With the introduction of Name, Image, and Likeness (NIL) opportunities, student-athletes now have the chance to earn money while still competing in their sport. However, managing money effectively is just as important as making it. Without proper financial planning, NIL earnings can be spent quickly, leaving little for future goals such as college tuition, investments, or even life after sports.
As a parent, you can help your child develop smart financial habits by teaching them how to set realistic and meaningful financial goals. Here’s a step-by-step guide to ensuring they manage their NIL income wisely and build a strong financial future.
1. Start with Financial Education
Before setting financial goals, your child needs to understand basic financial concepts like budgeting, saving, investing, and taxes. Many young athletes lack exposure to financial literacy, making it essential to provide guidance early on.
Key Financial Concepts to Teach Your Student-Athlete:
- Budgeting: How to track income and expenses to avoid overspending.
- Saving & Investing: The importance of setting aside money for emergencies, long-term savings, and investments.
- Taxes: Understanding that NIL earnings are taxable, and a portion should be set aside for federal and state taxes.
- Smart Spending: How to distinguish between wants and needs and avoid reckless spending.
💡 Tip: Direct your child to online financial literacy resources like Financial Literacy for Student-Athletes and Financial Literacy for NIL to expand their knowledge.
2. Define Short-Term, Mid-Term, and Long-Term Goals
A structured approach to financial goal setting can help your child allocate their NIL earnings efficiently. Categorizing goals into short-term, mid-term, and long-term makes it easier to prioritize spending and saving.
Examples of Financial Goals:
✅ Short-Term (0-1 year):
- Pay for personal expenses (gas, food, clothes).
- Purchase new athletic gear or equipment.
- Set aside money for travel to competitions or showcases.
✅ Mid-Term (1-5 years):
- Save for college tuition, housing, or books.
- Build an emergency fund (3-6 months of expenses).
- Invest in personal branding (website, social media marketing, NIL consulting).
✅ Long-Term (5+ years):
- Invest in stocks, retirement accounts, or a business.
- Save for post-college career opportunities.
- Plan for financial security after athletics (if going pro isn’t an option).
💡 Tip: Have your child write down their goals and rank them by priority to stay focused.
3. Create a Budget for NIL Earnings
A budget helps track where money is coming from and where it’s going. Encourage your child to break their NIL earnings into different categories so they save wisely and avoid unnecessary spending.
Basic Budget Breakdown for NIL Earnings:
- 40% – Savings & Investments (College savings, retirement, investing)
- 30% – Taxes (Federal, state, and self-employment taxes)
- 20% – Personal & Living Expenses (Rent, food, travel, phone, car, athletic gear)
- 10% – Fun Money (Entertainment, shopping, leisure)
💡 Tip: Encourage your child to use budgeting apps like Mint, YNAB (You Need a Budget), or EveryDollar to track their finances easily.
4. Open the Right Bank Accounts
Managing money effectively requires the right financial tools. Help your student-athlete open accounts that support their financial goals.
Suggested Accounts:
- Checking Account – For daily expenses and NIL deposits.
- High-Yield Savings Account – For emergency funds and short-term goals.
- Investment Accounts (Roth IRA, Brokerage Account) – To grow NIL earnings long-term.
- Tax Savings Account – To set aside a portion of earnings for taxes so there are no surprises.
💡 Tip: Look for accounts with low fees and good interest rates to maximize savings.
5. Teach the Importance of Taxes & NIL Earnings
NIL income is taxable, and many student-athletes aren’t prepared for the financial impact. If taxes aren’t properly managed, your child could owe a large sum at tax time.
How to Handle NIL Taxes:
✔ Set Aside 25-30% for Taxes – Since NIL earnings are self-employment income, taxes are not automatically withheld.
✔ Make Quarterly Estimated Tax Payments – If your child earns significant NIL income, they may need to pay taxes every three months.
✔ Work with a Tax Professional – A CPA or tax advisor can ensure compliance with IRS regulations and help with deductions.
💡 Tip: Keep track of 1099 forms (issued by companies paying for NIL deals) and save receipts for tax deductions.
6. Plan for Smart Investments
NIL earnings can be a great starting point for wealth-building if used wisely. Encourage your child to start investing early to maximize long-term financial security.
Investment Options for Student-Athletes:
📌 Roth IRA – A great tax-advantaged account for long-term savings.
📌 Stock Market – Investing in index funds or ETFs for growth.
📌 Business Ventures – Using NIL money to create a personal brand or company.
💡 Tip: Encourage your child to work with a financial advisor to develop an investment strategy that fits their goals.
7. Avoid Common NIL Money Mistakes
Many student-athletes make financial mistakes that can hurt their long-term stability. Teaching your child what to avoid is just as important as teaching them how to manage money.
Common Financial Mistakes & How to Avoid Them:
❌ Spending All NIL Earnings Immediately → Set aside at least 40% for savings and taxes before making big purchases.
❌ Not Keeping Track of Expenses → Use budgeting apps to manage spending.
❌ Failing to Pay Taxes → Work with a tax professional to avoid penalties.
❌ Bad Investment Decisions → Stick to low-risk, long-term investments rather than chasing fast money.
❌ Signing Bad NIL Contracts → Always review contracts with an attorney before agreeing to NIL deals.
💡 Tip: Establish financial accountability by having regular check-ins with a parent, mentor, or financial advisor.
8. Encourage Long-Term Thinking
Help your child see NIL earnings as an opportunity to build a financial foundation for life beyond sports. Many student-athletes don’t go pro, so NIL money should be used strategically to prepare for the future.
Encouraging Financial Discipline:
✔ Teach Delayed Gratification – Encourage saving over spending for instant rewards.
✔ Help Them Define Their Future Goals – Whether it’s owning a business, buying a home, or saving for graduate school, NIL can help them start early.
✔ Promote Financial Independence – Teaching good money habits now ensures they make smart financial choices after college.
💡 Tip: Match savings contributions to encourage them to save more (e.g., If they save $500, you match with $500).
Final Thoughts: Helping Your Student-Athlete Build Financial Success
Earning NIL money is an incredible opportunity for financial growth, but only if managed wisely. By setting financial goals, creating a budget, understanding taxes, and investing early, student-athletes can maximize their NIL earnings and build a solid financial future.
As a parent, your role is to guide and educate your child about money management. Teaching these principles now will set them up for long-term success, whether they go pro, pursue another career, or start their own business.
If you have any questions about NIL financial planning, budgeting, or tax management, feel free to reach out to us at in**@**********************es.com. We’re here to help!
