Financial Planning for Athletes: Leveraging NIL Earnings for Long-Term Wealth

For college athletes, NIL (Name, Image, Likeness) presents an incredible opportunity to earn money while still in school. However, it’s crucial to think beyond the immediate financial gains and use these earnings to secure long-term wealth and financial independence.

With proper financial planning, athletes can transform their NIL income into assets, investments, and opportunities that will pay off long after their athletic careers have ended. In this article, we’ll explore strategies to help athletes leverage their NIL earnings for long-term wealth creation.

1. The Importance of Starting Financial Planning Early

As an athlete, the earlier you start thinking about long-term financial goals, the more you’ll be able to build wealth over time. NIL offers a unique opportunity to kickstart that process, but the key is to plan ahead.

Build good habits: Use NIL earnings to develop good financial habits—saving, investing, and planning for the future.
Long-term vision: The goal is not just to make money but to use it to secure financial freedom. Consider the potential of NIL to set you up for life after sports.

Pro Tip:
Even if you’re new to financial planning, it’s never too early to start. Begin with simple budgeting and savings, then build up to more sophisticated investment strategies.

2. Develop a Detailed Budget and Set Financial Goals

Your first step should be to develop a solid budget that tracks all sources of income and outlines spending goals. Budgeting isn’t just for keeping track of expenses—it’s also a critical tool for wealth creation.

Track all income sources: Keep track of all NIL deals and any other sources of income, such as part-time work, sponsorships, or investments.
Identify needs vs. wants: Prioritize spending on needs like tuition, housing, and training while limiting spending on non-essential items.

Set clear, short-term goals (saving a certain amount each month, building an emergency fund) and long-term goals (investing for retirement, paying off debt, purchasing property). Regularly review and adjust your budget to stay on track.

Pro Tip:
Consider using budgeting apps like Mint or YNAB (You Need a Budget) to automate tracking and stay organized.

3. Save and Build an Emergency Fund

The first and most important step in securing your financial future is to build an emergency fund. While NIL is a great opportunity, it’s also variable, and you may face periods without any income from deals.

Start with a goal of saving 3–6 months of living expenses. This fund will provide a cushion in case NIL opportunities dry up or an emergency arises.
Automatic savings: Set up automatic transfers into a high-yield savings account so you’re consistently saving part of your NIL income.

Pro Tip:
If you’re unsure of how much to save, start small—setting aside 10–15% of each NIL paycheck can add up over time.

4. Invest for the Future: Build Long-Term Wealth

Once you’ve established an emergency fund, the next step is to invest for your future. While NIL income is short-term, the goal is to create long-term wealth that can grow even after your athletic career ends.

Start investing early: Time is your ally, and the earlier you begin investing, the more your money can grow through compound interest. Start with simple, diversified investment vehicles like low-cost index funds or ETFs.
Use retirement accounts: Even though you’re young, it’s a good idea to start contributing to retirement savings. A Roth IRA is an excellent choice for athletes, as it allows for tax-free growth on investments and is not subject to required minimum distributions.

Pro Tip:
If you’re unfamiliar with investing, work with a financial advisor to develop a diversified portfolio that matches your risk tolerance and long-term goals.

5. Avoid Lifestyle Inflation: Live Below Your Means

With the increase in NIL opportunities, athletes can quickly fall into the trap of lifestyle inflation—spending more as they make more. However, this can seriously hinder long-term wealth creation.

Limit impulse spending: Instead of upgrading your lifestyle with every new NIL deal, focus on saving and investing.
Prioritize savings and investments over luxuries: Always ask yourself whether a new purchase will help you achieve your long-term goals or just provide temporary satisfaction.

Pro Tip:
When considering a major purchase, wait 24–48 hours before making a decision. This “cooling off” period helps prevent impulse spending.

6. Plan for Taxes: Set Aside Money for Tax Liabilities

NIL income is taxable, and failing to set aside enough for taxes can lead to unpleasant surprises during tax season.

Set aside 25–30% of your NIL earnings for taxes: This will help you avoid owing money when it’s time to file your taxes.
Quarterly tax payments: If your NIL earnings are substantial, you may need to make quarterly estimated tax payments to the IRS. Work with a tax professional to ensure you’re staying compliant.

Pro Tip:
Use an online tax calculator or consult a professional to determine your exact tax rate and ensure you’re saving enough throughout the year.

7. Diversify Your Sources of Income Beyond NIL

While NIL is an exciting opportunity, it shouldn’t be your only source of income. Diversifying your income streams will provide long-term financial security and protect you from potential downturns in NIL opportunities.

Explore side hustles: Think about leveraging your personal brand to create other income streams, such as sponsorships, online courses, or merchandise.
Invest in real estate or digital assets: Consider investing in income-producing assets, such as rental properties or online businesses, to create passive income streams.

Pro Tip:
The key to financial freedom is building assets that generate passive income. Look into rental properties, dividend-paying stocks, or creating digital products that generate recurring revenue.

8. Seek Professional Financial Advice

Managing NIL money and investing for the future can be complex. Seeking advice from professionals will help ensure that you’re making informed decisions and taking full advantage of the financial opportunities available to you.

Work with a financial advisor: A certified financial advisor can help you create a personalized financial plan, manage investments, and plan for taxes.
Consult with a tax professional: NIL income is taxed differently from traditional income, so working with a tax expert will ensure you’re staying compliant with the IRS and minimizing your tax burden.

Pro Tip:
Regularly meet with your financial advisor to adjust your plan as your NIL income grows or changes.

Final Thoughts

NIL offers incredible opportunities for athletes to earn money and build a future, but the key to success lies in how you manage that income. By creating a financial plan that includes saving, investing, and diversifying income, you can turn your NIL earnings into long-term wealth and financial security. Remember, it’s not just about the immediate financial gain—it’s about setting yourself up for success in the years to come, both on and off the field.