Content area
Purpose
There is a paucity of empirical research that explores the financial well-being of collegiate student-athletes. The purpose of this paper is to investigate the key aspects of financial well-being (e.g. financial knowledge, financial self-efficacy and finance-related stress levels) of varsity athletes at US colleges and universities.
Design/methodology/approachThe authors used data from the National Student Financial Wellness Study. The data were analyzed using general linear regression models.
FindingsThe findings suggest student-athletes have lower financial knowledge than students who are non-athletes. Despite their lower levels of financial knowledge, these student-athletes report higher levels of financial self-efficacy. Furthermore, even when controlling for scholarship funding, student-athletes reported lower levels of financial stress than their counterparts. One could interpret this as student-athletes having a false sense of confidence in their money management behaviors. This overconfidence can impact many areas of their overall financial well-being. Alternatively, non-athletes may not be as financially confident as they should be.
Research limitations/implicationsThis study could be replicated with stronger measures (e.g. Financial Self-Efficacy Scale), with the inclusion of subjective financial knowledge measures, comparing the impact of demographic variables. As, most financial constructs have gender differences (Farrell et al., 2016) and race differences (Amatucci and Crawley, 2011) and depend upon college major (Fosnacht and Calderone, 2017). Another limitation of this study is the small percentage of student-athletes, a common problem with research in this area. Further research is also needed to unpack the finding that self-efficacy decreases at higher levels of financial knowledge.
Practical implicationsIt is evident that college students (athletes/non-athletes) need financial education. For universities and college coaches, this study could be used as a rationale for providing financial education for their athletes. The addition of financial courses could be used as a recruiting tool for collegiate coaches and benefit the university. Requiring financial education could also benefit universities long term as it may potentially increase the donor possibilities by alumni. As a final note, it is important that financial courses figure out ways to improve financial self-efficacy alongside financial knowledge, as findings suggest both are integral to decreasing financial stress.
Social implicationsLess than 4 percent of universities in the USA require students to take a personal finance course (Bledsoe et al., 2016). If more universities included personal finance as a graduation requirement and did more to engage student-athletes (and non-athletes) in financial planning, then the average level of financial knowledge would likely improve on campuses across the USA. In addition, increasing young adults financial self-efficacy could improve financial stress which is linked to mental health and physical health.
Originality/valueThis study provides the first empirical look into the financial well-being of collegiate student-athletes across the USA. Although there are many benefits to participation in college sports, student-athletes face additional time pressures and a predisposition to clustering around certain majors. Findings suggest that collegiate athletes need additional support around their financial literacy and non-athletes may need support developing financial self-efficacy. These two findings should be used by academic institutions and athletic departments to determine how to encourage financial health in their student-athletes and general student body.
Little is known about the financial health of collegiate athlete. This is surprising for several reasons. First, college students are easily accessible by researchers (Batres et al., 2018). Second, there has been a large focus in research and in popular media on the academic health of student-athletes (e.g. Gayles and Hu, 2009). Finally, there is a rise in media attention around professional athletes and deficits in their financial health (e.g. Dean, 2013; Kuper, 2013; Pagliarini, 2013; Preston, 2013; Torre, 2009). This paper proposes that there is a need for more research focus on the financial well-being of student-athletes to prepare them for life after graduation.
Financial well-being is a state of feeling financially healthy, happy and worry-free resulting from one’s ability to sustain current and future desired living standards (Brüggen et al., 2017; Strömbäck et al., 2017; Malone et al., 2010). Financial well-being is linked to improved academic performance, job satisfaction, physical and mental health, and is a strong predictor of individual happiness, satisfaction and overall well-being in life (Shim et al., 2009; Parish and Cloud, 2006; O’Neill et al., 2005). Financial well-being has been linked to three key areas: financial knowledge, financial self-efficacy and financial stress (Remund, 2010), with the intersection of financial knowledge and financial self-efficacy being a key predictor in how an individual is able to cope with financial stress (Heckman et al., 2014).
