How Financial Advisors Can Help NIL Athletes Build Long-Term Wealth

Name, Image, and Likeness (NIL) deals have opened new financial doors for college athletes, creating opportunities to earn significant income while still in school. But with great opportunity comes great responsibility. This guide will show how top college athletes – and their families – can turn short-term NIL income into long-term financial stability. We’ll cover why this windfall is unique, how easy it is to squander, and the essential money principles and strategies that can help ensure today’s earnings become tomorrow’s security. The tone here is clear, encouraging, and aimed at both athletes and parents. Let’s dive into the playbook for lasting wealth.

Disclosure: Axon Capital Management is a fiduciary financial advisory firm. The information provided in this guide is for educational purposes only and is not intended as personalized financial advice.

The NIL Opportunity: A New Kind of Payday

In the past, student-athletes were forbidden from profiting off their sports. That changed in 2021, and now NIL deals – from endorsements to social media partnerships – are transforming college sports finances. For many young athletes, this is the first chance to earn “pro-level” money before ever playing professionally. In fact, NIL has quickly become a billion-dollar market. Top players can land individual deals in the millions of dollars – for example, some star college athletes have reportedly signed NIL agreements worth $4–5 million.

This kind of income at a young age is exciting and empowering, offering a head-start on financial security. Some of the youngest self-made millionaires today are student-athletes. NIL money can help pay for better training, support family needs, or just provide comfort that many college students never experience. With proper planning, NIL income could even be the first step toward multi-generational wealth. In short, NIL earnings represent a game-changing financial opportunity for athletes to leverage their talent and personal brand into real money.

The Risk of Squandering Early Wealth

Despite the huge opportunity, there’s a very real danger: most athletes risk squandering their NIL earnings if they’re not careful. Being young and suddenly well-paid can lead to costly mistakes. Many of these newly wealthy college athletes are among the least prepared to manage their newfound riches. It’s easy to see why – juggling classes, games, and endorsement deals is a tall order for any young person, especially if they come from a background with little financial education. Without guidance, impulsive spending, poor planning, or even scams and bad advice can drain away the money as quickly as it came.

History provides cautionary tales. Professional athletes famously struggle with money after their careers end. A widely cited report found that around 78% of NFL players faced financial stress or bankruptcy within just two years of retirement, and about 60% of NBA players went broke within five years. The exact numbers can be debated, but the message is clear: a high income in your 20s doesn’t guarantee lasting wealth. The real tragedy is that many athletes who earned millions end up with little to show for it, not because they never had money – but because they failed to invest and build wealth with it. They might spend it all on luxury cars, big houses, or help to every friend and relative, only to find themselves struggling financially a few years later.

For college athletes, the risk is even sharper. Most won’t sign pro contracts after college. That means your NIL earnings could be the largest athletic paycheck you ever get. It might have to last you a long time. If it’s blown on short-term splurges, you may miss the chance to secure your future. Overspending, neglecting taxes, or failing to plan for life after college can quickly consume the benefits of NIL deals. The good news? With some smart moves, you can avoid these pitfalls. Below, we outline key financial principles and strategies to ensure you don’t “fumble the bag” but instead score a financial touchdown for your future.

Think Short Window, Long Game

An athletic career – especially at the college level – is often a short window for earning money. Whether or not you go pro, your peak sports income might be confined to a few years in your late teens and early 20s. By comparison, life after sports is long. Professional leagues have average career lengths of just 3–5 years, and many college stars won’t play pro at all. In other words, you could be making good money now, but you might need to rely on those earnings (and whatever they grow into) for decades to come.

Always remember: today’s NIL paycheck might be temporary, but your life after sports is long. Treat this income as if it may have to feed, house, and support you long after the cheering stops. It’s tempting to live large in the moment – buying the fanciest car or treating all your friends – but think beyond today. Discipline now means freedom later. Young athletes often want to buy the car or buy the house for their family, and it’s a wonderful goal – but it must be done in moderation so it doesn’t leave you in a financial hole.

The mindset to adopt is this: Use your short earning window to set up a long, comfortable life. A few years of high income, if managed wisely, can potentially fund many years of stability. In fact, even if you only had, say, three years of strong NIL earnings, invested properly those could put you on a path to early financial independence. So, keep your eyes on the long game. Every dollar you save and invest now is a dollar working for Future You.

