College athletes face an unprecedented financial landscape. No longer are they restricted to scholarships and stipends; now, through Name, Image, and Likeness (NIL) deals, athletes can earn money while competing at the college level. While these opportunities can provide significant income, they also introduce new challenges, such as managing earnings, understanding contracts, and long-term planning. Financial literacy is now more critical than ever, equipping athletes with the tools to make informed decisions, avoid common pitfalls, and secure financial stability.
Why Financial Literacy Is Important For College Athletes
“I had to make it to the [Baltimore] Ravens to know what a 401(k) was —that’s bad,” shares Brandon Copeland, former NFL player and author of Your Money Playbook, in an online interview.
“You graduate college, and people are like, ‘That’s good debt, that’s bad debt,’ and you’re like, ‘Well, you taught me the tangent of a 45-degree angle and not how to buy a house,’” Copeland adds, referencing the lack of financial education in colleges and universities. He says this is one of the reasons he started a financial literacy class in the University of Pennsylvania.
Copeland’s experience, and that of many others, highlights the need for improved financial education for college athletes. Financial literacy equips athletes with the knowledge and skills to manage your finances effectively, both during and after your career. You face unique financial situations, such as managing scholarship funds, stipends, or even earnings from NIL deals.
Strong financial literacy will help you navigate these complexities and make informed decisions. Without it, you could face financial difficulties, like debt or missed opportunities to build long-term security. Even if you don’t go on to play professionally, understanding how to manage your finances will set you up for success in life beyond sports.
Key Financial Literacy Lessons For College Athletes
Budget And Save
As a college athlete, especially if you’re earning NIL income, managing your cash flow effectively is critical. It’s tempting to spend money on short-term desires, but without a structured budget, you might struggle to meet even basic expenses.
A budget helps you track your cash flow and manage your expenses responsibly. Necessary expenses like rent, food, and transportation should be prioritized, while discretionary spending on entertainment or luxury items should be limited. Avoid impulse purchases. Live within your means and establish a habit of saving.
Build an emergency fund enough for six months’ expenses to add a layer of financial security for unexpected costs. This fund gives you stability during injury or when transitioning between seasons. You should also focus on balancing short- and long-term savings goals. Short-term goals could be vacations or new gear, while long-term goals might include homebuying or retirement planning. Even small, consistent contributions to savings can build long-term financial security.
Understand Contracts
With NIL deals and other financial opportunities, contracts play a significant role in your financial life. However, navigating legal agreements can be tricky. To avoid entering unfavorable deals, it’s essential to understand the key terms in contracts, including payment structures, exclusivity clauses, and termination conditions.
It’s wise to seek legal and professional representation when signing any significant agreements. A lawyer can review the terms and ensure you fully understand your obligations and rights. This is particularly important with NIL deals, where your intellectual property rights are at stake.
Invest
Investing is a powerful tool for building wealth over time, but it requires a solid understanding of basic principles such as risk, returns, and diversification. Starting early allows you to benefit from compound interest, where your money grows exponentially over time.
Diversifying your investments—whether in stocks, bonds, real estate, or business ventures—helps reduce risk and ensures that you’re not overly dependent on your sports-related income, which may be unpredictable. If you make it to the pros or even if you pursue a career outside sports, a solid understanding of investing can go a long way in establishing your financial stability.
Manage Debt
Debt management is a crucial aspect of financial well-being, regardless of income. While college athletes’ scholarships and NIL deals can provide significant financial support, they don’t guarantee immunity from debt.
For instance, athletes may turn to credit cards or loans if the stipend isn’t sufficient to cover personal expenses. Or if you have an NIL deal, you might be tempted to overspend on cars or homes. Even with high earnings, you can still be in debt if you don’t manage your finances well. This is where discipline becomes critical—knowing when and how to borrow, and how to repay effectively, is key to maintaining financial health.
Distinguishing between good and bad debt is another key factor. Good debt, like a reasonable mortgage or a business loan, can be an investment, while bad debt, such as high-interest credit card balances, can drain finances. To protect your financial security, you should prioritize timely payments, understand loan terms, and keep credit utilization low. By managing debt responsibly, you can build a strong financial foundation for your future, regardless of your athletic career’s outcome.
Manage Insurance
Managing your insurance as a college athlete requires a proactive approach, starting with a thorough review of your university’s insurance policy. This helps you understand what is covered and what gaps might exist, such as off-field injuries or long-term medical care.
It’s also important to plan for your insurance needs after your athletic career, as university-provided insurance will no longer cover you. Securing life insurance and private health insurance and reassessing long-term disability options can safeguard your financial future.
Finally, as life changes and you take on more responsibilities, regularly reevaluate your insurance needs. As your financial obligations grow, such as with a mortgage or dependents, adding or updating your coverage ensures continued protection for you and your loved ones.
Plan Your Retirement
It’s never too early to plan your retirement, especially since athletes face shorter career spans than many other professions. Start retirement savings early through accounts like a 401(k) or IRA to maximize the power of compounding and ensure that you are setting aside money for the future.
If you do turn pro, you may also have access to pension plans or other retirement benefits. Learning how to maximize these opportunities ensures that you’re financially prepared for life after sports. Establishing a clear retirement plan, regularly contributing to retirement accounts, and managing investments wisely will help ensure financial stability long after you’ve left the field.
Seek Help
You should recognize that you don’t have to do it alone. Seeking professional financial advice can help you make informed decisions that will positively impact your financial future.
A financial advisor or planner specializing in working with athletes can offer tailored advice on managing your income, handling taxes, and planning for long-term financial goals like retirement. Many universities or athletic programs may also have resources or partnerships with professionals who can provide financial guidance, so it’s worth exploring these options.
Peer support is another valuable resource. Connecting with fellow athletes or alumni who have successfully navigated similar financial situations can offer practical insights. Learning from their experiences—both successes and mistakes—can help you make better decisions and avoid common financial traps. For example, the Athletes Organization provides support and resources to help college athletes navigate contracts and finances.
Final Thoughts
Financial literacy is crucial as you navigate the complexities of scholarships, stipends, and NIL deals. Mastering budgeting, understanding contracts, managing debt, investing, and planning for retirement can secure your financial future. Seeking professional advice and peer support ensures you make informed decisions, setting yourself up for long-term stability beyond your athletic career.