Financial knowledge is important in order to be able to manage money properly. However, financial knowledge does not translate directly to financial management (e.g. Klontz et al., 2008; Willis, 2011). Therefore, most researchers have now added the concept of financial self-efficacy into the mix. Financial self-efficacy is the confidence in one’s self to be able to manage one’s finances (Heckman et al., 2014). Financial knowledge and self-efficacy are essential to financial literacy. Remund (2010) states that “financial literacy is a measure of the degree to which one understands key financial concepts and possesses the ability and confidence to manage personal finances through appropriate, short-term decision-making and sound, long-range financial planning, while mindful of life events and changing economic conditions” (p. 284).
Therefore, the purpose of this paper is to investigate the relationship between financial literacy (i.e. financial knowledge and financial self-efficacy) and finance-related stress levels of varsity athletes at public US colleges and universities. More specifically, a priori research, described in the literature review, allowed for the development of three key research hypotheses that guided the study:
Student-athletes will have lower rates of financial knowledge.
Student-athletes will have higher rates of financial self-efficacy.
Student-athletes’ high rates of financial self-efficacy will provide a protective buffer against financial stress despite lower rates of financial knowledge.
In the next section, the literature review has been structured to provide a rationale for these three research hypotheses. To the authors’ knowledge, this is the first study involving empirical analyses of the financial knowledge, financial self-efficacy and financial stress levels of student-athletes. Since little is known specifically about financial health among student-athletes, research on the financial health of college students, in general, will be used as a springboard for our study of collegiate student-athletes.
Literature review
Student-athletes will have lower rates of financial knowledge
The first hypothesis for this paper is that student-athletes will have lower rates of financial knowledge. No articles on the financial knowledge of student-athletes in general was found by the authors. Thus, an exploration of college students’ financial knowledge will occur before briefly exploring the trends around general academics of collegiate-athletes.
Research has shown that, in general, most college students have low rates of financial knowledge. Joo et al. (2003) found that only half of the college students in their sample paid their credit cards in full every month, and 40 percent did not know what the annual percentage rate was on that credit card. The Study on Collegiate Financial Wellness (SCFW) found that on average college students were only able to answer 3.3 of the 6 basic financial knowledge questions correctly (Study on Collegiate Financial Wellness, 2017; Montalto et al., 2018). Several arguments have been made to explain the low financial knowledge rate such as universally poor financial knowledge levels in the USA, rising costs of college education and a lack of overt parental financial socialization (Borden et al., 2008). Another argument is that there is not enough formal education around finances in schools. Only 13 states require a personal finance course in high school (CEE, 2009). Since there is no research on the financial knowledge base of collegiate athletes, the closest avenue of research to financial knowledge would be the level of collegiate-athletes’ knowledge or academics, in general.
The research on student-athletes’ academics is not a straightforward topic. Some research has shown that athletic participation is associated with higher graduation rates (e.g. Corack, 2014) and increased educational engagement (e.g. Umbach et al., 2006) (please see Comeaux and Harrison, 2007 for a more extensive review). This study does not mean to take a deficit lens on college athletes’ academic careers. There are a lot of positive educational consequences developed from athletic participation in college. However, there is a cost to participating in athletics. Student-athletes on average spend between 20 and 40 h per week in their athletics and miss classes when their sport is in season, taking away from time that could be applied to academics (Watt and Moore, 2001; Wolverton, 2008). This may be why in one study researchers found that all student-athletes (irrespective of race, gender, sport or university) had better academic success during off-season compared to their athletic season outcomes (Scott et al., 2008). Another study found lower graduation and retention rates, as well as lower grade point averages (GPAs) for athletes than the general student population (College Sport Research Institute, 2014).
The disparity in grades could be the amount of time needed to compete at the collegiate level, associated with participating in athletics during college, but it also could be a selection bias. Some studies have found that college-athletes tend to have lower high school GPAs and standardized test scores than non-athletes who are admitted to the same schools (Bowen and Levin, 2011; Knobler, 2008). A final reason behind the development of the hypothesis that collegiate-athletes may have lower financial knowledge than the general student body is the body of literature on major clusters in student-athletes. Several studies have found that student-athletes tend to gravitate to a handful of majors that are not related to financial planning or financial management (Schneider et al., 2010) and most colleges only require financial planning courses in the financial planning major or related fields (Yates and Ward, 2011).
