Personal Finance for Strength & Conditioning Professionals
Updated: Dec 30, 2020
It is no secret that Strength and Conditioning Coaches, generally, do not get paid a lot. We have all heard the "overworked and underpaid” argument. In many cases this is very true. However, there are a lot of often overlooked concepts that can ameliorate the underpaid aspect of this argument. As a strength and conditioning coach, I understand I will probably never be rich (whatever that truly means). I also understand the power of compounding interest. Einstein referred to compounding interest as the 8th wonder of the world. Through retirement and investment accounts it’s not unreasonable to expect to retire with over $1 million. Understanding personal finance, retirement accounts, investments, and debt consolidation are certainly important, but putting that knowledge to use is the hard part. Throughout this post I hope to give you a better understanding of personal finances, key terminology, and actionable steps to take control of your financial journey. We all love our field and as much as we may want to be grinding away deep into our 70’s that’s not always feasible. Through proper management, planning, and hard work you can prepare yourself for retirement and live well doing so.
Before we get started, we must first understand some key terminology that we are not always taught through our education and certification processes. Along with this terminology I will give you some resources that have helped me along the way. First, I would highly recommend reading Rich Dad Poor Dad by Robert Kiyosaki in order to better understand personal finance. I have mentioned this book before and for good reason. It really is a great place to start and the concepts are laid out in such a fluid way, it’s easy to comprehend. With that being said, let’s go over 4 terms that should be understood before moving on; budget, asset, liability, and equity.
A budget is an estimate of income and expenditure for a set period of time. In order to efficiently take control of your personal finances you will need to know what your budget is. This is a simple calculation that can be pretty difficult to properly nail down. We will go into budgets in more detail later in this post. Liabilities and assets can also be very complex but for the purpose of this post we will look at them as black and white entities. An asset is anything that provides income and a liability is anything that costs you money. Finally, equity can be defined as what is left over when you subtract your liabilities from your assets.
Understanding what a budget is and compiling a budget are very different. In order to set ourselves up for financial success, it is imperative that we understand how much money we have coming in and going out on a monthly basis. I would recommend tracking everything you spend money on for an entire month. Be very detailed with the amount of money that was spent and what it was spent on. As a strength coach, you’re more than likely proficient enough in excel to tackle a task like this. I recommend using excel because it’s really easy to sort and interpret the data you input as the lists gets longer. The good news is there are plenty of websites, apps, and software that can help you with this if you don’t want to use excel. Excel and Google sheets also have pre-made budget templates that they offer for free. After you have decided on your preferred method of tracking your earnings and spending, it’s time to break down the spending into necessary and unnecessary spending. Necessary spending is anything you need to survive, such as rent, bills, and food. Unnecessary spending would include coffee, clothing, and impulse buys at the gas station. Let’s look at a small example.
If you’re interested in the Budget Template I use you can download it here.
Joe makes $2,500 a month after his taxes have been taken out. This means $2,500 enters his bank account on a monthly basis. He pays $1,000 in rent, and $600 total in utilities including his cell phone. He also pays $450 in food/drinks. He spends $150 on subscriptions such as Netflix and Amazon prime. He spends another $100 on clothing, and $100 on Gas. Add all this up and Joe is spending $2,400 of his $2,500 monthly income. If Joe doesn’t have any debt, he is currently saving $100 each month for a total of $1,200 per year.
This doesn’t sound like a lot, and it isn’t but at least Joe isn’t spending more than he is earning and accruing more debt each month. He also now understands where his money is going which is very powerful. With this information he can make some simple adjustments in order to save even more. For example, he may look at his grocery bill and decide that he can cut out a couple of coffees a week and do a better job of eating the food he has at home instead of letting it go bad in the fridge, which will end up saving him an additional $75 each month. He can also manage his subscriptions and cancel some of the ones he rarely or never uses. Let’s just say he cuts a couple and is able to reduce that by $25 each month. He is now doubling the amount of money he is saving each month. Easier said than done surely, but by simply understanding where his money was going it was very easy to analyze it and make simple adjustments that will save big money over time.
Now that we have an idea of how to assess current spending habits and create a monthly budget, we need to determine the best course of action moving forward. This will be very individualized and based on goals, but there are a couple of areas that everyone should be prioritizing.
If your employer has a 401k match program, you should be taking full advantage of it. No matter what the level of match is, it’s free money. Free money that will grow over time and will set you up better in retirement. I suggest matching to the maximum amount and enjoying the free money that accumulates in your retirement account. I can’t think of a scenario where you wouldn’t want to be contributing to the 401k in order to have your employer match the contributions in some way. If you’re employer does not match, then perhaps it could be beneficial to opt out of the plan in order to put that extra money towards debt. This seems like a rare case, but could come up.
