Sunday, August 12, 2012

The Cost of Being an Olympian

Eric Flaim is a two-time Olympic silver medalist who works now as a financial adviser with Ameriprise. He estimated he spent approximately $250,000 for his 10 years of Olympic training and active competing which is the cost of a home in some states.

The cost to become an Olympian is expensive.  Athletes who aren’t viewed as strong Olympic medal contestants are less likely to receive substantial support from their sponsors.   If they compete in a not-so popular sport the chance of getting financial support is further reduced.  On average Olympians don’t begin a professional career until their late 20s or early 30s.

Parents of gymnasts can expect to spend up to $1,000 a month at training facilities plus travel expenses.  Leotards and warm-up suits can range from $300 - $500.  Additional costs include entry fees for each meet and competition.  When a gymnast is chosen for the U.S. national team and begins traveling internationally, USA Gymnastics commences paying for the cost of training and travel for the gymnast and his or her coach, but any family member who travels with them has to pay their own way.

For a family to travel to the Olympics to show their support it can range from $10,000 - $20,000. The annual price of training for Maya Lawrence, an Olympic fencer, was estimated to be $20,000. Top level players spend approximately $15,000 each year for approximately 6 - 8 years or $90,000 - $120,000 to perfect their game.  Weightlifter Sarah Robles lived on her $400 a month stipend from U.S.A. Weightlifting while she trained full-time for the London Games.   

Olympians are sometimes taken advantage of due to their young age and lack of financial knowledge.  Here are 12 tips to help you manage your income.

  1. Say no to all of your recent relatives and friends who you haven’t heard from in a while.  Don’t let guilt cause you to lose all of your money.  Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.
  2. Consult an accountant, lawyer and financial advisor to develop a plan to get advice on how to maximize tax deductions, set aside money to pay taxes at the end of the year, protect your money and grow your money.
  3. Create a safety net.  If possible, set aside a portion of money enough to cover your monthly expenses and bills for one year. 
  4. Avoid lavish or unnecessary spending such as buying sneakers for all the children in the neighborhood or buying your family members all new cars.
  5. If you wish to give money to a friend or relative consult a lawyer and accountant to document the gift and ensure that the money is properly accounted for on your taxes.
  6. Consider purchasing an item that will appreciate over time such as an investment property instead of a car or boat.
  7. Pay off all your debt.  Consult a professional on how to assist your parents if they are struggling financially to prevent future implications with the IRS.
  8. Setup a retirement account.  You will need at least $1,000,000 in your account if you retire at age 65.
  9. Setup estate planning including a will and living trust.
  10. Donate a portion of your money to charity to help those less fortunate which can be a write-off on your taxes. 
  11. Don’t put all of your money in one area; diversify your investments to minimize losses.
  12. Set financial goals with target dates on how to grow and make your money last.
Olympian gold medal winners get a $25,000 cash prize, silver medal winners get $15,000 and bronze medal winners get $10,000.  Olympian medal winners are taxed on all money and awards they receive and have to report the fair market value of merchandise or products received on the IRS Form 1040. Take a lesson from Rihanna who lost millions due to fraudulent accountants and watch your money very carefully. 


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