Financial education would improve financial knowledge, but it is not enough because research is mixed on the impact financial knowledge has on financial well-being (Lusardi et al., 2010). Some studies show that financial knowledge has a direct significant effect on financial well-being while others do not show a direct significant effect (Mokhtar and Husniyah, 2017; Santos et al., 2016; Shim et al., 2009). Furthermore, the direction of the significant relationship between financial knowledge and financial well-being is uncertain (Mokhtar and Husniyah, 2017). Potentially, the findings have not been consistent because they are missing the construct of financial self-efficacy in these studies. Therefore, this study will add to our understanding of the link between financial knowledge, financial self-efficacy and financial well-being.
Student-athletes will have higher rates of financial self-efficacy
Although financial knowledge is important, a critical element in building financial well-being among college-age youth is self-efficacy (Heckman et al., 2014). Financial self-efficacy is a concept derived from the more general term self-efficacy. Self-efficacy refers to an individual’s confidence in their ability to master and perform certain skills or tasks (Bandura et al., 1994). Applying the concept of self-efficacy to personal finance means that individuals who have a greater confidence in their financial knowledge and financial management are more likely to be confident in their financial decision making capability and less likely to avoid learning and applying financial knowledge (Bandura et al., 1994; Farrell et al., 2016). Farrell et al. (2016) found that having higher rates of the variable of financial self-efficacy was more important than any other financial variable (such as education, financial risk preferences, age and household income) in measuring financial health and well-being of their participants.
However, high financial self-efficacy is not enough to create financial well-being. Knowledge is still an essential element of the equation. In fact, the intersection of low financial knowledge and high financial self-efficacy produces an overconfidence in one’s financial abilities (Farrell et al., 2016), which leads to irrational financial behaviors (Chatterjee, 2014). Numerous studies have found that overconfidence is related to frequent investor trading activity, portfolio underperformance, greater risky asset holding and negatively impacts individual wealth creation over time (Barber and Odean, 2000; Chatterjee, 2014; Peng and Xiong, 2006). Individuals need a sense of self-efficacy around finances to see financial endeavors as something they can master. However, this must be coupled with enough financial knowledge to ensure that overconfidence does not push them to make risky financial decisions.
At this point, there has not been a study looking at college student-athletes’ levels of financial self-efficacy compared to the general student body. What the research has shown is that successful athletes tend to have high self-efficacy in a multitude of tasks (Bullard, 2016; DeRohan et al., 2011; Nicholls et al., 2010; Nwankwo and Onyishi, 2012). Therefore, it would be in line with previous literature to assume this would be true for financial self-efficacy, as well.
Student-athletes high rates of financial self-efficacy will provide a protective buffer against financial stress despite lower rates of financial knowledge
The third hypothesis is built upon this presupposition that student-athletes would have high financial self-efficacy (H2) and that they would have lower financial stress level despite lower rates of financial knowledge (H1). That is because there is an inverse relationship between financial self-efficacy and financial stress. Students with high financial self-efficacy were less likely to report financial stressors as unmanageable (Heckman et al., 2014). Financial self-efficacy also affected the help-seeking behavior of students. Students with high financial self-efficacy were more likely to seek help in dealing with financial stress than students reporting similar levels of stress but with lower financial self-efficacy (Lim et al., 2014). Financial self-efficacy was positively related to subjective well-being and negatively associated with credit hour reductions in response to financial stress (Robb, 2017). This study will investigate whether student-athletes experience a similar protective buffer from having higher financial self-efficacy.
Method
Participants
This study uses data from the 2014 National Student Financial Wellness Study, a national US survey of college students collected at The Ohio State University. Undergraduate students (N=18,795) from 52 participating two-year public (n=8), four-year public (n=32) and four-year private (n=12) higher education institutions from across the USA were administered an online survey examining financial attitudes, financial practices and financial knowledge. The survey, administered to a random sample of 163,714 students, had a response rate of 11.5 percent. The survey design captured a picture of the overall financial wellness of undergraduate students in the USA. Table I lists the participating institutions.