Clearing High Interest Debt
After getting all the free money you can from your employer, this should be priority number one. The average interest rate of credit cards in 2020 is 21%. That is insanely high, and that can snowball very quickly. Your goal should be to save as much money as possible and put everything you can towards bringing the principle down as soon as possible. You will be hard-pressed to find an investment that will match the returns of 21%. Clearing this debt is the best investment you can make and will end up saving/making you more money in the long run. A high credit card balance not only means high interest payments which will not go towards reducing the principle, but will also negatively affect your credit score. Let’s look at a quick example before moving on to a plan to clear the debt.
Let’s say you have a $10,000 balance on a credit card with 21% interest rate and a minimum payment of 4%. If you were to pay the minimum payment each month it would take you 177 months (14 years, 9 months) to pay off this debt. This would also end up costing you $17,608.45 to do so. As you can see it is extremely important to clear this debt as fast as possible. Let’s look at some simple ways to accomplish that goal.
In order to clear this debt as fast as possible you need to pay more than the minimum required payments each month. The best way to do this, is to look at the budget we created earlier, and find areas where you can save extra money which can them be put towards your credit card. I look at it like this, at 21% interest, every dollar I spend or save on the credit card is equal to $11.92 in 14 years. That’s pretty powerful and really makes you think about that candy bar at the gas station. Is it really worth almost $12? Probably not.
We haven’t even touched on the concept of having multiple high-interest payments each month, but that can lead us to our next option. Debt consolidation could be a good option in order to lump all of your debt together and reduce your interest rate. If you only have one credit card you can also negotiate with your credit card provider in order to lower your interest rate. This doesn’t always work, but it’s certainly worth looking into. To go along with this, you can also negotiate other bills in order to save money. Some common bills that are actually negotiable are cable/satellite tv, internet, car insurance, medical bills, and cell phone. If your credit card provider is not willing to reduce your interest rate, you might be able to transfer your balance to another credit card. This usually comes with a fee but could offer advantages such as 0% APR for 18 months. Before doing this, make sure to do some math and shop around for the best offers in order to save you as much money/time as possible.
Another simple and effective way to increase your card payments is to sell things you don’t need or use. With eBay, craigslist, Facebook marketplace, and all of the other sites/apps available, it’s pretty easy to sell stuff these days. The best part is, you can sell almost anything. This could be an easy way to pick up some extra cash and pay down your debt.
Side hustles are another way to boost your income and reduce your debt. Later in this post, I will go into further detail regarding this topic. The idea is simple, make more money and use that money to pay of your debt.
There are a couple of other ways to eliminate this debt, but I would only recommend these in rare cases. You should really think hard, and weigh out your options before choosing to do either of these. The first is to take out a personal loan in order to reduce your principle on the high-interest debt. The interest rates for personal loans vary drastically and will be dependent upon your bank, your credit score, and a multitude of other factors. You can always apply for one, and then figure out the numbers as you go and decide if this is the right option for you. A lot of times you can get a personal loan that will cover the entire principle and have a lower interest rate. This seems like a no-brainer, but there are occasionally closing fees and some other expenses that pop up when dealing with personal loans. Be sure to do your research and ask all of the right questions before actually taking the loan out. The last thing you want to do is accumulate more debt. The second thing you could do is withdraw money from your retirement account. This is absolutely the last case scenario. You will be taxed heavily if you decide to do this and it will take a long time for your retirement to recover. If you were to take $10,000 out of your retirement, in order to reduce your debt, you would only receive $7,000 (a 30% loss) and this $10,000 equates to a ~$100,000 loss if you were to keep it in your retirement account for 35-40 years. That is a huge loss and will be very difficult to make up for. There are some cases where this might be the right option, but I would certainly look into every other option you have before doing this.
If you’re interested in learning more or have any questions about this subject please feel free to reach out and I will do my best to point you in the right direction. There are a lot of great and free resources out there on this subject.
Pay Yourself First
We have established that we have maxed out our 401k match program and we have cleared our high-interest debt. Now for the fun part. At this point you should have extra income each month, and hopefully you’re saving a decent bit of money. If you’re like me, you’re not making a ton of money and in order to retire “wealthy” you’ll need to do more than just that retirement match program. I’m going to outline a couple of ways you can put your money to work in order build more wealth and a much larger retirement portfolio. The first step is to “pay yourself first”. “Pay yourself first” is a personal finance strategy that encourages you to save your money prior to anything else. This method is useful because it promotes investing or saving money before paying your bills. This also helps to deter impulse spending because the money isn’t as available.
A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement. There are some restrictions to this type of account but there are also some benefits. The major restrictions are based on the household earnings. As of 2020 if you earn $139,000/year as a single or $206,000 as a couple you are not eligible for a Roth IRA account. This does not apply to most people in the strength and conditioning or personal training professions. There are also limits to the amount of money you can contribute per year. In 2020 the max you can contribute is $6,000 unless you are over age 50, in which case you can contribute $7,000.