Make a Game Plan for Your Money: Budgeting and Smart Spending

The first step to lasting financial stability is creating a budget – essentially, a game plan for every dollar you earn. A budget ensures that you control your money, rather than it controlling you. Start by figuring out your key categories: needs, wants, savings (and investments). For each NIL check you receive, decide how much goes to necessities (like rent, groceries, basic living costs), how much (if any) can go to “fun” or discretionary purchases, and how much you will pay yourself first by putting into savings and investments. By allocating a portion to each category, you make sure you cover today’s needs while still planning for tomorrow.

Live below your means, even if your means have grown. It’s easy to feel rich when big checks start coming in, but remember that income can fluctuate or end abruptly. Avoid the trap of “lifestyle inflation,” where higher income leads to higher spending on luxuries. Many pro athletes have fallen victim to this – buying multiple cars, designer clothes, and expensive vacations – only to find out too late that they overspent. You don’t have to live like a monk, but do keep your spending in check. For example, maybe limit big splurges to a small fraction of your NIL earnings and make them one-time treats, not ongoing expenses.

One technique is to use separate accounts for different purposes. Consider keeping your NIL money in a dedicated checking account, and then set up a separate savings account where you automatically transfer a chunk (say, 30% or more) of each payment as soon as it comes in. This way, you’re paying yourself (your future self) first, and you won’t be tempted to spend everything in your primary account. Some athletes even divide their budget into buckets like: 50% needs, 30% savings/investments, 20% wants – or whatever mix fits their goals. The exact percentages can vary, but the principle stands: budgeting helps you prioritize and ensures you don’t accidentally burn through your money.

Crucially, budgeting isn’t about saying “no” to everything fun – it’s about making sure you can say “yes” to the important things now and later. If you have a clear plan (maybe with the help of your parents or a trusted advisor), you’ll know how much is safe to spend on a new phone or a celebratory dinner, without derailing your future. Smarter spending choices today – like not going wild on flashy cars or clothes – frees up more money to put toward a house down payment or other big goals tomorrow. Remember, as an athlete you already understand discipline; managing money is just another field to apply that discipline. A solid budget is like a good playbook – it guides your actions and increases your chances of success.

Save Early and Invest in Your Future

Saving is the flip side of budgeting: once you spend less than you earn, you’ll accumulate savings that need a purpose. The smartest purpose for long-term savings is investing – putting money to work so it grows over time. For young athletes, investing early is a powerful move. Why? Because of the miracle that is compound interest. In simple terms, compounding means your money can earn money (through interest or investment returns), and then that new money also earns money, and so on – like a snowball rolling downhill. The more time you give it, the bigger it can grow.

Let’s illustrate the power of starting young. Say an athlete contributes $10,000 each year for four years (ages 18–22) to an investment account – a total of $40,000 invested. If they never add another penny afterward, and the money grows at an average 8% yearly return, by age 65 that account could be worth over $1.2 million! That’s the magic of about 40 years of compounding. Even much smaller amounts make a big difference when you have decades ahead.  

Key advice: once you invest money for the long term, try not to touch it. Let it grow. It might be tempting down the road to dip into your investment account for a fancy purchase, but every time you withdraw, you break the compounding snowball. Give your retirement savings 40+ years to compound and grow – you’ll be glad you did. Think of it like a seed you plant now; if you keep digging it up, it won’t turn into a strong tree.

One of the best ways for a young person to invest for the future is a Roth IRA, which we’ll cover next. But even beyond retirement accounts, if you’ve maxed those out, you can invest in regular brokerage accounts. The priority is to get your money growing. It may feel slow at first – investing is not a get-rich-quick scheme – but as the years pass, you’ll see that little by little, your money is making money, and that’s how wealth is built.

Note: Axon Capital Management does not guarantee a 8% return; this rate was used solely for illustrative purposes to demonstrate the potential long-term impact of early investing.

Leverage Tax-Advantaged Accounts: The Power of the Roth IRA

A Roth IRA (Individual Retirement Account) is essentially a special investment account for retirement. What makes it special? Contributions to a Roth IRA are made with after-tax dollars (money you’ve already paid taxes on), and then all the growth and future qualified withdrawals are tax-free. In other words, you pay taxes on your NIL earnings now, put some of that money into a Roth IRA, and when you take it out in retirement, you owe no taxes on the gains. If your investments double, triple, or grow many times over across 40+ years, all that growth is yours to keep, tax-free.

