Youth sports has become a $7 billion a year business, but a new TD Ameritrade survey finds that many parents are putting their children’s sports ahead of thei
From pre-dawn Saturday morning road trips, long hours standing in the hot sun or the pouring rain, to countless fast-food meals, sports parents understand the art of sacrifice.
The youth sports world today is a far cry from even just a generation ago, when a spontaneous pick-up game of running bases or flashlight tag might have erupted on a neighborhood street. Today's kids are scheduled, shuttled around, and dressed in team uniforms from the 5-year-old peewee leagues all the way to the senior banquet.
Organized youth sports have blossomed into a $7 billion industry, and it isn't going away anytime soon. Today's youth travel teams, which run the gamut from soccer to basketball to baseball and even sports like gymnastics and figure skating, are costing parents thousands of dollars in yearly team fees, out-of-town hotel costs, private coaching, and equipment fees.
"For our son who attends a competitive, nationally known high school, we spent over $10,000 a year for traveling to tournaments and for private coaching, so it can be a big commitment," says Kelly Trevethan, a San Francisco-based managing director of United Capital.
However, he says it's worth it. "As a parent of three kids, I would definitely be willing to sacrifice something for myself so that our kids are involved and have an infrastructure of support for them to be doing something healthy."
A new TD Ameritrade survey reveals that sports parents are indeed deeply invested in helping their kids achieve athletic aspirations, yet often sideline their own financial goals in the process.
Among the survey’s findings:
"Parents are willing to push off retirement, work longer, and save more, but at the same time, take more of the cash flow and use it toward their children’s extracurricular activities. In our community, we see kids going to strength, conditioning, or hitting coaches who try to prepare them for what it will take to play sports at a college level," Trevethan says.
When it comes to building a retirement nest egg, the cost of college is a sports parent’s biggest financial hurdle. Forty-three percent of parents surveyed say competitive youth sports and club teams are too expensive, but they are still willing to pay so their kids can play. On average, parents spend between $100 to $500 a month, per child, on competitive sports. Nearly 20% spend at least $1,000 or more, the survey found.
Many parents hope the investment will translate into scholarships or possibly even professional careers. The reality is that few high school athletes will play their sport in college. Check out these numbers from the NCAA:
The TD Ameritrade survey found:
Sports parents’ support and devotion to their kids’ aspirations is admirable. And no doubt there are many significant life lessons that kids learn by participating in team sports that go far beyond the dollars and cents spent.
Dan McGuire, a Northfield, IL, sports parent of two, points to his children's participation in team sports as "instrumental in helping our kids develop life skills, which are needed to be successful in a work or career environment." His daughter also earned a lacrosse scholarship that reaps value beyond the financial sense. "It helps her take responsibility for her college academic career. It also challenges her to understand and live a collegiate life of sacrifice and commitment," McGuire says.
At the end of the day, it’s a fine balancing act to find the money to support your kid's aspirations, yet also sock away enough funds to build your own financial security safety net and retirement egg.
Here’s what Trevethan recommends: "Our approach is that clients need to save 25% of their net take-home pay. This money should be going into savings. It’s best to first maximize your qualified retirement savings, such as your company 401(k) plan as well as your personal IRAs. Whatever is left over should be going to non-qualified retirement savings accounts that invest for growth with at least one year of living expenses held in a zero-risk savings account."
But if you can’t do all of that and spend five figures per year on children’s athletics? It may be time to scale back. Participation in school sports is far less expensive than those at the club level, and often the local park district league can be about as competitive as the travel league. And some say it’s never too early to encourage the children to pitch in with fund-raising and chores to help defray the cost. After all, it’s a team effort.
See if you are on the right path to retirement. Call us at 800-213-4583 to speak with a retirement consultant who can personalize a plan for you.
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