Whether you're a professional athlete on a major contract, a semi-pro player earning supplemental income, or a college athlete starting to monetize your NIL (Name, Image, Likeness), the financial challenges you face are fundamentally different from the average person. Your earning window is compressed, your income can be wildly inconsistent, and the financial decisions you make in your 20s can define your financial life for decades.
The Unique Financial Reality of Athletes
Most careers span 30-40 years of earning potential. For athletes, that window is often 5-15 years. That compressed timeline changes everything about how you should save, spend, invest, and plan. On top of that, athletic income often comes in large, irregular payments - signing bonuses, seasonal contracts, endorsement deals, appearance fees - making traditional budgeting methods almost useless.
The statistics around athlete financial struggles are well-documented. The issue isn't intelligence or irresponsibility - it's that most athletes are never given the financial structure and guidance they need from the beginning.
Multi-State Tax Obligations
One of the most expensive surprises for athletes is multi-state taxation. If you play or perform in multiple states, you generally owe income tax in every state where you earn money. This is sometimes called the "jock tax."
For example, if you play 20 games in a season and 3 of those games are in California, California may tax approximately 15% (3/20) of your total income. Multiply that across every state with an income tax, and you can end up filing 10-15 state returns in a single year.
Your home state matters. Choosing a state of residence with no income tax (like Florida or Texas) can save significant money - but only if you genuinely establish domicile there. The rules are strict and vary by state.
Building a Financial Foundation
Before thinking about investments or big purchases, every athlete needs three things in place:
- Emergency fund: 6-12 months of living expenses in a high-yield savings account. For athletes, we recommend the higher end given income unpredictability.
- Tax reserve account: A separate savings account where 30-35% of every payment goes immediately. (Use our tax savings calculator guide to find your exact rate.) This prevents the end-of-year scramble.
- A monthly budget that accounts for off-season: Your spending plan should be based on your lowest-earning months, not your highest. The surplus from big months gets saved and allocated intentionally.
Managing Irregular Income
The biggest budgeting mistake athletes make is spending based on their peak months. A $50,000 month doesn't mean a $50,000 lifestyle. Here's a framework we use with our clients:
- Step 1: Calculate your guaranteed annual income (base salary, guaranteed contracts)
- Step 2: Set your monthly lifestyle budget at 50-60% of that guaranteed income divided by 12
- Step 3: Everything above your lifestyle budget goes to taxes, savings, and investments
- Step 4: Treat bonuses, endorsements, and variable income as "extra" - not baseline
This isn't about restriction - it's about making sure the lifestyle you build today is one you can sustain for the rest of your life, not just while you're playing.
Career Transition Planning
The end of an athletic career is one of the biggest financial transitions a person can go through. Income drops dramatically and suddenly. If you haven't planned, the adjustment can be devastating.
We encourage our athlete clients to start planning for life after sports from day one - not as a sign of negativity, but as a sign of maturity. This includes:
- Building business skills and relationships during your playing career
- Exploring business ventures or investments that can generate passive income
- Getting educated on personal finance (not just outsourcing it)
- Building a financial cushion that covers 2-3 years of living expenses post-career
Who Should Be on Your Financial Team?
Athletes need a coordinated team, not just one advisor. At minimum, this should include:
- Accountant/bookkeeper - To manage your books, categorize income and expenses, and keep you organized (this is what TFMA does)
- CPA - To handle tax filings, multi-state returns, and tax strategy
- Financial advisor - For investment guidance and long-term wealth planning
- Attorney - For contract review, entity structuring, and asset protection
The key is that these professionals should communicate with each other. At TFMA, we coordinate directly with our clients' CPAs and advisors to make sure everyone is aligned.
NIL Athletes: A New Category
If you're a college athlete earning NIL income, you are now a business owner in the eyes of the IRS. That means quarterly estimated taxes, business deductions, and the need for proper bookkeeping - even if you're only earning a few thousand dollars. Setting up these systems early creates habits that will serve you for your entire career.
The Bottom Line
Financial success for athletes isn't about making the most money - it's about keeping it, growing it, and making it last. The right financial structure, the right team, and the right habits can make the difference between a career that sets you up for life and one that leaves you starting over.
At TFMA, our founder Jonathan Brown is a former student-athlete who understands the unique pressures and opportunities athletes face. If you're looking for a financial partner who speaks your language, we'd love to connect.