Alex Rodriguez is facing a 211-game suspension, and a dozen other players will be banned from the field for 50 games in the latest round of fallout from Major League Baseball's investigation into the use of performance-enhancing drugs (PEDs). Clearly, some people never learn, but ordinary Americans in less glamorous jobs can learn some valuable lessons from the downfall of A-Rod and other baseball stars. Even if you aren't a professional athlete, and even if you don't put anything into your body more exotic than the occasional rum-and-coke, here are four personal finance lessons you can take from baseball's PED scandal:
1. Don't overreach for successWhat surprises many baseball fans about high-profile PED cheaters like A-Rod and Barry Bonds before him is that they were clearly on their way to Hall-of-Fame careers before they started bulking up on illegal substances. These are people who felt their exceptional natural abilities weren't enough, so they overreached for success. The finance lesson here? Don't overreach for success with your investments. Be willing to sell your winners when they have met your expectations, because nothing has unlimited upside potential.
2. Value your reputationRetired players associated with PEDs have received little support in Hall-of-Fame voting, and while some active cheaters may continue to benefit from lucrative contracts, their endorsement potential has been badly compromised by this scandal. You may have a lower profile than a star ballplayer, but your reputation is financially important too. Be careful what you post on social media, because leaving your indiscretions where others can see them may cost you job opportunities. Your credit history is another example of how your reputation can have financial repercussions. If you aren't careful with your credit history, you may find you don't qualify for the best rates on mortgage loans or credit cards -- you might not even qualify for credit at all.
3. Save for gaps in employmentUnless his appeal is successful, A-Rod will miss 211 days of work. That sounds like a lot, but according to the Bureau of Labor Statistics, the average stint of unemployment for Americans is even worse, at about 256 days. Unlike PED cheats, you may face a period of joblessness through no fault of your own, so protect yourself by building up a high-yield savings account that could see you through a stretch that lasts for several months.
4. Don't cheatYou may have no incentive to take PEDs, but ordinary Americans often encounter opportunities to gain a financial benefit by cheating, such as not paying your full share of taxes or padding an expense account. What the baseball players who got caught cheating remind us is that cheaters never fully own their possessions or their lives. If holding onto everything you've worked for depends on not getting caught, you've invited risk to play a starring role in your life.
Some people look at the rewards of being a major league baseball player and wonder why more don't cheat to try to get an edge, while others wonder why anyone would jeopardize such an attractive career by doing something against the rules. Those conflicting incentives are similar to the temptations that often surround money. The lure of risk-taking tends to be obvious, but it is good to be mindful of the consequences as well.