Now that the Paris Olympics are over, we can see some familiar memes and rhetoric. Chief among these is the notion of money and the role it plays – from Arshad Nadeem being Pakistan’s first gold medallist in 32 years, despite not being able to afford a proper javelin to train with, to Turkish “hitman dad” Yusuf Dikeç scoring silver with little in the way of equipment.
There’s no argument that those who manage an Olympic win – despite less affluent backgrounds – have managed a colossal feat (which also doesn’t detract from the fact that, even for those with wealthy backgrounds, it still takes a tremendous amount of skill and commitment). But this raises the issue of those in a “sandwich” position: what makes it tough for the middle or upper-middle class, particularly single digit millionaire families, to raise an Olympian or other such champion?
After all, a single digit millionaire still has the means to afford proper tuition and equipment, without too much of a tradeoff. So why is it that families in this wealth range still tend to urge children into more conventional high income careers, like the doctor-lawyer-banker route?
The reason is risk.
What stops a single digit millionaire from throwing everything behind a child’s one endeavour?
- A single-digit-million may not count for much given the costs
- Many comfortable and familiar options exist, which may not for less affluent families
- The financial rewards are frankly limited
1. A single-digit-million may not count for much given the costs
Families with a net worth in the low millions are still well-off; but that kind of wealth pales in comparison to training costs. Now this does vary a lot between sports; tennis and figure skating can already run into hundreds of thousands per year, but Olympics-level training for any sport is likely to add up to the cost of a rather large condo over a decade.
Aside from the years of training, travel, and equipment, there’s opportunity costs as well: training for high-level championships means having less of a social life (i.e., a narrower or weaker social network), less working experience, or perhaps getting an education much later in life. If people already complain about two years of National Service, imagine starting a decade later than your peers, because you were training to be an international level fencer, skier, etc.
And whilst there’s no denying that being in the Olympics helps in your resume, it’s unlikely to result in a bigger paycheque, especially at the entry level.
The biggest worry for parents is if it doesn’t work out
Here’s the kicker: even after all that training and missed opportunity, it’s a tiny fraction of aspirants who actually go on to enter the Olympics. An even smaller fraction of that small fraction will become medallists.
This is true for any highly competitive field: it’s one out of millions who go on stage and become an actual rock star, or an esports pro who gets fat endorsements.
In the event of failure, parents will need to further support their children through school, or through a lower-income job (due to missed opportunities). As such, the ones who can comfortably support children in these endeavours need to be much more than single digit millionaires.
If you can fork out several hundred thousand a year for your child’s training, and still provide for them if they fail and need to start again at 25 to 30, then you’re in a safe place to do it. The sad fact is, most single digit millionaires today aren’t in that position.
They’re better off than less affluent families, in that they can even consider taking such a gamble in the first place. But they’re not better protected if that gamble fails.
2. Many comfortable and familiar options exist, which may not for less affluent families
In an ironic sort of way, less affluent families have less to lose. If there are no good openings where they’re from (e.g., living in a developing country, or having no opportunities in education), then any sort of talent should be cultivated as an escape. This is why we hear so many rags-to-riches stories: if you’re poor but you can sing, dance, play sports, etc. then you may as well take your best shot. If you fail, things can’t be much more painful than they already are.
When it comes to a single digit millionaire background though, there’s much more to lose.
If you could potentially have a high-paying job, because you have the means to pay for the doctor-lawyer-banker route, would you still trade all that for the long shot of becoming an Olympic medallist? You know your life could be comfortable taking the safe route. So for the upper-middle bracket, there’s much less incentive to take such big risks. And even if the children don’t see it that way, chances are their parents will.
3. The financial rewards are frankly limited
The Singapore government gives out $1 million for a gold medal. While that sounds like a lot, it’s frankly terrible. Remember: it takes hundreds of thousands of dollars a year in training, having no social life, losing key opportunities, all for a very slim shot at this. To be blunt, the odds are only acceptable to the very passionate, or to people who are terrible at maths.
That said, financial incentive isn’t the sole driver of champions, and the Olympics really proves that. Singapore pays $1 million for a gold medal – the US pays around US$37,500, and Australia only pays around AUS$20,000. We’re still not doing quite as well as those two.
The point is, winning the Olympics will not set your children up for life, even in the slim chance they become gold medallists. Odds are, the financial reward will just about make up for the sacrifices they’ve made. Perhaps a little more if they manage to get endorsement deals – but for every Usain Bolt and Michael Phelps, there are a dozen other athletes in less prominent sports who go without the interest of Nike, Adidas, etc.
Also note that, as time goes on and inflation sets in, it’s quite likely that a single-digit million will simply make you tomorrow’s middle class. As such, single digit millionaires may still feel a need to grow their wealth, if their children have higher aspirations. To get help based on your current situation, reach out to us at Single Digit Millionaire.com.
