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What the American family can learn from the NFL bankruptcy crisis
Eighty-seven percent of todays teenagers say they dont know anything about personal finance, according to a study from ING Direct. - photo by Tyler Stahle
Apparently, no amount of touchdowns can protect a National Football League player from filing for bankruptcy soon after retirement.

A research paper published by the National Bureau of Economic Research found that nearly 16 percent of NFL players drafted between 1996 and 2003 have declared bankruptcy within 12 years of retirement.

While that may seem mind-boggling to the average American, considering that the average pro football player makes $1.9 million per year, researchers have found that initial bankruptcy filings start shortly after a player retires from the league and remains persistent after the first dozen years of retirement.

The paper acknowledges that NFL players hit their peak earning amounts while they are young, generally right out of college. Then, due to the brutality of the sport, are forced to retire young, and are not likely to ever earn money on the same level again.

Conversely, the average American woman reaches pay peak at age 39, while male income continues to grow until age 48, according to Forbes.

Athletes have a different set of challenges from, say, entertainers, said Michael Seymour, founder of UNI Private Wealth Strategies. Theres a far shorter peak earnings period [in sports] than in any other profession, and in many cases they lack the time and desire to understand and monitor their investments.

Regardless of when peak earning amounts are reached, however, many experts believe that the reasons athletes or regular Americans go broke simply comes down to poor money management and misplaced trust.

Learning to manage your money

Eighty-seven percent of todays teenagers say they dont know anything about personal finance, according to a study from ING Direct.

They do want to learn, but right now they dont have the tools they need, said Laura DiLello, ING Direct spokesperson. They know that having a savings account is important.

Typically, todays youth are expected to learn money management and budgeting skills from their parents. But many adults admit feeling uncertain and insecure with their understanding of financial literacy.

Parents really need to gain more confidence, continued DiLello. They may be going through their own financial problems, but it doesnt mean they arent a good influence.

Some experts recommend teaching kids financial responsibility through an allowance. Giving a child a set amount of money each week can help teach them the cycle of money management.

Help your children understand that when they make money, they should put some aside in savings. Then as your children grow, allow them to pay for their cellphone bill or car insurance. Thus, helping them see how adult finances really work.

The same goes for adults. According to Vox, its recommended to put away between 15 and 20 percent of your paycheck. However, the average savings rate for the American family last year was 4.8 percent, well short of what is needed to provide a comfortable retirement.

Trust the right sources

According to NFL agent Leigh Steinberg, one of the biggest mistakes a young NFL player makes is hiring a family member or friend to make their business decisions.

Former Los Angeles Lakers star Magic Johnson agrees.

Thats the killer, he said. Johnson says he frequently gets calls from other star athletes proposing business ventures or ideas, but hell never hear them out if they want to depend on family or friends.

It wont even be a conversation, continued Johnson. They hire these people not because of expertise but because theyre friends. Well, theyll fail.

For the average American family, advice and help from financial experts can be welcomed and helpful. However, dont trust just anyone who wants to handle your money.

Sophia Bera, a Minneapolis-based certified financial planner, recommends getting recommendations from people who have the same financial needs as you do. Then, before getting in touch with the planner, research their company, profile and LinkedIn bio.

Suze Orman, an author and financial advisor, offers the following tips on her website to help you find the right financial planer:

  • Be wary of any financial advisor who cold-calls you, or one that youve never heard of. Most successful advisors have clients coming to them, not the other way around.
  • Always make the effort to visit the adviser's office even before you agree to work with the individual.
  • Make sure advisers are certified financial planners, meaning theyve gone through a two-year certification course thats required to meet the latest education standards.
  • Dont write a check out to the adviser. The only checks you should be writing are to the brokerage, insurance company or other financial services firm.