Making $400,000 yet living with Mom and Dad

For many young people, the life of a professional athlete seems like it would be amazing. You get money, fame, and the ability to play a game for living while also have a lot of fun away from the playing field.

Speaking for myself, the mindset I had at 24 would have steered me toward having a nice condo in a trendy area, a great car, and substantial expenditures on food, travel, and fun, had I been a professional athlete making $400,000 annually. I think I would have been fairly responsible overall – after all, at 24 one is a fully-grown adult. Additionally, I would have remained true to my values and continued to be very close to my parents, but wouldn’t have lived with them on a day-to-day basis.

That’s what makes this story I found on Fox Sports to be interesting. A 24 year old athlete who pitches for the Oakland Athletics organization, is a guy who lives at home with his parents. Now, these days that’s not so unusual; plenty of people, 24 years and older, live with their parents. Many families find this to be a way to pool resources and save money.

The difference is that this guy makes $400,000 annually! While it’s on the extreme low end of major league salaries, it’s still a substantial income by most accounts. How many 24 year olds making that kind of money, with plenty of fame, would live at home – when they clearly have many other more exciting options?

Apparently, he would. And frankly, I applaud that. Why not? While the 24-year old version of me wouldn’t have done that, the older version of me thinks that it’s not such a bad idea. At 24 years old, just getting started in life, it couldn’t hurt to live there for a short while. In his profession, there are ups and downs for young players (he was sent to the minor leagues this year), so it’s smart to be careful. He can pitch in at home and help defray some expenses for his folks, since he’s unmarried and not obligated to another person. Plus, it can help him save the rest of his money without doing anything crazy such as buying overpriced property, or having insanely expensive nights out on the town. Wouldn’t it be hard to do that with Mom and Dad right there?

Let’s assume, to make it easy, it comes out to $250,000 after taxes.  If he lives at home and helps out, what could his expenses be? Let’s say $4,000 per month? Annually, that’s $48,000 – leaving him with $200,000 after taxes.

Let’s say he takes that 1 year’s worth of savings from living with Mom and Dad, and invests it in the stock market, earning 5% annually after taxes for the next 30 years. In that scenario, that one year of savings by living at home would be worth about $864,000. Granted, this must be viewed in the context of inflation and decreased purchasing power. Nevertheless, that’s quite a benefit for just living at home for one year.

Regardless of what his actual motivations are for living at home, this guy is a good role model for smart financial moves.

Whether or not he is consciously doing it, he is demonstrating two important personal finance actions:

  1. The ability to differentiate between wants and needs.
  2. The importance of saving early in life, to open the possibility for compounding to perform its magic

What do you think of this? Do you think it’s smart for a 24-year old making a substantial income to be living at home, or should someone in that position live it up a bit more?

Comments

  1. says

    I think it is a great idea. It will hopefully keep him more grounded, which is good since many people with too much money too fast can go astray. Also, I am sure he is on the road a lot, so why pay for a house he can only use part of the year? Plus, athletes get traded all the time, so delaying putting down roots might make sense.

    • Squirrelers says

      Everyday Tips – I think it’s a positive move as well. Sometimes, a person who just starts making money – whether $400,000 or $40,000 – doesn’t know what to do with it. Being at home should, one would hope, keep him grounded a bit.

    • Squirrelers says

      Financial Samurai – Yes, I agree: you never know when it will be gone! Supposedly, Mike Tyson and Evander Holyfield both lost their fortunes, despite being in the tens of millions. I recall many years ago reading an article about how an NFL running back bought like 15 or so cars in his rookie year. If he would have just kept all that money in the market, from that first year, he would be well on his way to an average citizen’s retirement.

  2. says

    I wouldn’t move out to spend more crazily, but as someone who moved out for good when she was 19, I wouldn’t be living at home.

    I’m all for saving…he could live pretty well on $4000 a month and still save the rest as you smartly suggested. I just wouldn’t want to be living with my parents…talk about putting a damper on a social life (even a non-crazy social life…). Of course, at 24 I had been married for 2 years…

    • Squirrelers says

      BFS – it sure wouldn’t be as easy to have a fun social life. A young major league baseball player making loads of money could certainly have a great social life if he wanted to…maybe he has more fun on the road!

  3. says

    My question: Does his mom do his laundry? Hm, according to the article, she does. AND cleans his bathroom. Talk about service. He should hire her a cleaning lady at least. Hopefully he’s contributing something.

    • Squirrelers says

      I agree, making that kind of money, one should offer some appreciation for the parents to say the least. Maybe he’s doing something for them, but it wasn’t in the article? Let’s hope so.

  4. says

    I didn’t read the article yet, but I wonder if he is thinking frugally and that’s what spurred the decision to stay at home. OR, there’s something else keeping him there. I have two younger siblings, one just turned 29 and the other one is 30. Each of them still lives with their / my parents (it’s complicated, I have two sets of parents with half-siblings!) Of course the reason each of them still live at home is due to finances. However, both sets of parents haven’t tried to encourage them to move out. Which brings me to another reason this young ball player may be staying at home: his parents want him there and are making it a very comfortable place to be.

    If he’s smart, he’ll save his money then move out before it becomes too difficult and/or scary for him to start out on his own.

    • Squirrelers says

      Little House – really, as I am responding to everyone else’s comments, I’m realizing that this guy has the best of all worlds. He can spend half his time at home, where he is with his loving (I’m assuming) parents in his familiar surrounding. The rest of the time, he is on the road and could have fun in the cities he goes to. All the while, he saves because he has no mortgage and home-related expenses of his own. Not bad….

  5. says

    I like the frugal aspect of staying with mom and dad, but (as BFS mentioned) he could also live frugally on his own…renting (not buying a house) and saving as you suggested. I think that a 24 year old who can afford it should be on his own so he can learn what life is like outside the nest. If he stays at home now, while he can afford to be on his own, what will happen when he is 25 or 26 or 30 and no longer in professional baseball? Will his parents have to kick him out? In my opinion, it is time for him to move out and grow up.

  6. says

    If I had a job where I was on the road a lot, I would consider it. Maybe he’s just sensible and would think it was a waste of money renting a place that he was never at.

    If he wants privacy, he can go rental a hotel or cottage for the weekend.

  7. says

    In the case of a spoiled kid, I would suggest not staying at home… but in this guy’s case, it seems like it’ll help him to secure his financial footing. That’s pretty cool that he’s willing to do that; he must share a pretty special bond with them.

  8. says

    I think it’s fine that he’s living at home, but at some point they both should move out. The article references the respecitve mothers cleaning for both of themf, which is something I feel they should do themselves if they have their own place (of course, they do have the resources to hire that out.) Either way, good for them for not wasting it away and becoming the next broke, has been athlete.

    • Squirrelers says

      Jeff – I think that’s the big takeaway, that they look like they’re on track to avoid the broke ex-athlete trap. Good for them! Now, as far as laundry and cleaning, hopefully they’re helping their Moms out in other ways.

    • Squirrelers says

      Barb – I would agree, this guy is wise. He’s trading short-term “hassles” of living at home for long-term security. Smart move.

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