There are 14,597 students with a recorded varsity athlete status, although not all students are used in the analyses due to missing values of other variables and covariates. A total of 580 students report being a varsity athlete and the remaining 14,017 report not being a varsity athlete. The sample of varsity athletes includes 328 females, 233 males, 6 self-defined and 3 transgender. Varsity athletes in the data are predominantly white (n=391), followed by multi-racial/ethnic (n=56), black (n=37), Asian (n=33), Hispanic or Latino (n=23), Middle Eastern (n=9), other (n=8), native American (n=6) and Hawaiian or Pacific Islander (n=2). Table II provides a descriptive summary of student-athletes and all other students.
Measures
Students responded to an online survey where they provided answers to questions pertaining to financial education, financial management behaviors (to measure objective financial well-being), financial self-efficacy, financial socialization, financial stress and strain, financial optimism, paying for college, student loans, consumer debt, debt-related stress, financial knowledge, academic information, demographic information and parental socioeconomic status. The following are variables relating to the objective, which we used in the statistical analysis. As dependent variables, we utilized two financial self-efficacy questions and three financial stress questions. All items were measured on a four-point Likert-type scale ranging from 1 (Strongly disagree) to 4 (Strongly agree). We used means of each concept as the variable score.
We adopted financial knowledge as a key dependent and independent variable. The means of the scores on the five objective knowledge questions provided the independent variable score for financial knowledge. Covariates included a financial management score (with values ranging from 1 to 4, and higher values indicating greater financial management abilities), categorized scholarship funding (five categories indicating percentage of expenses covered by grants and scholarships), categorical GPA, mother’s college status (yes/no/do not know), father’s college status (yes/no/do not know), categorized parents’ annual income, gender (male/female/transgender/self-defined/prefer not to answer), and race (categorized as African American or non-African American). Note that further information describing the financial score variables (financial knowledge, financial self-efficacy, financial stress and financial management) is provided in Table III.
Data analysis
Summary statistics and simple independent t-tests comparing the values of the financial score variables across athletes and non-athletes were calculated. Next, a general linear model was used to determine differences in financial knowledge between athletes and non-athletes after adjusting for covariates. Two additional general linear models were used to:
estimate the effect of athletic status on financial self-efficacy while accounting for financial knowledge (adjusting for covariates); and
estimate the effect of athletic status on financial stress while accounting for financial knowledge and financial self-efficacy (adjusting for covariates).
General linear models were determined to be appropriate, as the financial score variables (means of Likert-type responses) are approximately continuous. For all three general linear models, estimated marginal means and post-hoc pairwise comparisons were calculated to learn how athletic status relates to the dependent variable (adjusting for financial self-efficacy and financial knowledge where necessary). All statistical tests use a significance level of α=0.05; all analyses were performed using IBM SPSS Statistics v. 25 (IBM Corp, 2017).
Results
Financial management, financial self-efficacy, financial stress and financial knowledge are treated as approximately continuous and normally distributed in all analyses. There are no major outliers or extreme departures from normality, though all of the variables are slightly left-skewed (meaning, in general, scores tend to be high, but there are some scores that are relatively low compared to others). Due to the large sample sizes, the t-tests are robust to this departure from normality (http://rctdesign.org/techreports/arphnonnormality.pdf).
There are highly significant differences between athletes and non-athletes with respect to financial knowledge (athletes have significantly lower financial knowledge (M=2.66, SD =1.42) scores than non-athletes (M=2.99, SD=1.35; t(14,327)=−5.69, p<0.001) and financial stress (athletes have significantly lower financial stress scores (M=2.58, SD=0.85) than non-athletes (M=2.77, SD=0.82); t(14,505)=−5.319, p<0.001). There are no significant differences in financial self-efficacy between athletes (M=3.10, SD=0.61) and non-athletes (M=3.07, SD=0.60; t(14,505)=1.458, p=0.145) or financial management between athletes (M=2.94, SD=0.63) and non-athletes (M=2.93, SD=0.59; t(14,516)=0.414, p=0.679). To more specifically study the relationships of athletic status, financial knowledge, financial self-efficacy and financial stress, we analyzed a series of general linear models that include covariates.
What is the effect of athletic status on financial knowledge and financial management?