The beauty of a Roth IRA is in the long-term payoff. You might not fully appreciate it at 20, but having a pot of money growing tax-free for retirement is like giving a gift to your 60-year-old self. To reinforce how powerful this can be: imagine by the time you’re 23 you’ve contributed, say, $20,000 total into a Roth IRA. If that grows at an average rate and ends up being $200,000 or $300,000 by retirement (which is very possible over decades), none of the increase will be lost to taxes. That could mean tens of thousands of extra dollars for you, just by choosing the Roth vehicle.

Beyond Roth IRAs, if your NIL earnings are very high, you have other retirement savings options too. Because many athletes under NIL are considered independent contractors, you might be eligible to open a Solo 401(k) or an SEP-IRA (Simplified Employee Pension IRA) as a “business owner” of your own brand. These accounts have much higher contribution limits, allowing you to shelter more of your income for retirement and even get some current-year tax breaks. This is a bit more advanced, and an Axon financial advisor can help set it up correctly.

In summary: take advantage of tax-advantaged retirement accounts while you can. Max out a Roth IRA for tax-free growth. If you’re earning way more than the Roth limit, consider other self-employed retirement plans to stash money away. These moves will not only save you on taxes but also instill a habit of investing for the long haul.

Don’t Forget About Taxes – They Won’t Forget About You

Speaking of taxes, it’s critical to understand that NIL income is taxable income. This might be the first time you’re dealing with taxes beyond a simple summer job W-2. When you hear “$100,000 deal,” remember you won’t get to keep all $100,000 – a chunk of that will eventually go to the IRS (and possibly your state revenue department). Unlike a regular paycheck from an employer, where taxes are automatically withheld, NIL payments often come with no taxes taken out upfront. Many athletes are paid as independent contractors (on 1099 forms), meaning it’s on you to set aside money for taxes and pay them yourself, usually quarterly throughout the year. It’s easy to forget this and spend everything in your account, only to face a nasty surprise at tax time. Don’t let that happen.

A good rule of thumb is to immediately set aside a portion of every NIL payment for taxes. That money should sit in a separate savings account until you pay the IRS. If you’re earning substantial sums, consider making quarterly estimated tax payments to avoid penalties for underpayment. A tax professional can help you calculate these.

Also be aware that taxes apply not just to cash but also to non-cash compensation you might receive. If your deal includes free goods or trips (for example, an apparel company giving you lots of free gear, or a brand paying for you and your family to travel to an event), those perks might be considered taxable benefits too. The general principle is: if you receive something of value because of your NIL agreement, the government likely expects a cut. Receiving NIL payments isn’t the same as a scholarship stipend – it’s income, and Uncle Sam will want his share.

Finally, consider working with a qualified tax advisor or accountant. They can ensure you file the right forms in each state (for instance, if you earn money in multiple states, it can get complicated), take advantage of any deductions, and pay the right amount on time. The last thing you want is to make headlines for tax troubles or to give away hard-earned money in penalties. As the saying goes, “it’s not what you make, it’s what you keep.” Tax planning helps you keep more of it (legally) and sleep soundly knowing the IRS is satisfied.

Build Your Financial Team: Fiduciary Advisors and Family Support

You may be a star on the field or court, but when it comes to managing money, don’t go at it alone. Just as great athletes have coaches, trainers, and teammates, you’ll benefit from having a trusted financial team in your corner. This team can include your parents or other family members, as well as professional advisors – but the right kind of professionals.

First and foremost, consider working with a fee-only, fiduciary financial advisor. That’s a mouthful, so let’s break it down. Fiduciary means the advisor is legally obligated to act in your best interest at all times. Fee-only means they get paid only by you (usually through a transparent fee or percentage of assets they manage), and not by commissions for selling products. This combination is important. Unfortunately, in the financial world, there are plenty of “advisors” who might steer young athletes toward deals that make the advisor money (through kickbacks or commissions) but aren’t truly the best for the athlete. Many people see inexperienced, wealthy young athletes as targets for quick commissions. By choosing a fee-only fiduciary, you drastically reduce the conflict of interest – their goal is to grow and protect your money, which aligns with your goal, because that’s how they earn their fee. They have no incentive to push a bad investment or insurance product just to earn a cut.

A good fiduciary advisor can be invaluable. At Axon, we will educate you on basic finance skills (budgeting, banking, credit management), help you understand the time value of money and compound interest, and assist in setting up things we discussed (investment accounts, retirement plans, insurance, etc.). We can help you create budgets, set savings goals, and develop a long-term plan tailored to your life. We’ll also provide tax guidance, making sure you’re setting aside the right amount and utilizing strategies to minimize your tax hit. Perhaps most importantly, a good advisor will force you to think beyond your college years – preparing you for life after sports, whether that’s a pro career, another profession, or just ensuring your money lasts if you never have a big paycheck again.

