Milos Raonic on Money Management
I approach building good money habits the same way I approach my tennis game-in a slow, disciplined manner, with lots of short-term goals that are part of a long-term plan.
My initial lessons on budgeting and saving started when I was 10. My parents would drive me to tennis tournaments several hundred kilometres away from my home in Thornhill, Ont. They paid for everything, but I handled a lot of the actual transactions. I would swipe their credit card for all purchases on the road-gas, coffees, meals, lessons and other routine expenses-and those costs quickly added up. I learned that someone needs to pay, and I knew that one day soon, it would be me.
In my teens I began to save 90 per cent of the income I earned from playing. I know that’s a lot, but it was my rainy-day savings plan. The time would come when I’d have to start paying for all my competition expenses-as would the time when I’d have to stop playing tennis.
I learned that good budgeting means understanding the difference between needs and wants. My parents were never wasteful. In fact, my dad, a nuclear engineer, has owned only three cars in his life-he’s put more than a million kilometres on those vehicles. His philosophy? Why buy a new car when the old one does the job? For my dad, cars are a need, not a want. Saving the difference has helped him pay for more important things over the years-three kids’ passions as well as a good post-secondary education.
Those lessons were key for me. They helped me to become a patient, hard-working person who always keeps his eye on the endgame. Perhaps that’s why I’ve spent the last few years educating myself about money management. I’ve found the most valuable lessons are simple, overlooked concepts.
For example, learning the difference between net and gross earnings. When you’re responsible for paying your own living costs, as well as your coach’s salary, hotel fees and other expenses, and you have an uneven income-because I only get paid if I win-then budgeting based on what you get to keep at the end of the day (net earnings) is much more important than relying on what you earn on paper (your gross earnings).
Believe it or not, part of my ongoing financial education comes from the tennis associations. Every time I win, I must show up at the association office to collect my cheque. Before I leave, I sit down with an accountant who shows me how every dollar was earned, and deducted, from my paycheque. I’m always surprised at how much smaller my earnings are after deductions, which reinforces why it’s so important for me to save. I want to feel secure knowing that I can pay for my tennis expenses far into the future.
But while planning is important to me, I can’t risk letting it impact my tennis game. I’m a very risk-averse person. Currently, all my money is invested in bonds. Sure, I could have a 200 per cent return with riskier investments, but I’m more motivated by avoiding the 50 per cent loss than chasing returns.
Have I missed out on some great investing opportunities? Sure. Three years ago, my manager and I left a Tesla dealership in San Jose, Calif. He immediately bought Tesla shares, and he’s much richer today because of it. I didn’t. But I hate to lose more than I like to win, and I can’t afford to forfeit sleep over market losses. Mental clarity is key to my tennis success, and I know enough not to mess with that.
Right now, I’m happy to keep my full head of hair and stay worry-free on the court. Someday, building a well-diversified stock portfolio will be important to me. But for the time being, I keep my financial priorities in line with my professional aspirations and continue to pay myself first. The strategy works, and I’ll use it until I leave the tennis court behind. It’s about keeping it simple, and I’m proud of that.
© Rogers Publishing Ltd. “How I Did It,” as told to Julie Cazzin, from MoneySense (January 2015), moneysense.ca.