How do I look after my finances?
Key Learnings
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Financial planning is important for everyone but especially for professional athletes as their playing career tends to be relatively short and unstable due to the risk of injuries.
Professional athletes are likely to enjoy peak earning and make 50-75% of their lifetime earnings before age 35.
Financial planning can be complicated. It is important to turn to a professional for financial advice; choosing the right people to advise you could be the difference between growing your wealth and losing everything.
Creating a budget and monitoring it at regular intervals will help you remain financially stable.
Stay out of financial trouble by being careful about your spending and ensuring you are aware of the risks of gambling and illegal sports betting.

Financial terms explained

Here is list of definitions of customary financial terms that will help you kick start your understanding of the financial game!

  • Accountant is a practitioner of accountancy, which is the measurement, and analysis of financial information that helps managers, investors, tax authorities and individuals make financial decisions.
  • Annual Percentage Yield (APY) is the rate actually earned or paid in one year, taking into account the effect of compounding. The APY is calculated by taking one plus the interest rate and raising it to the number of periods in a year or number of years.
  • Annuity is a financial product sold by financial institutions that are designed to accept and grow funds from an individual and then paying out a stream of payments to the individual at a later point in time. Annuities are primarily used as a means of securing a steady cash flow for an individual during their retirement years.
  • Assets are anything of value (e.g., securities, property) that you own.
  • Bond is a debt certificate or IOU issued by a corporation or unit of government.
  • Borrowers are promised interest for loaning their money to the bond issuer and the return of their investment at a specified future date.
  • Budget is an estimation of the revenue and expenses over a specified future period of time.
  • Broker is an individual or firm that charges a fee or a commission for executing buy and sell orders submitted by an investor.
  • Cash equivalents are investment securities that are short-term, have high credit quality and are highly liquid.
  • Cash flow is the relationship between household income and expenses. For example, households that spend more than they earn have negative cash flow.
  • Certificate of deposit (CD) is a savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination.
  • Commission is a service charge assessed by a broker or investment advisor in return for providing investment advice and/or handling the purchase or sale of a security.
  • Compounding is the ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings.
  • Credit is the receipt of money, goods, or services in exchange for a promise to repay the amount borrowed at a future date, generally with interest.
  • Debt is a general term used to indicate an outstanding balance of money owed for loans, mortgages, credit cards, and other forms of credit.
  • Disposable income is a portion of a person’s income, including social service payments, that is left for spending or saving after the Tax Department has taken its share.
  • Dividend is what is paid out of a company’s profits to its shareholders, usually yearly (final dividend) and sometimes half-yearly (interim dividend).
  • Expense is a cost that is “paid”, including basic needs, such as housing and utilities, and other purchases, such as entertainment and clothing.
  • Fee based is information or a service that is only available upon payment of a fee.
  • Financial Planner is a practicing professional who helps people deal with various personal financial issues through proper planning, which includes but is not limited to these major areas: cash flow management, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning (for business owners).
  • Financial Planning is a process of establishing financial goals and developing an action plan to achieve them. The financial planning process includes all aspects of personal finance including managing cash flow, insurance, investing, taxes, and retirement and estate planning.
  • Fixed income investment is an investment that provides a return in the form of fixed periodic payments and eventual return of principal at maturity.
  • Flat fee, also referred to as a flat rate or a linear rate, refers to a pricing structure that charges a single fixed fee for a service, regardless of usage. Rarely, it may refer to a rate that does not vary with usage or time of use.
  • Funds are pools of money contributed by individuals to make investments with the benefit of size or to gain tax advantages.
  • Gross income is an individual’s total personal income before taking taxes or deductions into account.
  • Income is economic wealth that is generated in exchange for an individual’s performance of agreed upon activities or through investing capital. Common sources of income include salary from a job, self-employment earnings, alimony and child support payments, gifts, tax refunds, and public assistance.
  • Inflation is the rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.
  • Insurance is a contract (policy) in which an individual or entity receives protection or reimbursement against losses from an insurance company.
  • Interest is the charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
  • Investing is the process of purchasing assets such as stocks, bonds, real estate, and mutual funds with the expectation of future income and/or capital gains (growth in value).
  • Investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future.
  • IOU is a contraction of ‘I owe you’; written evidence of a debt, usually signed by the debtor and held by the creditor.
  • Liabilities are money owed by an individual or business that decreases net worth.
  • Lump sum is a one-time payment of money, as opposed to a series of payments.
  • Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
  • Net income is an individual’s income after deductions, credits and taxes are factored into gross income.
  • Net worth refers to an individual’s net economic position calculated by using the value of all liabilities minus the value of all assets.
  • Peak earnings refer to the time in life when workers earn the most money per year.
  • Periodic rate is a finance charge on consumer credit loan balances, expressed as a percentage. The rate is recorded at regular intervals, such as daily, weekly, or monthly charges.
  • Portfolio is the combined holding of stocks, bonds, cash equivalents, or other assets (e.g., real estate) by an individual or household.
  • Preferred stock is a class of ownership in a corporation that has a higher claim on the assets and earnings than common stock.
  • Principal is the original amount of money invested or borrowed, excluding any interest or dividends.
  • Rate of return is profit earned in relation to capital invested; what you get back as a reward for risking your money. Risk is an exposure to investment loss.
  • For example, a high-risk investment carries with it a high chance of loss.
  • Risk management is the process of identification, analysis and either acceptance or mitigation of uncertainty in investment decision-making. Essentially, risk management occurs anytime an investor or fund manager analyses and attempts to quantify the potential for losses in an investment and then takes the appropriate action (or inaction) given their investment objectives and risk tolerance.
  • Savings is the amount left over when the cost of a person’s spending is subtracted from the amount of disposable income that he or she earns in a given period of time.
  • Savings account is an account established at a bank or credit union for storing money. Interest is paid on deposited. Minimum deposit amounts may be required in order to avoid fees.
  • Securities are written evidence of ownership or creditorship, such as bonds and stock certificates.
  • Share is certificate representing one unit of ownership in a corporation, mutual fund, or limited partnership.
  • Social security is a Federal government programme that provides retirement and disability benefits to workers and their dependents. Workers pay for Social Security through payroll taxes.
  • Stock is a type of investment that represents a unit of ownership of a corporation. This ownership is represented by shares of stock, which are a claim on the corporation’s assets and earnings.
  • Variable expenses change depending on your consumption of a good or service. A variable expense is a cost that changes significantly from period to period, such as week to week, month to month, quarter to quarter or year to year.
  • Variable income investment is an investment where payments change based on some underlying measure such as short-term interest rates.