There’s nothing money can buy that’s bigger than your name — at least that’s what retired NFL star Chad Johnson, who wore No. 85 and went by the nickname ‘Ochocinco,’ told Fox Sports host Shannon Sharpe when explained his frugal spending habits.
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“Why am I driving a Rolls Royce when I’m Ocho? Why am I buying a $50,000 to $80,000 watch? Time is free, so what am I paying for?” he asked on the Club Shay Shay podcast. “I can’t buy anything bigger than my name.”
The former Cincinnati Bengals and New England Patriots wide receiver made close to $49 million over 11 NFL seasons, according to Spotrac — and using his unique money mindset, he claims to have saved 83% of that staggering total.
What makes Johnson’s money management particularly impressive? Many legendary NFL stars have gone bankrupt after falling victim to the League’s extravagant spending culture and other financial challenges such as divorce or a career-ending injury.
Ochocinco wore fake jewelry from Claire’s, always rented his exotic cars and flew on cheap planes to save money. He even admitted that he lived in the Bengals’ stadium for two years so he didn’t have to rent or buy a house.
“They’re all caught up in an image, they look a certain way and they’re rich,” he said. “It’s pointless.”
While your career earnings may pale in comparison to Ochocinco’s cool $49 million, here are five ways to preserve and build your wealth to an All-Star level.
Understand the game plan
For NFL stars and those of us who sit and watch football at home, one of the first steps toward financial security is “a deep understanding of your cash flow,” according to Mike Olivi, a registered financial advisor with the NFL.
It is important to know how much money comes in, how much you spend, how much goes to debt and taxes, and how much is left for savings and investment.
Olivia said he encourages NFL players to “run their career like it’s a business,” meaning they need to understand financial statements such as balance sheets, income statements, cash flow and equity.
“What is needed [is] understand how to act as an entrepreneur. That knowledge is key,” he said – and that level of financial literacy is just as important for the average American as it is for wealthy athletes.
Watch now: Moneywise Q&A with NFL Certified Financial Advisor Mike Olivia
Saves like Ocho
When it comes to saving, NFL players have an advantage over their fans. Most soccer players retire from the League by age 30, well before the average U.S. retirement age of 64, which means they have more time to save and put money into work.
According to Olivia, the optimal savings rate — the percentage of gross income you can save — is 20%. However, most people have trouble saving even 5% because of ongoing expenses like mortgages, insurance, and paying off loans.
“With professional athletes, because they make a large portion of their lifetime earnings in a short period of time, they may be able to save 80% of that income,” Olivia explained.
With so much money tied up in savings, NFL stars can really profit from compound interest.
Johnson said no to sports cars and bling to save much of his career earnings. Like an NFL star, you might want to think about the expenses you can say no to.
Put your money to work
How do rich people get rich – other than inheriting money or getting windfalls like newly drafted NFL players?
“It’s ownership of the business, it’s some interest in the business (whether your own or someone else’s) like stock options, RSUs or some other stock ownership,” said Olivia, who is a senior partner at West Pac Wealth Partners and Head of Strategy at Olivia Team Virtual Family Office. “Or it will probably be real estate or some passive income source.”
“If I’m thinking about an NFL athlete … how do you create that so that they use tanks or financial assets that are useful, that generate returns, that are safe [and] liquid so that [they] have access to capital so that they can then generate passive income when they are no longer in the League?”
While you may not consider yourself wealthy, it still pays to accumulate assets (if you can) that will help you achieve your long-term financial ambitions.
Read more: ‘Watch your money’: Jeff Bezos issues financial warning, says you might reconsider buying ‘new car, fridge or whatever’ — here are 3 better recession-proof buys
Play defense
Insurance doesn’t have to be a grudging purchase. It can protect you from unexpected financial losses and help you live safer in your daily life.
For NFL stars, a career-ending injury is common, Olivia said, which is why he advises players to buy disability insurance.
“Their income, bonuses, performance-based compensation — all of that can be secured, but a lot of these athletes don’t have the time [to think about personal risk management],” He said.
“They also think, on some level, that they’re indestructible because that’s the mindset you have to have to get into the League. [But having] protection playing that defense is the key.”
The second layer of defense is excess liability insurance. If you have a car accident, a lawsuit, or a guest slips and falls on your property, this coverage will increase when the liability coverage on your other policies, such as home and auto policies, is exhausted.
After all, life insurance isn’t just useful for the death benefit — Olivia said it can also be a “wonderful asset class” while you’re alive because of the financial features many policies have.
Ask a coach for advice
Financial decisions made under the pressure of FOMO — fear of missing out — don’t always end well.
Olivia said it’s better to take a step back and calculate the risks, perhaps with the help of a mentor or financial professional.
He gave the example of NFL stars hiring a real CPA firm. “Having the right accounting professional and accounting advice is really key … to be able to avoid state income tax – there are ways to do that.”
Legal advice is just as important, he added, in terms of setting up foundations, estate plans, and perhaps even prenuptial agreements to protect assets so that no one can touch them.
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This article provides information only and should not be construed as advice. Supplied without any warranty.