Another crucial role of a trusted advisor (and even a good sports agent or lawyer) is as a protective buffer. They can help review opportunities that come your way, filtering out bad deals and scams. NIL is still like the Wild West in some respects, and not every opportunity is worth your time or safe for your brand. An advisor on your team can ensure you aren’t taken advantage of by fine print or shady operators. They can also evaluate investments that might be pitched to you so you don’t end up pouring money into a sketchy venture because a friend or stranger pressured you. In short, they help you make informed decisions and stick to your long-term plan.

In addition to professional advisors, keep your family involved and informed if possible. Many college athletes are still very young (some even minors) when they start earning NIL money, so it’s natural and often wise for parents to be part of the process. Your parents or guardians likely have your best interests at heart, and they can help keep you grounded. They might not be financial experts (or they might be – everyone’s situation differs), but at the very least they can provide a second set of eyes and a voice of reason when you’re faced with big decisions. Having a parent in the loop can also help coordinate with any advisors, since contracts and financial documents can be complex. Ultimately, you as the athlete are the “CEO” of your NIL enterprise, but you can appoint a trusted “board” of family and advisors to guide you.

To sum up: Surround yourself with good people and professionals who will safeguard your interests. Financial literacy and trustworthy advice are the keys to maximizing your earnings and securing your future. By building your own “financial dream team” – including family support and fiduciary guidance – you’ll have the backup you need to navigate the challenges of sudden wealth.

Key Takeaways and Next Steps

To wrap it all up, here’s a quick play-by-play of the most important steps for athletes and families to build lasting financial stability from NIL income:

• Treat NIL Income as a One-Time Opportunity: Remember that your sports-related earnings may be short-lived. Plan as if this is the main payday you’ll get – because for many, it will be. Don’t squander it on fleeting luxuries.

• Create a Budget and Stick to It: Map out your needs, wants, and savings. Live below your means and avoid lifestyle creep. Discipline in spending now will reward you later.

• Save and Invest Early: Pay yourself first by setting aside a significant portion of every check. Invest those savings for the long term – time is your biggest ally thanks to compounding. Even modest investments in your early 20s can grow substantially over decades.

• Utilize Tax-Advantaged Accounts: Open a Roth IRA and contribute to it annually. Enjoy tax-free growth on your investments. If your NIL earnings are very high, consider a Solo 401(k) or SEP-IRA to save even more for retirement while lowering taxes.

• Plan for Taxes: Always set aside money for taxes – usually around 30-40% of your NIL income, depending on your situation. Know that you’re likely getting 1099 income with no withholding, so the responsibility is on you. Pay quarterly estimates and keep good records of any deductible expenses.

• Work with Fiduciary Advisors (and Lean on Family): Don’t be afraid to get help. Hire a fiduciary financial advisor who puts your interests first. They can guide you in budgeting, investing, and avoiding pitfalls. Involve your parents or a trusted mentor in major decisions – they can offer perspective and keep you grounded.

• Think Beyond Sports: Invest in yourself beyond just money. Continue your education, develop career skills, and make connections. Your NIL earnings can give you a head start (for example, funding graduate school or seeding a business after college). A sports career can be brief, so build a foundation for the 40-50 years of life that come after.

In conclusion, NIL money can be a blessing or a curse – the outcome depends on how you handle it. By following general financial principles like budgeting, saving, and investing, understanding and managing your tax obligations, and using smart strategies like Roth IRAs, trusts, and good advisors, you can turn a few golden years of earnings into a lifetime of security. This is a pivotal moment: you have a chance to avoid the fate of those athletes who earn a fortune and end up with nothing. Instead, you can be the example of an athlete who used their Name, Image, and Likeness not just to make money, but to build wealth that lasts.

Stay humble, stay hungry (both in sports and financial learning), and know that every wise choice you make now is a step toward a stable and successful future off the field. Your future self – and your family – will be glad you played this money game wisely and for the long run.

If you have any questions or would like to speak with a financial advisor, please contact us by filling out the form below.

Article written by Brady Lochte, Financial Advisor at Axon Capital Management

Disclaimer: This article is for informational and educational purposes only and does not constitute investment, legal, or tax advice. Axon Capital Management is a registered investment advisor. Readers should consult with their own financial, legal, and tax professionals before making any decisions based on the content of this article. Past performance is not indicative of future results. All examples and strategies discussed are illustrative and may not be suitable for all individuals.

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