Should Paid College Athletes Be Required to Take a Financial Literacy Course?
Today’s college athletics landscape is hugely lucrative. Billions of dollars are generated by college sports each year through ticketing, merchandising, licensing, and more. Recently, after the historic decision to allow college athletes to benefit monetarily from their roles on athletic teams, some of that pie will be funneled to college athletes during their academic years.
This could be a beneficial change for college athletes and will allow them to benefit from the size of the industry. It also creates an unprecedented situation for college athletes, and the ramifications of these changes haven’t been fully realized yet.
Some argue that earning this money might create situations for athletes that might ultimately harm their financial standing. These thought leaders have proposed requiring financial literacy courses to equip paid college athletes with the necessary financial acumen to make fiscally beneficial decisions with their earnings.
What is Financial Literacy?
In the same way that reading literacy refers to the ability to understand written words and take in information via reading, financial literacy refers to understanding fundamental financial concepts and having a basic handle on how common financial issues should be handled.
Financial literacy includes a few core topics. Someone with good financial literacy does not need to know the in’s and out’s of various economic theories or how the foreign exchange market works — they simply need to have a solid grasp of the major financial systems that might affect them throughout their lifetime so that they can make strategic decisions about their finances and assets.
What Subjects Would a Financial Literacy Course Include?
To equip individuals with adequate financial literacy, a handful of subjects are important to explore. These might be tailored to match the needs of certain populations. While this isn’t a comprehensive list, here are a few of the most significant subjects within the field of financial literacy that would be beneficial for college athletes who earn money during their collegiate years:
Budgeting is a simple but extremely important concept that many of today’s college students (and adults for that matter) aren’t adequately taught. The process of determining how much money comes in every month and how much should be spent accordingly to make sure an individual does not overspend and end up in debt is vitally important.
Neglecting proper budgeting habits can result in significant debt and financial problems. Particularly in today’s credit-card-laden world, students who aren’t taught the principles of budgeting can easily find themselves in huge debt because they weren’t managing how much money they were spending in a given month compared to how much they were earning.
This can be a hugely complicated subject and confuse even seasoned professionals. For college students who are sometimes just beginning to earn any substantial income, the process of preparing tax submissions (as well as knowing how to organize their assets in order to make this process as painless as possible) is hugely important to learn how to do correctly to avoid penalties and problems down the road.
Accounting and Asset Management
Accounting management becomes more and more important as college athletes begin to earn new amounts of income or as they enter their professional careers. For many professionals and athletes that earn large salaries, have irregular assets, or earn through sponsorships and other more complex forms of income, receiving financial accounting services can be a necessary part of personal finance management.
It’s important to know when this may become important, what to look for in an accountant or in financial management services, and how to go about this process.
Retirement planning is an important knowledge area for every working professional. It’s impossible to avoid growing old and aging out of one’s working years eventually. For many people, they don’t learn about retirement planning concepts until they are too far along to make strategic arrangements or meaningful changes to their retirement plan.
This is a crucial area of know-how that is very important for any working professional to be able to grasp, and especially those that may have additional assets or income available to them at early stages in their careers.
Why is Financial Literacy So Important?
It’s tempting to think of finances as a specialty area of knowledge that “regular folks” don’t need to understand. And for some areas of financial management, it is often better to consult professionals for help in decision-making or to provide more technical financial services.
However, financial literacy is an important area of knowledge that everyone should be exposed to in order to make sure they are equipped to make good decisions about how they handle their financial income, assets, and liabilities.
Personal finances play a large part in one’s overall security, life decisions, career, and wellbeing. Organizing finances well can be the difference between accessing lifestyles and amenities one wants to be able to access throughout his or her lifetime or being prevented from being able to have or do those things because of a lack of resources.
Worse, poor personal finances management can not only hamper access to things like more comfortable homes, better vehicles, more vacations, and financial security in the future — it can substantially detract from one’s quality of life and even cause significant hardships, stress, and insecurities like food or shelter insecurity. Financially vulnerable positions can create huge amounts of strain and difficulty.
In fact, an entire branch of mental health services exists to address the massive amount of difficulty that poor financial planning can create. Financial therapists provide therapeutic help specifically for those that have found themselves in financially difficult or unstable situations. The existence of this type of service indicates just how much it matters that individuals get their finances right.
As college athletes begin to earn income and new assets from their collegiate playing careers, ensuring they are equipped with basic financial literacy could help them make better financial decisions and avoid falling into common financial pitfalls that could hurt them in the future.
We hope you enjoyed the article “Should Paid College Athletes Be Required to Take a Financial Literacy Course?” Are you currently a college athlete? Let us know!
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