The first general linear model examines the relationship of athlete status to financial knowledge. Table IV is an ANOVA table indicating significance of each of the independent variables in the model. The R2 for this model is 0.064. All covariates except for father’s college attendance are statistically significant. In other words, there remains a statistically significant difference between athletes (m=2.30) and non-athletes (m=2.65, F(1, 12,634)=34.88, p<0.001), implying that this difference in financial knowledge is associated specifically with athlete status. Note that these means are evaluated at the average value of financial management =2.93, and adjustments were made for other covariates. Figure 1 shows these means and standard error bars for comparison.
What is the effect of athletic status on financial self-efficacy while accounting for financial knowledge?
The second general linear model examines the relationship of athlete status to financial self-efficacy, while accounting for financial knowledge (which differs according to athlete status) and adjusting for covariates. The R2 for this model is 0.207. All covariates except for both parents’ college attendance are statistically significant.
A significant interaction of athlete status with financial knowledge was found and is included in this model (F(1, 12,584)=6.98, p=0.008). The regression coefficient relating financial knowledge to financial self-efficacy is larger for athletes (b=0.071, t(12,584)=4.123, p<0.001) than for non-athletes (b=0.025, t(12,584)=6.573, p<0.001).
To further examine the relationship of financial self-efficacy to athlete status, Figure 2 provides estimated means standard deviations comparing the financial self-efficacy of athletes and non-athletes at different values of financial knowledge (adjusted for covariates). Note that athletes have significantly lower financial self-efficacy than non-athletes at low values of financial knowledge (t(12,584)=−3.77, p=0.031), and significantly higher financial self-efficacy than non-athletes at high values of financial knowledge (t(12,584)=2.47, p=0.014). There is not a statistically significant difference at a mid-level value of financial knowledge =2.5 (t(12,584)=−0.04, p=0.978).
What is the effect of athletic status on financial stress while accounting for financial knowledge and financial self-efficacy?
The final general linear model examines the relationship of athlete status to financial stress, while accounting for both financial knowledge and self-efficacy and adjusting for covariates. The R2 for this model is 0.182. All covariates except for race (African American) are statistically significant.
A significant interaction of athlete status with financial knowledge was found and is included in this model (F(1,12,525)=4.71, p=0.030), but the interaction of athlete status and financial self-efficacy was not significant and was not included. Financial self-efficacy is significant, although it does not interact with athlete status (b=−0.371, t(12,525)=−29.51, p<0.001); as may be anticipated, as financial self-efficacy increases, financial stress significantly decreases (similarly for both athletes and non-athletes). The relationship of financial knowledge to financial stress is not statistically significant for athletes (b=0.024, t(12,525)=0.99, p=0.332); the relationship is statistically significant for non-athletes (b=−0.030, t(12,525)=−5.661, p<0.001), and the relationship is negative (the higher the financial knowledge, the lower the financial stress).
To further examine the relationship of financial stress to athlete status, Figure 3 illustrates estimated means and standard error bars of the financial stress of athletes and non-athletes at different values of financial knowledge (adjusted for covariates). Note that athletes have significantly lower financial stress than non-athletes at low (t(12,525)=−3.03, p=0.003) and mid-range values of financial knowledge (t(12,525)=−2.69, p=0.007), but have similar financial stress to non-athletes at high values of financial knowledge (t(12,525)=0.58, p=0.555).
Discussion
There is a statistically significant difference between the financial knowledge of athletes and non-athletes, regardless of the inclusion or adjustment of covariates in the model. Student-athletes have lower financial knowledge than non-athletes. Further, in the cases where there were statistically significant differences in financial self-efficacy for athletes and non-athletes, the difference depended upon the students’ financial knowledge.
If financial knowledge is toward the low end of the scale, athletes have lower financial self-efficacy than non-athletes; on the other hand, if financial knowledge is toward the high end of the scale, athletes have higher financial self-efficacy than non-athletes. For financial knowledge in the middle of the scale, there are no differences in financial self-efficacy. This is due to a greater effect of financial knowledge on financial self-efficacy for athletes than non-athletes.
