Most professional athletes never reach their financial potential. Despite their outrageous incomes, they make poor financial decisions that stifle their growth and deplete their wealth.
Unfortunately, the same can be said for average Americans. Despite ample resources, many of us spend recklessly, rack up debt, and invest as an afterthought with no real vision or plan.
But, just like the real world, the world of professional sports has superheroes. And LeBron James is the brightest star of them all. Over the years, James has conquered both the sports world and the financial world through a series of smart – no, brilliant – moves.
These days, James is the highest paid athlete in the NBA, yet still makes over $50 million per year in endorsements. The financial titan also penned a lifetime deal with Nike and has career earnings in the hundreds of millions of dollars.
And, sports lover or not, we could all learn a thing or two from a guy who turns visions into riches and makes other sports star’s financial antics look like child’s play.
Here are five wealth-building strategies we could all learn from LeBron James:
Lesson #1: You need multiple income streams.
From the very beginning, James has cultivated too many income streams to count. From his over-the-top salary playing for NBA teams like the Cleveland Cavaliers (reportedly over $30 million from 2016-2017) to his myriad endorsements with companies like Coca-Cola, Nike, Samsung, and McDonald’s to his investments in numerous growing brands (more on that later), James has cash coming in from every angle.
While the average person will never earn millions of dollars every year like James, everyone can pursue multiple income streams. And yes, everyone should.
Think about it. Most people have one job and one employer. What happens when that income source dries up?
When you’re laid off or fired?
“No matter how highly paid you are, whenever someone else signs your checks, they can decide to stop paying you at any time,” says frequent CNN contributor and financial advisor Rob Wilson.
And if you don’t have other forms of income coming in, your financial situation could become bleak quickly.
“LeBron does not solely rely on income from basketball, or even endorsements,” says Wilson. “He started a marketing and sports representation agency with his childhood friends, he’s appeared in movies, he started a media company that had launched shows on Showtime (Survivor’s Remorse) and NBC (The Wall), and has invested in early stage ventures like Beats by Dre and Blaze Pizza.”
While not everyone can make million dollar deals, everyone can make sure they have a few different sources of money coming in.
Have a full-time job? Start a side hustle. Or, find ways to invest your money to earn consistent, passive income.
The more income streams you have, the better off you’ll be.
Lesson #2: Invest like you mean it.
According to a Gallup poll from last year, only slightly more than half of Americans own stock. But, even among those of us who do invest, most approach the endeavor with the enthusiasm of a root canal.
We contributed a fixed percentage of our incomes to our 401(k)s, pick a few funds we barely understand, and call it a day.
Unfortunately, American savings strategies rarely work out well. As a recent poll from GoBankingRates showed, one-third of Americans have nothing saved for retirement and more than half have less than $10,000 saved. Yikes.
It’s easy to only view LeBron through the lens of success with his endorsement deals, multiple NBA awards, and numerous championships, says financial planner Ty C. Hodges of Client Centric Wealth. But, at one point in his life, James was just a kid out on the court perfecting his game.
“This is much like investing,” says Hodges. “You don’t magically become a sports superstar or a millionaire overnight.”
Instead, you create a goal or a vision and you work at it or save for it every day, every month, and every year.
“By investing little by little over time, you benefit from the power of compounding,” says Hodges.
Lesson #3: Become the best at what you do.
It’s completely normal to dread the Monday morning alarm clock and count down the minutes – no, seconds – until Friday afternoon. For most people, a job is how they earn a living but now how they make a life.
But, it’s amazing what can happen when you place a relentless focus on becoming the best at your craft. Think of all the career superstars you know in the fields of real estate, banking, science, and art. The doctors who perform life-saving surgeries on tiny babies. Online entrepreneurs who create multi-million dollar businesses out of nothing. People who pull themselves out of poverty to build businesses that employ thousands of people.
These people endure the same job stress as the rest of us, yet they dominate their professions like they were born to rule. Why?
Some people just think differently, says Wilson. They understand they are paid in proportion to the value they create in this world – and that the best way to add value is to become the best at what you do.
From an early age, LeBron established a system for everything from homework to grooming, says Albuquerque Financial Planner Jose V. Sanchez.
In addition to creating systems, he is a champion of healthy habits and keeping positive people around to support his goals.
“Had he not been blessed with athletic talent, his worth ethic would have made him successful in any field,” says Sanchez.
Lesson #4: Surround yourself with the right team.
LeBron has been surrounding himself with a team of advisors to help him oversee his financial affairs and business interests since early on.
“It would be impossible for LeBron to maximize his earnings and investments without his team,” says financial advisor Peter Huminski of Thorium Wealth.
A few years after entering the NBA, LeBron even went out of his way to meet with Warren Buffet.
“Not only did he have the meeting but he and Buffett have become great friends over the years,” says financial planner Jude Wilson of Wilson Group Financial.
Reportedly, Buffett gave James some especially sound advice: Invest monthly, diversify broadly, and believe stocks will win over time.
While not everyone has the opportunity to meet with an investing legend like Buffett, we can all benefit from building our own “teams” of qualified financial professionals.
Like James, you should know you don’t have to do it alone. And, if you want to build wealth, getting professional advice will help.
Lesson #5: Plan for the long haul.
Another financial lesson we could all learn from James is the importance of thinking ahead. Most of us are thinking about this week, this month, or maybe our next vacation. But, James? His financial moves tell us he’s been planning decades ahead since the beginning.
“LeBron James has displayed patience and an astute business sense in his contract negotiations by opting for shorter deals in order to maximize his long-term earning potential,” says Orange County financial advisor Anthony M. Montenegro.
This disciplined approach has secured him the top earner’s position in the NBA with an annual basketball income of over $30 million. Yet, not everyone loved his strategy- especially at first.
“He has often been criticized by opting for shorter, more risky contracts as a player,” says personal finance expert and sports fan Trent Silver of Nerdster.com.
With shorter contracts, some industry insiders have expressed worry of how an injury could cut his career – and his earnings – short.
But, with the league’s salary caps constantly rising, he has actually kept the door open to bigger earnings all along. In hindsight, many of his questionable financial moves have been genius.
Still, his long-haul thinking extends well beyond his NBA career.
“The small forward for the Cleveland Cavaliers became one of the original investors in the Blaze Pizza chain in 2012,” says Montenegro. That pizza chain has realized substantial growth ever since.
“LeBron has also been credited with having bought a position in Beats Electronics before it was acquired by Apple.”
That deal alone netted him millions of dollars.
But, it wouldn’t have been possible if LeBron hadn’t been thinking ahead – a talent he is finally well known for.
The Bottom Line
You don’t need to earn a pro athlete’s salary to build wealth, but you may benefit handsomely if you follow some of LeBron’s cues. But, you should also remember that the most important lesson of all might just be how James never limited himself or the scope of his ideas.
“He’s switched employers when work conditions were less than ideal, he’s drowned out countless criticisms, and he overcame a 3-1 deficit in the 2016 finals when the odds were stacked against him,” says financial planner Morgan Ranstrom of Trailhead Planners.
When you put these moves into the context of our financial lives, there are lessons everyone can learn.
At work, we need to know when to walk away from a job that is stunting our growth to seek challenges and financial success elsewhere. We also need the ability to drown out the countless pundits and opinions in the media and confidently stick to our long-term financial plan and how we define success.
Finally, never give up.
“Never stop betting on yourself and your capacity to overcome obstacles,” says Ranstrom.
Cultivate the heart of a champion, and the riches will come.
////photo credit Keith Allison