Answer: About 1% of U.S. millionaires (those earning $1 million/year) are professional athletes

We often hear from teachers that students are convinced that professional sports are the road to riches but besides the challenge of making it to this pinnacle (only 0.03% of high school seniors playing basketball ultimately get drafted after playing college ball), almost 99% of millionaires have generated their wealth outside of professional sports. Then again, athletes who suddenly come into millions from their first contract often struggle to live within their means while we have also uncovered examples of celebs who are famous but frugal too. 

Questions:

• Did this answer surprise you? Why do you think that so many people believe the answer to this question is a much higher number? 
• Given that only 1% of millionaires are professional athletes, what are other ways that people generate wealth in the U.S.? 
• Why do so many professional athletes struggle to build wealth despite signing contracts in the millions of dollars? 
• Agree or disagree with the adage "It's not what you make, it's what you keep." 

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (NGPF Blog post):

So, if we assume the vast majority of professional athletes in the US are under age 35 (there are certainly exceptions, especially in the world of golf), and we consider there are roughly 5000 pro athletes in the top four US leagues, and we use the figure from The Wages of Wins Journal that approximately 51% of all NBA players average $1M per year, I’m thinking about this math:

3% of millionaires are under 35 (8000 people)

5000 pro athletes, but only half earn $1M per season (2500 people)

At most, 2500/8000 = 31.3% of the 3% could be athletes = 0.94% of millionaires are professional athletes

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This FinCap Friday "Famous and Frugal" highlights celebrity investors, athletes and entertainers with frugal habits. 

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 Not to burst any bubbles but this chart from Business Insider shows how difficult it is for a high school athlete to become a college athlete and to ultimately be drafted by a professional sports team. Having once played a college sport (not sure athlete is an appropriate term), I can assure you that at all levels of sport "hope springs eternal," even when the facts suggest otherwise: 

About the Authors

Jessica Endlich

When I started working at Next Gen Personal Finance, it's as though my undergraduate degree in finance, followed by ten years as an educator in an NYC public high school, suddenly all made sense.

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Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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