You can open a Roth IRA through banks, credit unions, brokerage firms, or savings and loan associations, as long as they have received Federal IRS approval. This account is really easy to open up, takes about 10 minutes to d so, and can go a long way towards building your wealth over time. I would always suggest maxing out your Roth contributions for the year before making other investments. If you’re interested in learning more here is a link to a Roth IRA calculator that can give you some insight into what you could earn based on age, salary, and contributions.
If you have maxed out your Roth IRA for the year, or you just simply don’t want to go that route, another good way to pay yourself first is to start investing in other ways. You can do this by opening up a taxable brokerage account, using a robo-advisor tool, or opening a self-directed investment account. Each has their own benefits and I’ll do my best to outline them quickly. Before doing any investing I highly recommend reading The Intelligent Investor by Benjamin Graham. This book teaches management and diversification strategies as well as principles of value investing.
Opening a taxable brokerage account allows a professional to guide your investments and will handle all of the ins and outs that go along with investing. Since this account is taxable it is much more liquid than a retirement account, but you will be taxed on earnings. The ways in which you’re taxed are also dependent upon how long you hold your assets, your tax bracket, and the type of gains you received. This can all be very complicated, but if you’re like me and just put money into the stock market and leave it there, it really isn’t too difficult to get started.
You can also decide to go the robo-advisor route, which also handle the ins and outs of investing by using sophisticated algorithms, which are based on your wants/needs for investing. Like a brokerage account, there are usually some fees associated with these tools. The fees are usually very low and well worth the price for the service provided. I like this option for anyone who wants to get started in investing, but doesn't care to do any of the leg work. You can simply deposit money into an account and leave it alone. The advisor does the investing and management and you get to grow your wealth. If you're more interested in a "self-directed" approach there are plenty of great tool available for that as well.
Another way to “pay yourself first”, is to open up a self-directed investment account. You can do this the traditional way, through a brokerage account, or you can use an app-based approach such as Webull, M1 Finance, or Robinhood. This can be a fun way to put some extra money into the stock market and learn as you go. However, I would not recommend jumping in and throwing money into companies without doing your research. Just like the other methods, these are taxable accounts and you will be taxed on your earnings.
The great thing about apps like this are, you can get started investing with no fees and you can start by investing as little as $1. Each of these apps uses fractional shares, which means you can buy a pieces of shares of companies. This is great when you're just starting because you can diversify your portfolio without investing a ton of money.
I am currently using WeBull and Robinhood and have provided my affiliate links above and below respectively, if you’re interested in getting started. I have been a big fan or Robinhood, but they have had some bad press recently and I have started using WeBull more. Robinhood is easier to get started with as its interface is really "game-like" which incidentally is part of the reason they have been sued. However, WeBull does offer more sophisticated ways to invest, research, and trade. By using the Robinhood link to sign up, you will get 1 free stock worth up to $500. WeBull is currently running a promotion where you can get up to 4 free stocks for signing up and depositing $100 and using the link above this paragraph.
Perhaps the most important way to “pay yourself first”, at least after first getting out of debt, is to start a savings account. Many top investors agree that you should have 3-6months worth of salary readily available at all times as an emergency fund. Keeping this money in a saving account will give you access to a higher interest rate than your basic checking account which will allow you to at least increase the value of this money slightly. Usually, this is barely enough to cover inflation, but having this money available is extremely important.
Fast-Track Your Financial Freedom
Now that we have a very basic outline and plan of action we can start to find little ways to fast-track that plan. We know that we need to get rid of our debt, but sometimes our primary job isn’t enough to get this done, or at least not as quickly as we would like. Below, I’m going to go over a few ways to make or save more money in order to get you to financial freedom and a nice retirement plan faster.
Perhaps, the best way to make more money is to get another job. It’s that simple. Finding the best side hustle for you can be a little bit trickier, but there are plenty of options out there. I’m going to go over some side hustle ideas that I am familiar with and I know can work for you.
As a strength and conditioning or fitness professional this is usually the go-to method of side hustling. It allows us to stay where we are most comfortable, and perfect our craft. It’s a win-win. We can earn income while gaining valuable experience. I recommend this method to anyone, as the long-term benefits are enormous. You might find that you actually enjoy the private sector more than a team setting, or that you feel you can make a bigger difference in that setting. You will also learn some great skills that can help you along your journey. Being a personal trainer is like being a salesperson and marketer combined. The catch is you have to be an extremely effective communicator and you have to know what you’re doing from a tactical standpoint or no one will actually see success. You can make a lot of money, gain a lot of valuable experience, and learn a lot about yourself through this side hustle. The biggest downside I see to personal training is time commitment. This is essentially a full-time job. You might be able to pick up a client here or there and train them from your main jobs facility which really makes things manageable. But if you have to do this through a gym or another company, they might require a bit more out of you. I wouldn’t be a strength coach today if I hadn’t been doing this as a side hustle for my early years. This is how I made income while interning and volunteering to get my foot in the door of the sector I really wanted to be a part of.
