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Wealth Management for Student Athletes

Student athletes have a lot on their plate, not only do they have to meet academic requirements, they have to; meet the demands of practice, travel to games, make time for friends, and enjoy college. In addition to that juggling act, a student athlete also needs to consider wealth management.

Considering all the demands a student athlete faces, it’s no secret why so many student athletes struggle financially through their academic years. Keep reading to learn more about tips on wealth management for student athletes.

What Is a Student Athlete? 

Taking a step back, let’s review what is a student athlete? Simply put, a student athlete is a student that participates in their schools organized sports. Gymnastics, basketball, football, tennis, golf, hockey, swimming, and baseball are the most common sports where you’ll find a student athlete, but the sports list goes on and on. 

Do Student Athletes Struggle Financially? 

College can be incredibly demanding and stressful! Afterall, this is your last bit of education before entering the workforce.

The curriculum is important, as it should set you up for success once you graduate. With that said, student athletes multiply that stress level as they have so much to juggle outside of attending class and spending late nights studying. 

Considering the demands a student athlete faces, between early morning practices, and evening practices, a student athlete finds themselves with very little free time. The little free time they have is typically invested into studying, and the last thing they could even think about doing is working.

For that reason, many student athletes notoriously do not have part time jobs throughout college, and struggle financially. 

Do Student Athletes Get Paid?  

Despite collegiate sports grossing billions of dollars per year, student athletes do not get paid to play! There is a heated debate over this, as many people believe a student athlete should be paid, similar to a professional athlete.

Especially considering the value and attention they bring to a specific university.

Should Student Athletes Get Paid?

People often question ‘is it ethical to pay student athletes?’ After all, Duke’s basketball program is more popular than some of the teams in the NBA, and brings in a lot of money for the university. 

However, many student athletes are receiving some type of scholarship to attend college. Considering the cost of education, if the student athlete doesn’t need to pay for $X amount of education, the college or university may feel as though that is an adequate form of compensation.  

There are two very divided viewpoints here. 

How Student Athletes Make Money Now 

Social media has changed everything. Student athletes can accept endorsements from brands and generate income on social media, or other marketing outlets.

For example, if an athletic brand is promoting a new sneaker, they can ask the student athlete to wear the sneaker in an Instagram post, tag the company, and they will receive a commission. The NCAA does in fact regulate this.

The rule is that the college or university is not allowed to pay the student directly. The income a student receives must come from the brand or endorsement they are partnered with, such as Nike, or Gatorade.

College athletes can sell their name to whoever they want but can’t receive payments directly from their school. 

5 Steps for Budgeting as a Student Athlete 

There are 5 steps a student athlete can take to help them budget and financially get through their academic years. 

Start With Fixed Expenses

The first step of any budgeting process is isolating the fixed/essential bills. This may include electricity, groceries, internet, insurance – really any expense that you are not willing or able to live without.

This is the minimum amount of money you’ll need to live each month. Keep in mind the various college expenses that the student athlete will have to pay, unless covered by the school, and the healthy diet they are likely following. 

Budget What’s Left 

Now with an understanding of how much money you actually need, you can start figuring out how to allocate any additional money you have. Money can be spent on discretionary items, afterall, you want to enjoy your college years.

But, it’s important this additional spending should be well managed and planned for properly. 

Save

That’s where the saving step comes in. A common budgeting formula is the 50-30-20 rule.

What is the 50-30-20 rule? This rule allows you to spend 50% of your money on your needs, 30% of your money on your wants, and 20% of your money needs to be allocated to savings. 

Allow Room for the Unexpected 

One of the reasons why savings is so important is because it allows you to have money in the bank for something unexpected. For example, if your car needed new tires, that could easily cost a few hundred dollars.

If you had money in your savings account, you can avoid charging this expense on a credit card and side step getting into debt! Allowing oneself wiggle room financially is especially important to keep in mind when talking about wealth management for student athletes.

Plan for the Worst

Another great approach to saving and budgeting would be to plan for the worst. A simple way to do this is to have at least 3 months of your essential bills saved up in savings.

For instance, if your essential bills (step 1 above) cost you $500/month, you’ll want to keep at least $1,500 in savings. That will allow you to weather a financially hard time. 

Ways for Student Athletes to Make Money

There are a handful of ways that student athletes can make money, on their own terms, while maintaining a demanding schedule. Common options include: 

  • Teaching their skills to other students, or to the younger generation. For example, if you’re a college basketball player, you may be able to give shooting lessons to other students. Or, you could give dribbling lessons to the local highschool and charge for your service. 
  • UBER/Lyft/Instacart or DoorDash are all great options for student athletes. These options allow for maximum flexibility with zero weekly commitment requirement. If you can’t work for a week or two in a row due to your travel schedule, that’s okay! But if you have a few days off, you can easily turn on the app and generate some income. 

Should College Athletes Get Professional Financial Advice?

Student athletes should absolutely get professional financial advice! 

Hiring the Right Financial Advisor 

Having the right financial advisor in your corner is key! Even if you aren’t bringing in a lot of income in the present day, financial advisors can still help.

Financial advisors will help the student athlete set up a proper foundation, which will serve them throughout their college years and better prepare them for life after college. 

Helping Budget for the Present 

Part of that foundation includes reviewing the student athletes spending habits, and creating a realistic budget. There will be a sense of accountability when someone, who is unbiased, reviews your spending each month.

They’ll quickly identify where spending can be dialed back, and what the value of dialing back that spending is. 

Planning for the Future

Financial advisors do not only focus on the present day, they also help you plan for the future. The advice and plans they set you up on while you’re in school will evolve and adapt as you begin to earn more money.

However, you’ll already have a relationship with the financial advisor, which will go a long way. Afterall, talking about money and life goals is personal.

It takes a lot for someone to open up, especially about financials. So seeking the help of a professional is a great wealth management tool for student athletes.

Get the Wheels in Motion for Retirement

As a student athlete, the only thing on your mind may be winning the next game or passing the next test. However, the reality is, it’s never too early to start thinking about retirement.

The right financial advisors will plant the retirement seeds early. They understand the single greatest wealth generating tool on planet earth, is time.

The sooner you start planning for retirement, the more you’ll be prepared for it! 

It’s Time to Win 

Student athletes are no stranger to hard work, determination, planning, and following through. All of these characteristics are essential to living a financially free life.

Considering the numerous pressures these kids are under, there is no doubt a professional financial advisor is a great resource to help with wealth management for student student athletes. A good financial advisor will help the student athlete establish a budgeting plan, ensure the plan includes enough cash reserves, and will plant the retirement seeds as early as possible.

The student athlete can continue to focus on the scoreboard, and their textbooks, while a financial advisor helps them keep score of their financials.