As the Winter Olympics approach, it’s become top of mind that the athletes participating in the Games are hitting the peak of their careers at a young age. For many, their sport is their career, and through endorsements and partnerships, they can make a great deal of money early on in life. For example, 33-year-old Olympic ski racer, Lindsey Vonn, already has a net worth of $3 million, according to Forbes. Whether it’s an Olympic athlete, NBA draft pick, pop star or a professional with high earnings, it is important to equip those who are young and successful to handle a windfall of wealth. When accumulating wealth at an early age, there are some important financial planning tips that can allow wealth to stretch throughout one’s lifetime:
Enlist a team of advisors: tax, legal and financial.
Managing wealth requires expertise and can be a full time job. To ensure you’re setting yourself up for long-term success, it is important to work with a team of financial, tax and legal professionals who can help to maximize tax efficiencies and to properly plan your financial estate. As you accumulate more wealth, your financial matters become more complex, so it’s important to create an open line of communication between these advisors to streamline planning.
Budget for a reasonable lifestyle.
With an influx of cash, the impulse may be to spend on expensive material possessions, but if you want your wealth to last a lifetime, you must first create a budget for efficient spending. Work with a financial advisor who can help you establish reasonable spending patterns and show you projections for future scenarios given current spending or savings habits.
If you’re living off an investment portfolio, a financial advisor can help you figure out a monthly income to meet your lifestyle needs. This way, you are living off a specific dollar amount rather than staring blankly at a million dollars in a bank account.
Be cautious of taxes.
Taxes can be particularly complicated, especially if large gains were realized in one year. The tax implications of an investment must be considered before doing anything for the long term. Working with a qualified tax professional who can assist you with planning is vital so you don’t experience any surprises when tax season comes.
If you suddenly come into a windfall of wealth, be leery of people who come out of the woodwork to ask for money. Ensuring your financial security for the long run is of the utmost importance and will ultimately allow you to help others responsibly. Having money may allow more freedom, but it is not the route to happiness. While spending on luxurious items may cause immediate gratification, it’s crucial to determine your financial priorities to make sure this money can last a lifetime. If you’re looking to start a conversation with a trusted advisor to discuss how to manage your wealth, please feel free to contact us at 888-578-0770.
Please note that this communication is for informational purposes only and neither this financial institution nor any of its affiliates give tax or legal advice. Consult a tax advisor regarding what may be best for your personal situation.
Securities and insurance products are offered through Univest Investments, Inc., member FINRA/SIPC and a licensed insurance agency. Investment advisory services are offered through Girard Partners, a Univest Wealth Management Firm. These affiliated companies are licensed subsidiaries of Univest Corporation of Pennsylvania. Products and services offered are not FDIC insured, are not a deposit of or bank guaranteed, and are subject to risks, including possible loss of any principal amount invested.