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NIL Money: Why Financial Literacy Matters Now More Than Ever for Student Athletes

  • Post category:Finances

By Jaime Malm, owner/founder of Iron Horse Financial Services, a registered investment advisory firm.

Since the NCAA changed its Name, Image, and Likeness (NIL) rules in 2021, student athletes across the country are finally earning what many would argue they’ve long deserved—the right to profit from their personal brand. For the first time, college athletes can sign sponsorship deals, monetize social media, sell autographs, and even launch their own businesses.

As a financial advisor who’s worked with athletes and their families, I love seeing this progress and the opportunities it creates for young people. I also see the risks.When you combine youth, sudden wealth, and inexperience, you don’t just get opportunity—you get vulnerability.

Here’s what student athletes and parents need to know before they sign the deal.

The NIL Era: Big Potential, Bigger Responsibility

In this new era, it’s not uncommon for freshmen to land deals worth tens—or hundreds—of thousands of dollars before they’ve even started their first college class. You might see an 18 year old roll into practice in a Range Rover they received from a recent NIL deal or sponsorship from a local dealership. Social media influencers with large followings can cash in on brand partnerships, while top prospects might sign contracts that rival minor league professionals.

That kind of money can be life-changing. It also opens up the student athlete to predatory advisors, potential litigation and a host of other potential problems.

Common Pitfalls (and How to Avoid Them)

Let’s be clear—NIL income is not free money. It’s taxable, it comes with strings, and it must be managed with care.

Here are some of the most common mistakes I’ve seen among young athletes:

  • Overspending: It’s easy to fall into the trap of instant gratification. Designer goods, luxury cars, and lavish lifestyles may feel like rewards, but they can quickly erode a financial safety net.
  • Bad Investments and Scams: From unvetted crypto schemes to “guaranteed return” offers, student athletes are prime targets for fraud. Even well-meaning friends and family can offer poor advice.
  • Ignoring Taxes: NIL income is reportable and taxable. Many athletes are shocked when they receive a large IRS bill they didn’t plan for. A good rule of thumb? Set aside 30% of every check for taxes.
  • Lack of Professional Guidance: Some athletes hire advisors without verifying credentials—or worse, rely on friends or distant relatives. Not all advice is created equal.

Building a Solid Financial Foundation Early

The good news? With some guidance and discipline, student athletes can turn NIL earnings into long-term financial stability—even generational wealth.

Here’s what I recommend:

  1. Get Educated Early: Learn the basics of budgeting, saving, and investing. Personal finance should be as important as physical training.
  2. Create a Budget (and Stick to It): Living like a college student, not a celebrity, is the smartest long-term play.
  3. Set Aside Money for Taxes: This is so important to ensure young people don’t find themselves in a situation where they are unable to pay the tax bill.
  4. Consider Creating an LLC: With the right structure and legal advice, athletes can better manage income and reduce tax liability.
  5. Build a Team: Seek out credentialed professionals—a Certified Financial Planner™, a tax advisor, and, when needed, a lawyer. Check references. Ask questions. Trust matters.

NIL is a Gift—Don’t Waste It

Earning power at a young age is a tremendous privilege—but it’s also a test. Too often, I’ve seen promising athletes hit financial hardship because no one taught them how to handle money. NIL doesn’t just change the rules of college sports; it changes the stakes.

If you’re a student athlete, a parent, or a coach—start the conversation early. Financial literacy is no longer optional. It’s essential.

And if you’re not sure where to begin, ask someone who’s qualified to help. The right guidance today could make the difference between fleeting success and lifelong financial security.

Jaime Malm, CFP®, is a financial advisor with over 20 years of experience helping individuals, families, and professional athletes build financial strategies that last. She is the host of the “Fly on the Wall Finance” podcast and a frequent contributor on topics of financial literacy and planning.