For student-athletes, Name, Image, and Likeness (NIL) earnings present an incredible opportunity to build financial independence while still in school. However, without proper financial management, these earnings can disappear just as quickly as they come. Whether your athlete is making a few hundred dollars from local sponsorships or signing major endorsement deals, having a long-term plan is essential.
As a parent, your role in guiding them through the financial side of NIL is critical. Here’s how to help your student-athlete manage NIL earnings wisely and set themselves up for long-term success.
1. Understand NIL Income & Taxes
Many student-athletes don’t realize NIL income is taxable—until tax season arrives and they owe money they didn’t plan for. NIL deals are self-employment income, meaning there are no automatic tax withholdings like a traditional paycheck.
How to Prepare for NIL Taxes:
✅ Set aside 25-30% of all NIL earnings for taxes
✅ Work with a tax professional to understand deductions and write-offs
✅ Keep track of all NIL-related expenses (travel, marketing, business costs)
✅ Consider making quarterly estimated tax payments to avoid penalties
Pro Tip: If your athlete is earning substantial NIL income, creating an LLC or S-Corp may provide tax benefits and legal protection.
2. Budgeting: Avoid the “Fast Money” Trap
With NIL deals, some student-athletes experience a sudden influx of cash—and without a plan, it can lead to overspending and bad financial habits.
Help Your Athlete Stick to a Budget:
💰 50/30/20 Rule:
- 50% Needs – Taxes, savings, business expenses
- 30% Wants – Fun money, shopping, entertainment
- 20% Investments & Future Planning – Retirement, college fund, real estate
🔹 Teach Delayed Gratification – Just because money is coming in now doesn’t mean it always will. Help them avoid impulse spending.
🔹 Use Budgeting Apps – Tools like Mint, YNAB, or PocketGuard can help track spending.
3. Build Savings & Emergency Funds
NIL deals aren’t guaranteed year after year. Injuries, changes in popularity, or new NCAA policies could impact future earnings. That’s why saving is crucial.
Key Savings Strategies:
✅ Emergency Fund – Set aside at least 3-6 months of expenses
✅ High-Yield Savings Account – Earn interest while keeping funds accessible
✅ Automate Savings – Automatically transfer a portion of NIL income into savings each month
Pro Tip: Encourage your athlete to treat their NIL earnings like a short sports career—save aggressively while they have the opportunity.
4. Invest Early for Long-Term Growth
Most student-athletes don’t think about investing, but starting early can create huge financial advantages.
Best Investment Options for Student-Athletes:
📈 Roth IRA – Tax-free growth on NIL earnings (great for long-term wealth)
🏠 Real Estate – Buying rental properties can generate passive income
📊 Index Funds & Stocks – Low-risk, long-term investing for financial security
🚀 Entrepreneurial Ventures – Use NIL earnings to start a business or brand
Pro Tip: Even investing $100 a month into a Roth IRA can grow into six figures by retirement!
5. Protect Their Brand & Earnings
NIL earnings are tied to an athlete’s personal brand. Poor financial decisions, social media mistakes, or signing bad contracts can hurt future opportunities.
How to Protect NIL Earnings & Brand:
✅ Work with a financial advisor – Help them make smart money moves
✅ Hire a lawyer – Review NIL contracts before signing anything
✅ Use social media wisely – A bad post can cost future sponsorships
✅ Get NIL Insurance – Protect against injury or loss of endorsement deals
Final Thoughts: Set Them Up for Long-Term Success
NIL earnings are a once-in-a-lifetime opportunity for student-athletes to build financial security. But without smart management, the money can disappear quickly. As a parent, you can help your athlete budget wisely, save for the future, and make smart investment choices. By treating NIL like a business and planning for long-term success, they can create financial freedom—long after their playing days are over.
