Leave it to a professional athlete to set another fine example for kids on how not to manage your money.
I could come up with an all-star roster of men and women who have burned through multi-million-dollar contracts over the years because of extravagent spending, poor investment decisions and a severe lack of financial common sense. But this latest case, involving San Francisco 49ers’ cornerback Tarell Brown, may be the most unusual.
Brown, according to several news reports, recently forfeited $2 million — all because he chose to do his off-season training at his home in Texas rather than showing up for the team’s workout program. That’s right, an “escalator” clause to Brown’s base salary of $925,000 would have paid him the additional $2 million simply for showing up.
Brown was also scheduled to receive a $75,000 “workout bonus,” but that’s gone too, according to news reports.
Predictably, after learning about his financial missteps through a Twitter message, Brown fired his agent.
I say, shame on Brown. He dropped the ball. He signed the contract, and even a cursory reading of it should have caught the $2 million detail. Instead, he played the blame game.
Knowing how much kids idolize sports figures, I was hoping Brown would take a knee and say something about the financial lessons he’d learned from losing his workout money, or what he would do differently the next time he signed a contract. But neither Brown nor his new agent could be reached for comment.
So, are there any useful lessons for kids from this tale? Of course.
First, know there are consequences in life for not understanding the financial and workplace rules of the game.
For a college grad starting his first full-time job or a teen lining up after-school work this fall, make sure to review every detail of the employment agreement and the company handbook.
That way, for example, they may at least have an idea of whether the company’s stock purchase plan really is a good opportunity, or know if taking office supplies home or surfing the Internet during work hours could be terminating events.
Losing that first paycheck for violating a company policy could have the same financial repercussions on your son or daughter as the $2 million hit to the football players’ wallet. It’s all relative.
But the important thing to remember is that ignorance is no defense.
Second, be careful about off-loading financial decisions to someone else — be it a stockbroker, a financial counselor or, yes, even a sports agent. Don’t be overwhelmed by money issues. Ask questions, do the due diligence. You’ve earned your money — take responsibility for learning how to handle it wisely. Why pay someone big bucks when you could be doing the work yourself?
Finally, there’s a message for parents. Give your children the tools they need to master their finances.
That last point is crucial, said Susan Beacham, a nationally recognized financial education expert and owner of the Money Savvy Generation: “While they’re still living under your roof, talk about money issues and give them enough information so that they’ll feel more confident to act when they’re on their own.”
To be sure, kids can’t avoid all learning-the-hard-way moments. But better if it’s not a $2 million mistake.