At the higher end of the financial knowledge scale, student-athletes have more financial self-efficacy than their knowledge would suggest. Perhaps this represents the normal course of action among athletes. In sports, practice creates confidence for the games. If athletes know more, they will be more confident. As financial knowledge increases, financial self-efficacy increases at a higher rate for collegiate athletes than non-athletes. However, student-athletes with high levels of financial knowledge may be overconfident in their ability to manage money. Alternatively, non-athletes with high levels of financial knowledge may not be as confident as they should be in their ability to manage their finances.
Similar to financial self-efficacy, the difference in financial stress between athletes and non-athletes is related to financial knowledge. When financial knowledge scores are on the low end of the scale, athletes have lower average financial stress than non-athletes. However, as financial knowledge increases, the difference in average financial stress between athletes and non-athletes becomes less, and becomes non-significant.
Limitations
The findings have clear practical and research implications that will be explored in the next section, but, first, it is important to note the limitations of this study first. This was a secondary data set so the measures and covariates are limited. Only objective financial knowledge was measured in this study. Objective financial knowledge (or the ability to answer financial questions correctly) is only half the story as financial knowledge can be measured subjectively, in addition to objectively. Subjective financial knowledge is one’s own self-rating of their financial knowledge. Xiao et al. (2014) measured financial knowledge both ways in their study of college students and they found that both objective and subjective knowledge decreased risky credit paying behaviors and borrowing behaviors of college students to different degrees. Specifically, they found that subjective financial knowledge has a stronger impact than objective financial knowledge. Thus, subjective financial knowledge would likely also be linked to financial stress and financial self-efficacy which creates opportunities for future studies incorporating both types of questions (Xiao et al., 2014).
Financial self-efficacy and financial stress were measured with several questions vs a standardized scale. Future research could consider using the Financial Self-Efficacy Scale (Lown, 2011) or the Financial Stress Scale (Northern et al., 2010). It is also important to disclose that there has been criticism about the application of overconfidence in personal finance. Clark and Friesen (2009) and Hoelzl and Rustichini (2005) both found that financial overconfidence results look different for participants in survey vs laboratory conditions.
Another important limitation to note is that the sample of athletes was small compared to the general population. This is not surprising as student-athletes only account for 4–26 percent of all college students (this rate is dependent on what division the university is located within the NCAA) (National Collegiate Athletic Association, 2013). Yet, the low rate of collegiate athletes in the sample must be acknowledged as a limitation. This small sample also prevented a thorough examination of possible confounding variables. If the sample of athletes had been larger, the study could have examined how different suprasystem variables impacted the outcomes. For example, most financial constructs (e.g. financial knowledge, financial self-efficacy) have gender differences (e.g. Farrell et al., 2016) and race differences (Amatucci and Crawley, 2011) and depend upon college major (Fosnacht and Calderone, 2017). Investigating the differences between student-athletes was not a focus of our study, but is a limitation to this study and has important implications for future studies.
Implications
This study found that collegiate athletes have lower rates of financial knowledge than non-athletes, meaning that as a population they must be targeted for financial knowledge education and support in school and beyond. While in school, it is essential that college athletes make time for personal finance courses to increase their knowledge around finances. The onus for scheduling these financial courses should not only be placed on collegiate athletes but the universities, as well.
Less than 4 percent of colleges and universities in the USA require students to take a personal finance course (Bledsoe et al., 2016). If more colleges and universities included personal finance as a graduation requirement and did more to engage student-athletes in financial planning, then the average level of financial knowledge would likely improve on campuses across the USA. Given that one of the methods for developing financial self-efficacy is through financial knowledge education (Kisantas and Kitsantas, 2005; Heckman and Grable, 2011), incorporating educational opportunities in financial knowledge during college may also increase financial self-efficacy. The alternative could be true as well, that financial courses need to explore ways of fostering the student’s financial self-efficacy in order to help them implement their financial knowledge more effectively. Feltz et al. (2008) described ways of increasing athlete’s coping self-efficacy, such as observing athletes exhibiting confidence in a stressful situation or talking to other athletes about ways that they have overcome their failures and improved their coping self-efficacy. These strategies may be useful in the financial planning classroom as faculty can self-disclose personal financial struggles and how they have overcome them. Providing financial education that focuses on increasing knowledge and self-efficacy for athletes could be used as a recruiting tool for collegiate coaches and benefit the university. In addition, requiring financial education could benefit universities long term as it may potentially increase the donor possibilities by alumni as they increase their net-worth.
