How to be a Financially Savvy Racer - Yes, There is Such a Thing
Compared to fast speeds, loud engines, and fun times at the racetrack, managing your finances probably isn’t the most thrilling aspect of your life if you’re a racer. However, without it, we wouldn’t have the financial resources needed to go racing and form the backbone of our sport. For me personally, I’ve loved saving and investing since my elementary years, so it’s no surprise that I went on to study finance in college and head my university’s investment club.
Usually when I tell people I’m a finance major and a racecar driver, they laugh and tell me those two things don’t go together very well. However, I disagree with the stigma that racing is “just a money pit” or an industry where people spend money foolishly. Yes, racing is extremely expensive and addictive, but racing is an industry nonetheless. Like any industry, there’s threats and costs, but also opportunities and revenues. Yes, it’s difficult to earn a sound living in racing, but the same goes for ball players of any kind, dancers, artists, small business owners, etc.
The fact of the matter is, money isn’t an infinite or easily attainable resource for anyone on the planet. Therefore, as the racing community, it’s important to take a step back and see how we can responsibly manage our finances while still being a part of the sport we all love. With that being said, I’ve come up with a list of 5 pieces of financial advice for racers and fans.
1. Financial advisors – It never hurts to talk to a financial advisor. It’s not necessary to dump a ton of money into this department and/or have them do all your investing for you. However, it’s good to get the advice of someone who works in the industry that you trust, even if you’re purchasing the products yourself.
2. Life insurance/disability insurance – I know as racers we like to take risks. However, we all have that one crash that makes us realize we’re not invincible. Be proactive and plan ahead financially. While we don’t like to think about all the bad things that could happen to us at the track, injury and death are an unfortunate part of motorsports. This doesn’t only apply to racecar drivers, but also mechanics, track workers, etc. Make sure you have a good life insurance policy and disability insurance. If you get hurt on Saturday night and can’t work during the week, you will not only be unable to earn income, but you also won’t receive worker’s compensation. Most racers have family or spouses to provide for, so think of them and the financial needs you have to provide for before hitting the track without coverage. Another resource you might want to look into is STIDA, a low cost insurance for racers that covers you anywhere (I myself have STIDA in addition to my insurance).
3. Try to save – I understand for some racers at the grass roots level, it can be difficult to save when you have bills to pay and want to go racing. However, try your best to save as much as you can, whenever you can. Even if it’s just a little bit, the beauty of compound interest can make a big difference in your account over time. Personally, I have my savings/checking, racing, and investing accounts all separate from one another. You don’t have to have multiple if you’re unable, but if you are interested in investing what you’ve saved, I’d recommend Robinhood. Robinhood is a free app and all the money you transfer into it goes into an interest bearing savings account. Then, if you want to invest any of that money, you can at the click of a button, commission free. A great place to start is investing in an index fund or ETF (such as the S&P 500 ETF or a Vanguard fund). Check out this link to see how much money you could have by retirement with your choice of savings amounts.
4. Don’t blow it – As much as we hate to admit it, racing is a privilege, not a necessity. I’d highly recommend not taking out ridiculous lines of credit or a second mortgage on your house in order to race. As racers, we all have to make multiple sacrifices in order to do what we do, but the inability to provide for your basic needs is not a sacrifice worth taking. Simply do what you can do. As I always say, the money has to come from somewhere, and this looks different for every team. Whether you’re funding your racing through sponsorship, your Monday-Friday job, or family and friends, only you can control it. This can be frustrating when you look across the pits and feel like other teams are spoiled or have things handed to them. However, it’s impossible to know who truly has what and where it’s coming from. The team with the glamorous rig and five cars may have nothing left, while the team with the flatbed and no spares might be frugal millionaires. It’s a waste of time to try and figure it out or be jealous of anyone. Therefore, do your best and forget the rest.
5. Sponsorship – For some, racing is a hobby. For others, racing is a career. In either case, if you’re planning on funding your team with sponsorship dollars in any capacity, present your team like a business. I’ve personally been blessed with a group of wonderful sponsors and will be the first to admit it’s extremely, extremely difficult. It takes hundreds of tries for few responses and most deals are lost in the process between the “yes” and the check. I started out banging down doors when I was 13 with small sponsor increments, and it’s taken working every day for almost ten years to get to where I am today with my sprint car team. My advice to anyone looking for sponsors is to be as professional as possible, sell the value you bring to them, start with family/friends/connections, attend networking events, expect a lot of failures, and execute hard for those you do receive.
Racing, like any other hobby or sport, is expensive. Be responsible, save/invest if you can, and race with whatever you can. Whether you can afford a $10 ticket to the grandstands or a $100,000 race team, either way, its ok. Be grateful and cherish whatever level of opportunity you can afford, and most of all, keep having fun!