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Why so many athletes seek bankruptcy protection

A great number of Maryland residents are also sports fans, and they follow one or more teams each season. Many are aware that professional sports players bring in substantial earnings, but fewer people realize that a significant percentage of athletes end up in serious financial straits, often seeking bankruptcy protection. A recent article looks at the reasons behind that statistic, and some readers will recognize those choices and behaviors as present in their own lives.

It is estimated that as many as 78 percent of professional football players find themselves either in bankruptcy or under severe financial strain within the first two years after they retire. That number is 60 percent for basketball players. One of the biggest financial challenges that these players face is the pressure to keep up certain public and private images. That pressure is often accomplished by buying expensive houses, cars and a range of luxury items. Spending beyond one's long-term financial means is a bad idea, regardless of a person's career path.

Another issue that brings many people to financial ruin involves helping family members. While the urge to assist loved ones is honorable, it can be very easy to overextend oneself by helping others. Many professional athletes have found themselves supporting multiple family members, with no end in sight. That can also be an issue for people who make their living in less glamorous fields. Providing assistance when needed is one thing, but taking on the role of benefactor for multiple loved ones is a recipe for disaster.

Another factor that can lead to financial trouble for professional sports players is a lack of financial literacy. Many of these young people find themselves with enormous incomes and no idea of how to best invest or save their wealth. The lack of experience and knowledge can lead to the need to seek bankruptcy protection in the future. Regardless of a Maryland resident's line of work, finding solid financial advice and learning how to responsibly manage money is perhaps the best way to stay on track and meet goals.

Source: Time, "What You Have in Common With Bankrupt Pro Athletes", Dan Kadlec, June 10, 2016

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