Know Before Pro
By Amobi Okugo \\\ MLS midfielder and founder of Frugal Athlete
One of the most important things I wish I knew before going pro were the basics to contributing to your 401k. Besides knowing that a 401k is money set aside for when you retire, I didn’t know anything about the ins and outs of handling a 401k. From how much I could max out to whether I was better suited for a Roth or pre-tax contribution. My rookie year I had no idea what percentage of my bimonthly paychecks I should allocate for my 401k contribution. I think it should be mandatory that all athletes not only contribute, but the max amount to their 401k, and learn the basics of it and not have to rely on their financial advisor to take care of knowing these things.
Tax write-offs!! I only thought tax write-offs were for business individuals when they go on corporate events and such and such. Not for an athlete like myself. As an athlete you are not only a brand but you are business and you are eligible for a number of tax write-offs that you may not know about. I will be writing a blog about a number of tax write-offs that you are eligible for as an athlete but in the meantime your accountant should help you with that aspect. Luckily I was fortunate enough to have a circle of individuals that informed me about the tax write-offs I was misinformed about.
Every Other Kind of Tax
Taxes…federal taxes, state income tax, social security tax, even sales tax…. I wish I knew all that information before I went pro…Simple concepts like knowing which states don’t charge state income tax. I remember calling my dad complaining about how the government is after me because they are taxing me in California when I didn’t even live there. Had I known about the The Jock Tax tax rule better known as the Michael Jordan Revenge Tax rule, I wouldn’t have felt so ignorant once my dad explained what the situation was. Understanding taxes and how they work would have enabled me to know more about other things such as net income and how much you are actually grossing vs what you are being paid.
Budgeting Your Money
I wish I knew how to properly budget my spending before I went pro. Understanding how to allocate a certain amount of money for fixed expenses like rent, mortgage, car note and re-occurring expenses like groceries, phone bill, and gas would have helped me not only save extra money but keep a better track of where I’m spending my money
Need vs. Want
The battle of necessity vs wants. Do I need a $400-dollar toiletry bag or do I want one? Do I need to have 6 pair of dress shoes for just one suit? Do I need to eat at “expensive restaurant” for brunch when I just bought groceries for the week? If I had mastered this dilemma before having money to spoil myself with, I would have been got a head start in regards to my spending habits.