Smart Financial Decisions for NIL Money: What College Athletes Need to Know Before the Money Starts Flowing (Part 1)

For years, college athletes generated enormous value while making very little money themselves.

Now the NIL era has completely changed that.

Student-athletes can earn money through endorsements, appearances, sponsorships, social media, autograph signings, camps, and brand partnerships. For some athletes, it may be a few thousand dollars. For others, it can quickly become six or seven figures.

And here’s the problem:

Many of these athletes are receiving more money at age 19 or 20 than some adults have ever managed before, with very little financial education surrounding it.

That combination creates risk fast.

The First Financial Shock: Taxes

One of the biggest mistakes NIL athletes make is assuming the money works like a normal paycheck.

Usually, it does not.

NIL income is generally considered self-employment income, meaning taxes often are not automatically withheld. Athletes may owe federal taxes, state taxes, and self-employment taxes on the income they receive.

I’ve already seen situations where athletes spent most of their NIL money only to later realize the IRS still expected a significant percentage of it.

That tax bill does not care that the car is already leased or the apartment is already furnished.

A good rule of thumb is that NIL athletes should immediately set aside a meaningful portion of every payment for taxes before touching the rest.

Because nothing destroys financial momentum faster than scrambling to cover a surprise tax bill.

NIL Money Is Often Temporary

This is another important mindset shift.

Many NIL opportunities are short-lived.

One season changes. An injury happens. A transfer occurs. Social media engagement drops. The spotlight moves to another athlete.

The income can rise quickly, but it can disappear quickly too.

That’s why one of the smartest things athletes can do is avoid immediately inflating their lifestyle around temporary income.

I know that sounds boring compared to buying the car.

But financial flexibility is far more valuable long term than impressing people for six months on Instagram.

The Athletes Who Usually Do Best Financially

Ironically, the athletes who tend to handle NIL money best are not always the ones making the most.

They’re usually the ones who:

• save aggressively early

• understand taxes

• avoid lifestyle inflation

• build diversified investments

• treat NIL income like a business, not free money

Because NIL income is business income in many ways.

That means tracking expenses, maintaining records, understanding contracts, and planning proactively.

One Good Year Can Change Your Future If You Handle It Correctly

Let’s say an athlete earns $150,000 from NIL deals over two years.

One athlete spends nearly all of it trying to “look successful.”

Another athlete:

• sets aside taxes

• builds an emergency fund

• fully funds a Roth IRA

• invests consistently into diversified index funds

• graduates debt-free

Those two lives may look very different by age 35.

Not because of the NIL money itself.

Because of the decisions surrounding it.

This is especially important because athletic careers are often short. Even professional athletes frequently face compressed earning windows.

The earlier financial discipline begins, the more flexibility athletes create later.

Beware of the “Everybody Wants Something” Phase

Another reality nobody prepares young athletes for:

The moment NIL money becomes visible, financial pressure often arrives from every direction.

Friends want trips.
Family members ask for help.
People pitch “business opportunities.”
Someone suddenly has an amazing cryptocurrency idea.
A teammate wants to start a clothing company.

And young athletes often feel guilty saying no because they want to help everyone.

But protecting your future is not selfish.

Many athletes will never again experience the same earning opportunities they have during a short NIL window. That money needs a purpose beyond temporary spending.

Financial Literacy Matters More Than Ever

Even professional athletes have openly discussed how little financial education they received early in their careers.

Now NIL has accelerated those same financial pressures into college athletics.

Which means athletes need guidance around:

• taxes

• investing

• contracts

• budgeting

• business structures

• long-term planning

Not after mistakes happen.
Before.

Because NIL money can absolutely become life-changing money.

But only if athletes treat it like a foundation instead of a temporary lifestyle upgrade.

Final Thought

The NIL era is creating incredible opportunities for student-athletes.

But income alone does not create wealth.

Good decisions do.

The athletes who build long-term financial security will usually not be the ones who spent the most loudly. They’ll be the ones who:

• stayed disciplined

• invested early

• avoided emotional spending

• built a team of trusted professionals

• understood that short-term visibility is not the same thing as long-term financial freedom

And honestly, that lesson applies far beyond sports.

*****

This article is for educational purposes and does not constitute personalized financial advice. Always consult a qualified financial advisor before implementing complex financial strategies. See disclosures for more details.