Professional basketball is on hiatus as the NBA lockout continues, with sputtering negotiations between the players and owners. The players are demanding what they see as a fair share of the revenues generated by their talents and hard work, while the owners are asking players to take a pay cut in order to correct what they feel are structural problems with the NBA business model.

Even though the NBA lockout is a dispute between millionaires and billionaires, whether or not you’re a basketball fan, there are several personal finance lessons here for all of us:

• Maximize your peak earning years. The average NBA career lasts only a few years, and most players will never make this much money again in their lives. If the 2011 season gets cancelled and the NBA players miss out on a full season of basketball, those are millions of dollars that they’re never getting back. Most “regular” people who are not professional athletes hit their peak earning years during their 50s. This is when you’re at the peak of your career; you’re experienced, you might be a manager or supervisor, and you’re more valuable to your company than ever before. So if you’re in your peak earning years, it might not be the best time to lose a job or quit your job to start a business – the risks and opportunity costs are greater than ever before.
• Do you have an emergency “lockout fund” of your own? Whenever one of the pro sports leagues has a labor dispute, the union saves up a “lockout fund” and encourages union members to save as much money as possible in case they miss paychecks. (The NFL did this as well during the NFL lockout in early 2011.) No matter how much money you make, we all need to have some kind of emergency savings fund – most experts recommend at least 6 months of expenses. This is money that you can live off of in case, like the NBA players, your paychecks go away. Are you ready? If not, start today. Save whatever you can, even if it’s $50 per month. Sock it away in an FDIC-insured bank savings account (not in stocks or other risky investments that can go down as well as up) and don’t touch it – that money is your safety net of last resort. Your emergency fund gives you freedom from fear, and hope in a dark time. Even if you lose your job or suffer a financial setback, you can always remind yourself, “I’ve got six months’ expenses in the bank – I’ve got some time to get back on my feet.”
• Keep your options open. Some of the best NBA players are considering playing pro basketball in other countries like Turkey, Italy, Germany, or China. Not all of us are superstar athletes who can command a high salary worldwide, but we all need to think about the question: “What would I do, starting tomorrow, if my job went away?” We all have the power to cultivate options and create opportunities and adapt to change. The biggest financial risk you can take in today’s economy is to stagnate in your career, get pigeon-holed into a job description or a job title, and not be able to adapt and evolve and do anything else. We can’t all be globetrotting basketball superstars, but no matter what field you’re in, the best opportunities and the best job security always go to the people who have the most options – the people who would be able to land on their feet if they ever got laid off. If you can stay flexible and adaptable in your career, you might never need to dip into that emergency fund after all.

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