The Importance of Financial Literacy for Student-Athletes in the Era of NIL
Managing personal finances can be a daunting task for student-athletes, especially when juggling the dual responsibilities of academics and athletics, while also dealing with multiple sources of income, each with specific stipulations. This added pressure can take a toll on their mental and emotional well-being. Financial education is crucial to help student-athletes navigate this complexity, teaching them how to make informed decisions about their finances.
Research indicates that student-athletes generally lack financial knowledge compared to their non-athlete peers. However, those who do possess financial literacy tend to manage their finances more confidently and make better decisions. Early financial education, particularly one that is tailored to the unique circumstances of student-athletes, can help build a solid foundation for their financial future. Offering financial literacy workshops, counseling, and resources specifically for student-athletes can equip them with the knowledge and skills needed to manage their finances effectively.
With the recent advent of Name, Image, and Likeness (NIL) rights, it has become even more vital for student-athletes to be financially savvy. As of now, 26 states have passed laws allowing athletes to profit from their name, image, and likeness, and Congress has introduced bills related to athlete compensation. This new source of income presents unique challenges, as athletes now have to manage large sums of money while still attending school and competing. Without proper financial education, student-athletes may face difficulties managing these funds, which can affect their overall well-being.
Financial literacy involves not just knowledge, but the confidence to apply that knowledge to make sound financial decisions. This knowledge can come from a variety of sources: formal coursework, parental guidance, or financial counseling. When students are equipped with financial knowledge and empowered to make financial decisions, they are more likely to engage in responsible money management behaviors that will positively impact their financial health.
Many student-athletes are learning how to handle money for the first time. Without a strong support system, it can be challenging to make the right financial choices. Therefore, the combination of financial education and the opportunity to apply that knowledge in real-life scenarios is essential for improving financial literacy. It’s also important to consider the athletes’ internal motivation and sense of control over their finances. When student-athletes feel that they have control over their financial decisions, they are more likely to make informed, positive choices. However, some athletes may overestimate their ability to manage their finances, which can lead to risky financial behaviors.
Data from a 2018 NCAA Innovations in Research and Practice Grant revealed that many student-athletes had little to no prior financial education. About 60% had not received financial education in high school, and only 19% had access to financial education during college orientation. Many athletes expressed a lack of confidence when it came to managing their finances, with a significant percentage unsure about how to save, invest, or handle their finances post-college.
Additionally, in a survey of athletes’ financial behaviors, most athletes were aware of basic financial concepts, but struggled with applying them effectively. For example, many athletes had a budget but did not consistently track their spending. When asked about their savings habits, nearly half reported having little to no savings at the end of each month. This highlights the gap between theoretical knowledge and practical application.
Athletes showed strong interest in receiving financial education through various formats, including one-on-one counseling, workshops, or apps. Most expressed a preference for personalized financial advice and counseling, rather than generic programs. Given the time constraints on student-athletes, many of them favored receiving financial education during study hall or tutoring hours, as opposed to traditional business hours.
To address these challenges, athletic departments should offer a mix of financial literacy programs tailored to the needs of student-athletes. Peer counseling, professional financial counseling, and workshops specifically designed for athletes’ unique schedules and circumstances can help students manage their finances more effectively. Financial education courses could be integrated into summer bridge programs or first-year experience courses, where athletes can learn the basics of budgeting, saving, and managing their money.
Another way to support athletes is by offering financial simulations, such as interactive games that simulate real-world financial decisions, like purchasing a house, car, or managing monthly expenses. These activities provide athletes with the opportunity to apply what they’ve learned in a low-stakes environment, which can improve retention and decision-making skills.
Athletic departments should also leverage partnerships with financial institutions or corporate sponsors to offer educational workshops and one-on-one sessions for athletes, without incurring additional costs. Financial planners, alumni in the financial industry, or even accounting firms can be invited to provide insight on managing finances, especially in relation to NIL income and taxes.
As NIL opportunities continue to grow, it’s essential for athletic departments to not only provide financial education, but also to offer resources such as legal representation and contract analysis. By ensuring that athletes have access to knowledgeable professionals who can help them navigate the complexities of NIL contracts, athletic departments can protect their athletes’ financial futures and set them up for long-term success.
Financial literacy is a vital skill for student-athletes, especially in the age of NIL. By implementing comprehensive financial education programs, athletic departments can help athletes better manage their finances, avoid pitfalls, and prepare for life after sports.