash the draft pick would get however what you’re saying is fine 🙂

    I feel like you could even become a financial planner to the stars with a strategy like this?

    • EvenStevenMoney
      1 year ago

      I do wonder how difficult it is being a financial planner especially as it relates to pro athletes. Young, tons of money, family and friends pressuring, keeping up with the joneses, and all making sure the money is going to last forever.

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