Finance in Focus: Budgeting
We continue to break down the complex world of athlete finances by looking at the importance of budgeting
Financial worries can often weigh heavily on an athlete’s mind, but it doesn’t have to be that way. As elite athletes, just as you ensure you have the right training and coaching structure around you, you should also pay close attention to organising your financial situation, as having a good understanding of your finances will help reduce the associated stress that may impact your performances in training and competition.
So in the same way that you put together a training plan to help you reach your sporting goals, you should also draw up a budget to help you manage your finances. Here’s how to do it…
Understand your income
As an athlete, you may have to deal with an irregular income, which makes it even more important to map out where your money is going to come from in a budget. Some athletes may be fortunate to receive a regular salary from their club, but many others will be looking at a variety of different income sources. This could range from prize money and sponsorship to government grants and scholarships, such as those awarded by Olympic Solidarity through your National Olympic Committee. Make a note of all your different income sources in your budget, with estimates of how much you will receive from each one.
Plan how you need to spend it
Once you know what your income is going to be, you can start planning how much you need to allocate to different expenses. This is all part of good financial management, and it is important to remember all the different things you will need to spend money on. This will include living expenses – such as rent or mortgage payments, groceries, bills and other general outgoings – as well as those expenses related to training and competitions, such as coaching fees, training facilities, travel costs, equipment and treatments. One major outgoing is likely to be tax. Tax rates vary from country to country and depend on how much you are earning, as well as your own personal circumstances. Be sure to get some professional advice so you know what your tax obligations are, as many of your training/competition expenses are likely to be tax deductible.
Know what you can and can’t afford
Once you can see what your expenses are, and what your income is, you will have a good understanding of whether or not you have a balanced budget. If your outgoings are greater than what you’re earning, then you will know that you need to look for more sources of income. This could mean trying to find more sponsors, applying for more grants or scholarships, or even looking for part-time work that can fit in around your training. Knowing your budget also gives you the chance to look at areas where you may be able to cut costs. If you have extra money left over, you may even be able to spend more in certain areas that could benefit your sporting career, such as adding a psychologist or an extra coach to your entourage. Remember, though, that it’s important not to spend more than you can afford.
Plan for the future
Drawing up a budget enables you to look ahead to see what your income and expenses are likely to be in the future, meaning you can plan for any eventuality. For example, how would an injury affect your earnings? Would an injury also mean you’d need to spend more on treatment and recovery? Planning for how you would deal with these situations will help reduce any worries or stress should they occur. Having a clear understanding of your financial future will also help you prepare for your eventual retirement and your transition into a new career.