The Off-Season: When the Zeroes don't Add Up

I hear it over and over. If only I made six figures, if only I made more, then I would be able to get out of debt and build wealth. I hear this from both youth and adults. In the words of the late urban poet, Notorious B.I.G, more money, more problems. He wasn't lying. 

More money usually equals more commitments, a bigger house, a nicer car, a housekeeper, laundry service, meal prepping, and so much more. Now, I'm not saying money doesn't help, but if you're unable to manage the little, how in the world do you manage the plentiful?  So what are you doing before you earn a six-figure salary?

What we do in the off-season directly impacts our on-season. 

Did you see the game-winning kick by elite soccer star Lionel Messi last week? It was simply the kick seen around the world. Messi inked a lucrative deal with InterMiami CF playing for the MLS in Miami, Florida. I was intrigued by Messi’s elite skills and top-notch performance. So, I researched to learn what he does in the off-season. I learned that even in his off-season, he’s preparing, resting, and strengthening his muscles. And I’m unsure how true this is, but some reports shared that he takes an afternoon nap! Now, that is my kind of routine lol.

I was a Division 1 athlete for my college's track and field team. Even though my sport growing up was volleyball, I was a long and triple jumper. During my first year, we practiced almost 3x a day: early strength and conditioning, specialty practice, and workout. Off-season was grueling because we worked out 3-4 hours a day, went to class then study hall. Off-season was a time to focus on the fundamentals and lay a proper foundation for in-season meets. 

The same goes for your finances. There is no magic switch. You don't start making $125K and automatically know what to do. You manage the $15 an hour, then the $40K a year and beyond. 

Did you know that over two-thirds of millionaires are self-made (they didn’t inherit their wealth)?

According to a 2019 study by Wealth-X and a study by Fidelity Investments. If you read the book The Millionaire Next Door by Dr. Thomas J. Stanley, you will find that many millionaires live quietly in regular neighborhoods, drive older model cards, and save/invest 20-30% of their income each year. 

The problem for most people is we consume what we see. We have the funds available, so we spend it. This approach means spending close to 90-100% of your income. It will impact your wealth over time. If you're spending 100% of your paycheck, it equates to working 100% of your time. (This does not negate the reality that so many people are just trying to make it. I know that within the US and other parts of the world, housing inequality and income inequality hinder building wealth) Imagine if you put nothing away. You might be working forever. Now if you spend 80% or even 70% of your income, you buy 20-30% back of your time. A few years ago, I was living off of 50% of my income and had the opportunity to invest 50%! I saw a post by @personalfinanceclub that inspired me to create the image below.

Exercise: Now that we know better, we must do better. I want you to calculate your annual income. Calculate how much you invested in that money. What's the percentage? If it's $0, it's time to switch it up. 

This exercise will also help youth get into the habit of paying themselves first, even before they get their first job. 

So how are you practicing good money habits in the off-season?