According to the Bureau of Labor Statistics, the median wage for 20 to 24-year-olds nationwide in the first quarter of 2015 was $493 a week ($25,636 a year). The average age of an NBA rookie is roughly around 20 years old and as of the 2014-2015 season, the MINIMUM salary is $507,336. That is over 19x more and not even close to what the first round picks earn. In a study done in 2009 by Sports Illustrated, it was revealed that about 60 percent of former NBA players go broke within five years of retiring.
To help these young stars learn to how manage their finances, the National Basketball Players Association (NBPA) has teamed up with the online financial advisory firm Personal Capital through a financial education program.
The program will include seminars on various financial topics, such as managing 401(k) accounts and offers free online tools that can combine the user’s daily spending and financial assets all in one place. The company’s app is available for free to the players and will have advisors available to them via phone, video, email or an online chat.
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The firm has conducted a study that found that NBA players spend an average of $42,500 a month, which adds up to over $500,000 a year. While the average salary of an NBA player may be around $5 million, the average player also retires at the age of 25 or 26. With those types of spending habits, it is easy to see why the players find their way to money troubles later down the road when they aren’t earning those types of figures.
“When it comes to finances, education is only half the battle – it really comes down to behavior and habits. Players have short careers, have complicated taxes and make fast financial decisions that can result in spending money too quickly. We’re excited to expand our successful campaign for fiscal education and help players change behavior,” Purvis Short, director of player programs at the NBA Players Association said in a statement.
Compared to the other professional leagues in the US, NBA players have a lot less time to adjust to the new lifestyle. The players have these massive paychecks taken from them just as fast as they are handed to them and without the proper knowledge of finances, it is difficult to understand that they need to try to make their earnings last as long as possible for a better future.