Kids Can See Sports as a Lousy Investment, So Why Can’t Parents?

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Kids Can See Sports as a Lousy Investment

By Anthony Isola

Learn more about Anthony on NerdWallet’s Ask an Advisor

Children’s sports are denting the finances of many parents.

A recent Wall Street article titled “Why Children Are Abandoning Baseball” pointed out that participation in youth sports leagues, especially baseball, has declined dramatically since 2000. The article, written by Brian Costa, cited a “pervasive emphasis on performance over mere fun and exercise” as a big reason for the drop.

I’ve also noticed that heavy travel schedules and pricey uniforms, equipment and extras — even sports trainers — are becoming increasingly common. That’s digging into family savings.

Why are some parents jeopardizing their finances while the main goals of sports programs are also being diminished? The answer can be found in an aspect of behavioral economics: exclusivity.

Many people believe (incorrectly) that they are getting more from their investments if those investments are “exclusive” — basically, not available to the masses. Hedge funds that require high minimums and charge high fees are often sought after because bragging rights at cocktail parties are more valued by some investors that solid returns.

This illusion of exclusivity is at play in children’s sports as well. Intramural town leagues are brushed aside for more expensive travel teams. Often these teams are based less on talent than on who can write a check to pay for them. Financial means trumps athletic skill and motivation.

To keep their kids on these teams, families hire high-priced trainers. Specialized coaching in running, batting, endurance and other facets of the game becomes necessary to make the grade. Some of these costs approach $100 an hour. This, of course, rules out many young players whose parents cannot afford such amenities.

What is the goal here? Why do some families endure months of stress, disrupted family time and exorbitant costs?

For many parents, the goal is to help their child win a college scholarship to defray the cost of higher education. But to me, the logic of spending thousands of dollars a year with a low probability of securing such a scholarship is baffling. Too many parents are choosing their own sports version of a hedge fund.

This is yet another example of the dearth of financial responsibility in this country. Many Americans have saved very little for retirement. The average 401(k) balance for people ages 55 to 64 is $104,000, according to the Federal Reserve. Combined student loan debt has surpassed $1 trillion.

If parents decided to forgo the frills and excess of these extravagant sports leagues, they could focus on their college-financing goals in more achievable way.

For example, they could consider starting a 529 plan. Saving $3,000 a year in a 529 plan for 18 years at a conservative rate of return of 7% can yield huge results. More than $105,000 in tax-free dollars could be available for tuition under this disciplined plan.

Keep in mind that 529 plans have advantages and disadvantages, so do your homework. For more information about the different 529 options, check out NerdWallet’s Best 529 Plans by State.

There are also many scholarships available for students with strong academic records and special interests — no athletic skills required.

While these options may not be as much fun as dreaming of college glory and a professional sports career, the probability of success is markedly higher.

Maybe the kids are right. Many of them are dropping out of sports leagues because they want a balanced life. They don’t want trainers or overbearing parents with misguided ideas on how to get them into a good college.

Imagine a world with funded retirement accounts and families not having to arrange their Mother’s Day schedule around a lacrosse tournament.

Maybe it is time to put our egos aside and focus on what is really important. A balanced family life, a college funding plan and a secure retirement would be excellent goals for all of us.


Image via iStock.