Parents Sacrifice Financial Security to Spend on Elite Youth Sports Programs

Many parents of children who participate in elite youth athletic programs put their family’s financial security in jeopardy in order to pay for youth sports. A recent survey by TD Ameritrade revealed that most parents of children in these elite athletic programs spend an average of $100 to $500 per child per month on youth sports while 20% spent over $1,000 per month per child. These levels of spending occur despite an absence of an emergency fund (40% of respondents) or retirement savings (33% of respondents). All respondents have children who are members of elite club teams sponsored by non-school organizations.

Loss of perspective

Encouraging youth athletic competition and spending money on it is admirable, but if basic financial needs are being ignored in favor of additional spending on youth athletics, there has been a loss of perspective. The survey revealed that 57% of respondents had no long-term financial plan. It is difficult to prioritize spending without long-term financial goals and a plan to attain them.

Those parents who expect to receive a financial return on the money they spend on elite youth athletics have also lost perspective. Two-thirds anticipate their children will win college athletic scholarships while only 24% received scholarships, and 34% expect their children will compete in the Olympics or professional athletics when in reality only 2% do so.

Early specialization and drawbacks to participation in elite youth athletics

High levels of competition in elite youth sports programs push youngsters to specialize in one sport at an early age. Eighty-three percent of respondents’ children participated in only one sport and played that sport competitively nine months out of the year. Specialization most often occurred between the ages of 9 and 10. This may be why “burnout” was identified by 49% as the number one drawback to their children’s participation in elite youth sports programs. “Time commitment” (49%) and “possible injury” (46%) came in as the second and third most cited drawbacks to participation in elite youth athletics.

Benefits of participation in elite youth sports programs

Survey respondents identified “teaching values” (67%), “increased confidence” (41%), and “regular exercise” (36%) as the top three benefits their children get out of participating in elite youth sports programs.

How to reduce the cost of participation in youth sports

The benefits of participation in organized youth sports are valuable. Here are some options for reducing the costs of participation:

  1. Buy used sports equipment. Young children outgrow athletic equipment before they wear it out.
  2. Avoid the cost and time commitment of elite programs until a later age. Instead, have your children participate in city recreation programs or programs sponsored by local service and civic organizations. These are available at a minimal cost, and your children will still receive the benefits of organized athletics noted above.
  3. Avoid early specialization, limit participation in any one sport to three or four months out of the year, and encourage participation in multiple sports. This will help prevent burnout, reduce the costs of repetitive use injuries, and broaden your children’s exposure to athletics.
  4. Parents do not have to jeopardize their family’s financial security in order for their children to participate in organized sports. The place to start is to identify long-term financial goals, make a plan to attain them, develop a budget that reflects the plan, then determine what can be spent on youth athletics without putting the financial plan at risk of failure.

    K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based Lifestyle, Double-Dome Publications, 224 pages

Are You Asking the Wrong Question?

Whenever you face a financial decision, what question do you ask yourself? If that question is, Can I afford this today?; you are asking the wrong question. The impact of financial decisions carries far beyond the moment they are made. A debt will affect you for the term of the loan. The decision to retire will affect you for the rest of your life. Even the purchase of a couch can have an impact on your finances for weeks or months into the future.

What is the right question to ask?

So what is the right question? It depends on the circumstances. The proper question for a 60-month car finance purchase is, Can I afford the monthly payment for the next five years? A decision to retire requires the question: Will I be able to afford to live on my retirement income and accumulated assets, taking inflation and increased health costs into account, for the next 20 to 30 years? The appropriate question for non-essential everyday expenditures such as eating out, going to the movies, or the purchase of a clothing accessory is, Can I afford this and still make my essential expenditures for the balance of the month, including any unanticipated expenses such as medical co-pays and repairs on vehicles or appliances?

You take change into consideration when you ask the right question

If you are honest, asking the right question forces you to think about the future. In thinking about the future, you must account for change, and not just any change; you must account for what might go wrong. How have circumstances changed in your life over the last year, three years, five years? Has your cost of living increased? Have you been laid off or had your hours cut? Have you experienced health problems that kept you from working? Have you experienced periods when there was a reduction or interruption of income? Have you had to pay medical deductibles and/or co-pays, auto insurance deductibles, auto repair expenses, appliance repair or replacement expenses, or repair expenses to your house?

