Investing for your child’s sports ambition

One of newest ‘the path less travelled’ these days is encouraging children to pursue a career in sports.It’s best to create a sports fund to fund these expenses through it rather than use the monthly surplus to fund these expenses in an unstructured manner.

Success rarely happens spontaneously or coincidentally, most often it is an outcome of discipline, diligence, attitude, and talent. Parents are increasingly getting clear about providing wings to their children’s dreams, shaping their inherent talent instead of being a conduit for churning out more of the same (managers, bankers and accountants). One of newest ‘the path less travelled’ these days is encouraging children to pursue a career in sports. While building a fund for your child’s sports career, the range, and depth of engagement in a particular sports line will dictate the level of expenses involved. The major expenses could involve sports trainer (technical) fees, training gear or playing equipment (bat, balls, pads, bags, racquets, jerseys, helmets, protection guards), gym trainer fees (including the things bought for home use like Thera bands, foam roll, ice packs, weights, balancing ball), costs of hiring the ground or net, club membership fees, match playing fees, fees of a nutritionist, fees of a physiotherapist (to ensure that the form while playing is right and the longevity of the player is enhanced), costs of diet supplements like protein, multivitamins, hydrating supplements, costs of consulting doctors, tests (blood, X-Ray, etc,) as and when an injury happens, fees of a sports psychologist (plus costs of undergoing personality factor and mental endurance tests) and costs of undergoing regular cryotherapy. Depending on the area of sports the additional costs of physiotherapists, doctor’s fees, cryotherapy may or may not be needed. For example, a chess player may not require a physiotherapist or doctor’s fees.

Shrikrishna Patkar/illustration

It starts with listing the essential costs involved under various heads on a monthly, annual, ad-hoc and one-time basis. You can work out an average of the past data for the last few years. Based on this data, it’s best to start investing in a ‘sports fund’ on a monthly basis and keep digging into it for the expenses (as and when they incur). Keep an extra buffer for 5-10% as past data may not repeat exactly. The key is to ensure that you don’t end up making ‘feel good expenses’ and eat into essential expenses. Some ‘feel-good expenses’ could be costly brands of sports- kit, jersey and mode of conveyance. It’s best to create a sports fund to fund these expenses through it rather than use the monthly surplus to fund these expenses in an unstructured manner. The downside of using the monthly surplus for funding these costs is that the sports-related expenses could be asymmetrical (ex, training fees could be lesser in offseason and other expenses like Physio and doctors’ fees could be higher in the playing season or as and when the injury happens). If the surplus is used for the expenses as and when they emerge it would end up being used for fire-fighting (managing expenses in their order of occurrence). It’s better to prioritise the surplus as per the various goals and use the inflows (monthly and annual) sensibly thus making room for other important goals like higher education, vacation, house purchase, retirement, etc. simultaneously.

Here’s a small list to keep handy:

How much will be needed and for how long? While none of us have a crystal ball allowing us a peek in the future, we will have to draw some estimates

List down the expenses under two heads: the unavoidable ones and the feel-good ones

Label the expenses as peak season expenses or off-peak season ones

Keep a buffer of 5-10 % as a miscellaneous fund for any unexpected expenses

While building a corpus for sports for the child it’s extremely critical to prioritize it besides your retirement expenses, other kid’s education expenses, pre-payment of home loan, taking a sabbatical, starting an enterprise and house purchase, etc. In addition, be clear about the role of sports in the child’s life. Is it for recreation and for all-rounder personality development or it is as a career/ profession? It is advisable to hire a financial planner to help you get clarity on these issues and recommend allocation of assets and future cash flows accordingly.

Deepali Sen is a certified financial planner and founder partner of Srujan Financial Advisers LLP.