If you don’t have time to personal train on the side you can always look for jobs that have a more flexible schedule. Delivery driving is a great alternative because you can really make your own schedule. You can also work as much or as little as you’d like. There are a lot of companies you can go through for this type of work. You could go directly to a restaurant who is hiring, but that will likely end up being like another full-time job and might take away a lot of the flexibility. I recommend going through a service such as Doordash, Uber Eats, or Grubhub. Each has their own benefits, but the biggest thing to look at is relevance in your area. With the pandemic these companies really grew their networks and are serving nearly everywhere. I would do your research and see which one is right for you. I personally have used Doordash because it was the best fit in my area. As I have stated above, the greatest thing about this side hustle is the flexibility. You don’t have to set a schedule, you don’t have any quotas to hit, and you can just sign in and start making money almost anytime you want. A major downside to this side hustle is location. This is great for me in the highly populated Norfolk/Virginia Beach area. This might not be as lucrative for someone living in a small farm town with very few restaurants. Another thing to keep in mind, if you wish to go down this route, is the tax ramifications. You will be in charge of keeping up with your income, paying taxes on that income, and keeping track of any write-offs. This isn’t difficult to do, and if you decide to try this out, I’d be more than happy to share my tips/tricks with you as well as the free apps I use that basically do the work for me.
I won’t spend a lot of time on this because it’s almost the exact same thing as delivery driving. The major players here are Lyft and Uber. I will say the vehicle specifications can keep a lot of people from working for one of these companies. There is usually a very high demand in a tourist destination or anywhere close to an airport. Some major downsides are saturation of the market and having people in your vehicle. If you’re in an area around an airport there are likely a lot of people who are doing this as their full-time job, which can make it less cost effective. Another major downside is having people in your car. You will need to keep your car very neat/clean in order to keep your rating high enough and while you can write this off of taxes, it does cost money and time upfront. You also have the chance of picking up rude or drunkenly sick people which is rarely a fun experience. This could be a great option for you if your car fits the specifications, you’re in the right area, and you don’t mind having other people in your car. As with the Delivery Drivers if you’re interested in this, I’d be more than happy to share my app list and tips/tricks.
Free Lance Work
Do you have any skills? There’s a good chance you can get paid to perform tasks for other people who don’t have the same skills you do. Sites like Fiverr, Upwork, and Guru are places you can market yourself and skills, and other people will pay you for your services. The primary obstacles here are having skills that are in demand and pricing appropriately.
There are plenty of other side hustles out there and I plan to do another post in the future highlighting more. For the time being, I’d like to move on to ways to save money.
Cut Your Expenses
The easiest way to save money is to cut your expenses. We went over this briefly when talking about budgeting, but is worth diving into again. I’m going to quickly highlight some ways to cut your expenses. Manage your subscriptions and cancel the ones you rarely or never use. Use your grocery budget at the grocery store only and don’t allow yourself to eat out or buy coffee from Starbucks and instead make your own food. Limit how often you go out drinking. Shop around your phone service, car insurance, or cable/internet service. You might be able to save some money each month just by switching companies. Take advantage of sales and buy in bulk when applicable. Overall, just be frugal and don’t live above your means.
Use Rewards Programs
There are a lot of programs out there that can save you a good deal of money just by signing up and giving them access to your email address. These types of programs should be no brainers, but a lot of times people don’t want to be bothered to sign up or they don’t take full advantage of the program. Most grocery stores have rewards programs which not only give you access to special deals from time to time, but they also accumulate fuel points and can be used to lower the price per gallon of gas when used at participating service stations. By signing up for this program you can save money on the items you were already going to buy and save money on gas later down the road as well. Some of those same gas stations have rewards programs where you can earn discounts or even free items by filling up your vehicle as you already do. Credit cards often have rewards programs as well. Some credit cards have cash back bonuses, which is essentially a 1-5% discount on anything you purchase with that card. Some credit cards have programs where you can earn points for purchases, which you can later redeem for statement credits, travel miles, or discounts on products. Just be sure to pay off that card in full before the end of the statement period.
There are plenty of other ways to save money, but by simply understanding your budget, not living above your means, and allowing your money to work for you long term you can be on your way to financial freedom.
I know this was a long post and I thank you for reading this far. I hope this has helped you in some way and given you some actionable steps to taking care of your personal finances. Full disclosure, this was not intended to be financial advice and I don’t have the qualification to give that sort of advice. It was intended to be an educational piece with some resources that doubles as a kick in the butt to get you moving. If you enjoyed this post I would greatly appreciate you sharing it on social media. Thank you!