NBA Players can live extravagant lives. What would it be like to live like an NBA player on a budget?
The 2021 NBA Draft wrapped up earlier this week and made a lot of young men millionaires.
It’s amazing to see the hard work and dedication of so many talented people pay off.
Thankfully they are getting fairly compensated for their hard work and potential output in the NBA.
The number one pick this draft was Cade Cunningham who is going to the Detroit Pistons!
Players can sign their rookie contracts at anywhere from 80% to 120% of the full rookie schedule.
Cunningham has $17,169,100 guaranteed in his first two seasons. If you add his 3rd and 4th year options his total contract value at 100% of the rookie scale is $37,999,015.
Here’s a table showing the salaries for the top 10 picks in the 2021 NBA Draft:
This is a lot of money that would let anyone live a lavish life. However, NBA players have to plan for their futures too.
The average career length of a regular starter in the NBA is about 9-10 years.
That means that a budget is important, even for NBA players!
The Life Of A NBA 1st Draft Pick On A Budget
Let’s see where Cade can live in Detroit keeping with one of our common budgets.
First let’s look at taxes.
After a federal income tax rate of 37% and a state tax of 4.25% Cade will bring home around $4.75M from his NBA contract in his first year.
To keep things simple I won’t make any assumptions about his endorsements, but it’s safe to say he will be earning a couple million in additional income.
Using Dave Ramsey’s budget, we can keep housing at a reasonable 25% of post-tax income.
His budget is $1.2M from his salary, but I’m sure he could comfortably go up to $1.6M with his endorsements.
Here are some of his housing options:
Downtown
This 16th floor corner penthouse has amazing views of downtown and is within 10 minutes of the Piston’s training facilities in New Center.
There is an extra city tax within Detroit City limits, but this is a great option for downtown life.
Suburbs
This home is on a private drive and is very spacious, it comes in at around 32% of Cade’s NBA salary, which shouldn’t be a problem when accounting for his endorsements.
This is just at 30 minutes from the Pistons Performance Center and there are nice towns between Bloomfield Hills and New Center like Royal Oak & Birmingham.
Even on a budget Cade Cunningham can get some pretty sweet spots in Detroit!
The Power Of Supplemental Income
Jason Tatum is a NBA player who has a very interesting savings strategy.
He saves his entire NBA salary and lives off of money from his endorsements.
Even though these players are dealing with millions of dollars, we can still take a page out of their book.
One of the most important ways you can get wealthier is to grow your supplemental income.
Income that you receive outside of your primary job can be saved to increase your savings rate and reduce your reliance on your 9-5 job.
The freedom from reliance on your main job is the important part here. The larger your supplemental income is, the more freedom you have from the job you currently work.
Types Of Supplemental Income
Part-Time Jobs
Part-time jobs are a good option to pick if you have the extra time after work. A good option is tutoring online.
VIP Kid is a good opportunity to earn some money on the side. You teach English to Chinese children for $14-$22/hour.
Many online opportunities are good because of their flexibility, but there are always stores and manufacturing or assembly plants looking for workers.
Side Hustles
If you have an interest and knowledge about a topic you can try to become a freelance writer or blogger by starting your own blog.
If writing isn’t your thing, maybe yo can start your own YouTube channel making videos about a topic you’re passionate about.
The good things about videos and blogs is that they stay up and can generate revenue without your constant effort.
Traffic through your Youtube channel or blog can drive revenue via ads and clicks.
Real Estate
Real estate can be great for generate passive supplemental income.
This option has the highest upfront cost out of all these options, but in my opinion it is the best way to make supplemental income.
The effort for upkeep is minimal and they rent is almost guaranteed. It takes a fair amount of planning before you can purchase a property and probably a couple years of savings for the average earner.
Once you make the plunge into owning property you can start reaping the benefits from real estate.
Use A Budget At All Income Levels
I can hear you now, “Well of course it’s easy for these NBA players to budget, they’re making a lot more money than I am!”.
Really it doesn’t matter how much money you make, it’s still important to budget.
There are many stories of famous athletes who made millions a year who end up with nothing in their savings.
60% of millennials making over $100,000 per year say they live paycheck to paycheck.
This just shows how important it is to plan and budget for your future.
What do you think about NBA Rookie salaries? Do you have any supplemental income? Where does it come from? Let me know in the comments.
Author Bio
Drake is a freelance writer who’s interested in history, economics, art, & beer. Drake graduated with a degree in Supply Chain Management and began working at General Motors. He writes about popular personal finance topics and shares his journey. Make sure to check back for more posts on Abnormal Money.