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At the height of his career, Cam Newton, former NFL MVP and Carolina Panthers quarterback, says he earned roughly $20 million a year. However, in a recent video on his YouTube channel, Newton confessed he was making online content “to keep the lights on.”
Newton’s candid admission pulls back the curtain on a common struggle retired athletes face: managing money once the big paychecks stop.
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He points to his own situation as “the No. 1 reason” why so many wealthy players end up broke, failing to scale back spending when their income takes a hit.
Here’s how untamed expenses can gobble up even eight-figure salaries.
Lifestyle creep
Newton insists he did a better job managing his money than the average athlete.
“I never really had a financial advisor, but I never really was a splurger either — still to this day,” the 36-year-old says.
Federal and state income taxes ultimately reduced his take-home pay to roughly $12 million a year. Newton estimates his annual expenses were between $5 and $6 million, leaving some room for savings and investments.
Although he no longer makes eight figures a year, he says his expenses have stayed more or less the same. Some of the big-ticket items draining his savings include private schools, home maintenance, alimony and luxury purchases.
“Those things never leave,” Newton says. “Your overhead never really changes.”
The problem Newton — and many other celebrity athletes — can struggle with is that when your income changes, your expenses have to change with it.
This rapid lifestyle inflation during prime earning years is one of the key reasons why even high-income families can struggle financially. Roughly 36% of consumers who earned $200,000 or more a year were living paycheck to paycheck, according to a PYMNTS survey.
The only way to avoid falling into that trap is to keep a tight lid on expenses, according to Newton. Cutting down on your monthly expenses is a good place to start, with insurance payments being one of the biggest cost culprits.
With OfficialCarInsurance.com, you can compare multiple insurance providers at once, ensuring you’re getting the lowest rate possible. The process is 100% free and won’t affect your credit score.
Make sure to pay special attention to liability coverage, optional coverage options and deductibles. If your insurer knows that you shop around, they may also be reluctant to raise rates in case this makes you change providers, according to reporting by NPR.
But car insurance is just the tip of the savings spear. If you have pets, a single visit to emergency care can cost between $90 and $240 on average just to be seen, according to CareCredit. And that’s before any overnight stays, additional tests or medication.
BestMoney is an online marketplace that lets you compare pet insurance policies offered by reputable providers like Spot Pet Insurance, ASPCA and Pet Best — to name just a few.
You can compare the coverage benefits, any deductibles, geographical availability and reviews all in one place. Many of the featured insurance providers offer tailored coverage plans, ensuring your pet’s needs are met.
Get started and find offers starting at just $10 per month.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Limiting expenses
“You can live a couple years like a king or, with the right money decisions, you can live the rest of your life like a prince,” according to Newton
Beyond cutting your household expenses, another key to living within your means is buying a house within your budget in the first place.
For most people, that means taking on a mortgage to make up the difference. Even so, nearly 11% of homebuyers exceeded their budget while purchasing their home, according to Clever Real Estate. Meanwhile, 39% exceeded their budget for upfront costs. Approximately 30% of millionaires have a mortgage, according to a 2022 report from Advisorpedia.
As such, securing the lowest mortgage rate possible can be critical to protecting your wealth. With Mortgage Research Center (MRC), you can quickly compare rates and estimated monthly payments from multiple vetted lenders. All you have to do is enter some basic information about yourself, such as your zip code, your desired property type and price range and annual income.
MRC will then show you customized mortgage offers so you can shop for a mortgage with confidence. After you match with a lender, you can set up a free, no-obligation consultation to see if you’ve found the right fit.
Another angle to tackle is your home insurance. Much like with pet and car insurance, shopping around a little bit can save you month-to-month. From here, you could funnel your home insurance savings into paying down your mortgage.
One option is to use OfficialHomeInsurance.com to help you shop around for the best rates to protect your home. All it takes is two minutes for them to comb through over 200 insurers, for free, and find the best deal in your area.
The process can be done entirely online as well.
Leave the next generation better off
A big risk of lifestyle creep is ending up without money set aside for your loved ones when you pass.
Life insurance can help you avoid that nightmare scenario by helping you try to find a way to maximize your estate while passing on more money to your heirs. High net-worth individuals in particular can benefit from these policies, allowing you to pass on your wealth to your beneficiaries.
Ethos Life Insurance is a modern life insurance company that offers a seamless, online process for purchasing term life insurance. Ethos has simplified the often complex and time-consuming process of buying life insurance, making it quick, transparent and accessible.
They aim to provide affordable, straightforward life insurance policies with no medical exams required for most applicants, ensuring peace of mind and financial protection for your family.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
