, last updated - Professional Athletes

Is your spouse a professional athlete that is currently playing overseas? 

Is your spouse a professional athlete that is currently playing overseas

The life of professional athletes is often a family affair. Players can be traded to different teams, and will consequently ask their families to move from one city to the next, or even to other countries. While sports families often have a strong support network in their home countries, things can get a lot more complicated when playing overseas, especially regarding their financial and tax situations, quickly going beyond the scope of their current group of advisors.

Living the dream of playing overseas, and preparing for the homecoming

Whether it´s international athletes living the dream of playing in the United-States, or American players and their families venturing out to the European or Asian leagues, these cross-border careers will automatically create complex financial situations. Many agents or local financial advisors may have their hearts in the right place, but they rarely know how to guide an international athlete regarding their finances, investments and retirement correctly. International players must face certain unexpected issues such as US and local financial restrictions, double taxation, or special deductions. The bottom line is that international athletes have specific financial needs that require them to recruit the right cross-border fiscal and financial team.

Importance of family: Making the right play

Many players leave home very young to focus on sports and get to the professional level. Unfortunately, they rarely receive the financial education needed to manage the financial complexity of a professional career. A player´s direct family are the ones who most likely understand what they are going through and the challenges they have to face. That’s why a trusted spouse or family member is well suited to take a bigger role in the family ́s personal finances, with the help of specialized advisors that can effectively support their cross-border financial needs.

The right financial game plan for your professional career

With the initial euphoria of going pro, it is easy for athletes to overestimate the length of their careers. Timing and injuries could change plans quickly, and cut things a lot shorter than expected. The average pro athlete career is less than 5 years for NBA and WNBA players, 6 years at the NHL level, and less than 3 years for MLS and NWSL soccer leagues. As a result, most athletes will retire before turning 30 years old, leaving them with many additional years to plan for.

Furthermore, professional leagues offer the allure of large paychecks, but only a select few reach those top salaries. And for those lucky few, it’s not guaranteed that it will last; income is rarely consistent, as athletes can get injured, traded, or moved to the minor leagues. The short-term earnings of a few seasons may need to sustain them for a long period after their playing days are over.

Your new teammates: budgeting, spending, and investing 

The key to success for pro athlete families is to figure out how to use the income of a short career to finance long-term needs. A professional sports career will often provide a large surge of income early in life, which will need to finance a future beyond sports. The important first step is to develop good habits about budgeting, spending, and investing. These three elements work together to build a successful plan for your future finances.

  • Budget: budgeting will need to account for the specific characteristics of a professional athlete´s life, whether it’s on- and off-season considerations, larger allocations for traveling, or physical training. Also, most importantly, pro athlete families will need to set aside more for investing which will be the key to their future financial security.
  • Spending: It´s important to have a clear and honest assessment of your expenses. In addition to the common living expenses (housing, groceries, etc.), sports families cannot forget the extras: frequent moving costs, new housing, different state or country tax expenses, etc. The more spending that can be accounted for in advance, the better you can control the real costs in your budget. 
  • Investing: The foundation of any successful long-term financial plan will rely on investing in the present to provide for the future. Investment returns will multiply many times over, which is why it’s so much more lucrative to start saving early. It’s wise to put aside as much as possible from each paycheck, even if that means deferring some spending; your future self will thank you.

Going to the next level with your investments when playing overseas

With a good budgeting strategy, your family is already on the right path. But when the professional athlete in the family is transferred overseas, it’s important to work with a cross-border finanacial advisor to take into consideration several important details. 

  • Compliance investing: When living in another country, you must make sure your finances can travel with you or accept a foreign address. This is by far the big problem facing overseas expatriates. (link to etf article) And it’s worth verifying what local investment products work for your home country tax restrictions.
  • Tax-efficient investing: There are often locally compliant investment options that offer great tax benefits, which can reduce the tax burden with your home or current country of residency.
  • Foreign currency exchange: It´s helpful to check what are the best ways to exchange currencies in order to get the best exchange rates. A small rate change or fee can have a significant impact when moving larger sums of money.
  • Investing in multi-currency investment accounts: Having accounts in multiple currencies can help avoid the risk of currency fluctuations, as well as provide a clearer picture of your financial situation. 
  • Retirement Planning: Retirement accounts tend to be adapted to the specific needs of each country. As a result, it’s important to ask a cross-border financial advisor at Harrison-Brook what retirement options are available and best suited to you. 

Building a team of cross-border professionals

Early in a professional athlete’s career, they often had a team around them consisting of a financial advisor, tax advisor, and agent. But once they play overseas, It’s necessary to scout out new partners who can handle the new cross-border issues they will be facing. At Harrison Brook, our international financial advisors build tax-efficient investment strategies by working hand in hand with specialized tax advisors, as well as attorneys focused on immigration and cross-border estate planning. Proactive planning with the right team will ensure financial security, so schedule a meeting with one of our cross-border advisers today.

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