Account for change in the future with savings

How do you account for what might go wrong in the future? You do it with savings. You need cash in reserve to handle expenses that exceed your monthly take-home pay and to cope with reductions or interruptions in income. If you don’t have savings, your answer to the purchase question is always “no”; you cannot afford to purchase anything that is not an essential expense such as food, rent, utilities, fuel, insurance, maintenance drugs, and any payments on debt. If you don’t have at least three to six months of living expense in an emergency fund to replace reduced or lost income, the answer to the purchase question is “no”; you cannot afford to purchase anything that is not an essential expense.

At a minimum, you need enough short-term savings to cover insurance deductibles and out-of-pocket expenses, a major repair to the automobile, and the replacement of a major appliance along with a separate emergency fund equal to three to six months of living expenses. Without this short-term cash on hand, you cannot account for the future, and therefore, cannot afford to purchase other than essentials.

Retirement requires accounting for change over a 20 to 30-year period of time. How do you know how inflation will affect your cost of living over two to three decades? Can you accurately predict your state of health and the costs of health care during that period of time? The truth is you can only make intelligent guesses about the future. The answer to dealing with an unpredictable future is to have a hefty cushion of retirement savings and let it grow, untouched, during the first decade of retirement. You can do this if you live on less than your retirement income during the early years of retirement.

What about the good things that could happen in the future?

Does accounting for what can go wrong in the future sound negative and pessimistic? What about the good things that can happen: a raise, a better paying job, or a bonus? True, the future may hold good fortune for you. The thing is, you cannot count on it. If you want to get out of debt and stay out of debt, it is absolutely necessary to account for what could go wrong in the future. If you don’t ask the right question and fail to account for the future, the future will not be kind to your finances, and you will be forced to take on debt to deal with unfavorable changes. On the other hand, when you ask the right question and account for the future, our experience has been, more often than not, that the future turns out to be bright.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based Lifestyle, Double-Dome Publications, 224 pages

That List in Your Head

If you find yourself living from paycheck to paycheck without any savings to speak of except for a retirement account at work, that list in your head might be the problem. You know what I am talking about. It is that list of things you want to buy, places you want to go, and services you want to subscribe to that you keep in your head. How many times have you said to yourself, a family member, friend, or co-worker, “Once I get my hands on some money, I’m going to buy myself that new whatever, or I’m going to go to wherever, or I’m going to join whatever.” And when you finally have the money, you spend it on the list. If it takes too long to get something on the list, you finance it with debt. You just have to have that next whatever.

The list never ends

And the list is never exhausted. In fact, it grows and grows. Advertising convinces you to add to the list. Your family members, friends, neighbors, or co-workers purchase something new, and now you want to acquire it; so you add it to the list. You watch a movie or television program and want to emulate the lifestyle of the characters, the accoutrements of which are added to the list.

The list does not create lasting happiness

You think the next thing on the list will make you happy. And it does for a short while, but there is always the next thing. You live in expectation of acquiring the next thing. You live in the future which is not living at all.

The list in your head keeps you from getting ahead

Year after year, the list bleeds off your extra money: salary increases, income tax refunds, gift money, and windfalls, large and small, but you never satisfied, never really content despite your consumption and material acquisitions. Your finances never improve. Just like contentment, financial security eludes you. You can blame thirty years of stagnant income, globalization, the one percent, monetary policy, and government fiscal policy, but it is that list, that list in your head that keeps you from getting ahead.

Unconscious spending vs conscious spending

That list in your head is evidence of unconscious spending. An awareness of the list and its effects on your finances are the first steps to becoming a conscious spender. Conscious spending has a purpose behind it, not a list. Long and short-term financial goals based on your values and a plan to achieve them provide a rational basis for making conscious spending decisions. A budget that reflects your long and short-term financial goals and your plan to achieve them provides the information necessary to make prudent spending decisions. Conscious spending moves you toward your goals rather than just satisfying the latest form of material gratification on that list in your head.

Moving from unconscious spending to conscious spending

If you have grown tired of living paycheck-to-paycheck and getting only fleeting satisfaction out of consumption, forget that list in your head. Ignore it and set some long and short term financial goals that reflect your core values. Make a plan to achieve your goals and create a budget to implement the plan. You will become a conscious spender who is moving relentlessly toward the fulfillment of your goals, and you will enjoy enduring satisfaction as a result of your efforts.

K. C. Knouse is the author of True Prosperity: Your Guide to a Cash-Based Lifestyle, Double-Dome Publications, 224 pages