In the previous paragraph, the use of peer disclosures and modeling as a vehicle for improving self-efficacy was described, but it warrants a longer discussion. Feltz et al. (2008) introduced the idea of using other athletes as the training tool for increasing self-efficacy (e.g. watching others model confidence, talking to other athletes about how they improved their self-efficacy). This too may be generalizable to financial realms. An example of peer-to-peer financial program is the Kansas State University’s Powercat Financial Counseling (Kansas State, 2014), which has had positive outcomes associated with their development. This study lends credence for other colleges and universities to consider creating their own peer counseling program to allow for undergraduates to model themselves after peers and learn strategies for improving financial self-efficacy.
The findings of this study are not just applicable during the college years. The findings suggest that college athletes would benefit from enlisting a financial planner after graduation. Fischer and Gerhardt (2007) findings suggest that financial advisors can be particularly valuable for individuals who lack financial knowledge. Engelmann et al. (2009) examine the functional magnetic resonance image (MRI) of individuals’ brains as they received financial advice. The MRI scans indicated that financial decisions were less taxing on the brain when participants received advice. Since the findings of this study show that collegiate athletes have lower rates of financial knowledge than non-athletes, there is a clear implication that they would benefit from working with a financial professional after graduation. As Fischer and Gerhardt’s (2007) findings also suggest that financial advisors can be particularly valuable for individuals who lack financial knowledge.
Despite college athletes being a population that would benefit from financial planning, it is important to note that there is a strong disconnect between many athletes and financial planners. There is an acclaimed sports reality franchise called “Hard Knocks.” In one episode, there is a fascinating scene with Carl Nassib, in which he explained to his teammates how there are too many financial advisors and that they will take your money (Hlavaty, 2018). This is just one example of mistrust of financial advisers by professional athletes. Similarly, Rob Gronkowski (“Gronk”) of the New England Patriots revealed that players often rely on him for advice. Although Gronk is fantastic at financial management and should be held as a role model and a method for increasing financial self-efficacy, he is a professional athlete, not a professional financial advisor, and may miss some of the nuances that are unique to individual financial plans (Durkee, 2018). Many athletes could benefit from the services of financial planners, but lack of trust can be a barrier to athletes seeking and acquiring advice (Martin et al., 2014). A visible partnership between universities and the financial planning industry to incorporate financial planning courses into college athlete’s curriculum may help build trust levels and allow athletes to become more discerning consumers of financial planning services beyond graduation.
This study found that college athletes with financial knowledge will have a higher sense of financial self-efficacy than non-athletes. The results of this study show that college athletes may be at risk for overconfidence which is in accordance with previous literature on this population. For example, Buccetti (2012) found that playing a collegiate sport makes an investor more likely to invest in a risky investment, as well as value that investment as less risky than it should be valued. Thus, the introduction of financial education early in their university career partnered with appropriate financial practitioners later is essential for the financial well-being of collegiate athletes beyond graduation. The NCAA has created some helpful financial videos for collegiate athletes on their website (Financial Awareness of Student-Athletes, 2017), but more work is needed.
This study found that college athletes with financial knowledge will have a higher sense of financial self-efficacy than non-athletes. This result may mean that college athletes are at risk for financial overconfidence. This finding is in accordance with previous literature on this population. For example, Buccetti (2012) found that playing a collegiate sport makes an investor more likely to invest in a risky investment, as well as value that investment as less risky than it should be valued. Thus, the introduction of financial education early in their university career partnered with appropriate financial practitioners later is essential for the financial well-being of collegiate athletes beyond graduation. The NCAA has created some helpful financial videos for collegiate athletes on their website (Financial Awareness of Student-Athletes, 2017), but more work is needed.
This finding also has important implications for non-athletes. The question arises, why is their self-efficacy decreased at higher levels of financial knowledge? Further research is needed to unpack this finding to see why this is the result. Perhaps gender is one possible factor driving the results. Collegiate sports may allow female athletes to feel more empowered than their counterparts. Research has shown women have lower financial self-efficacy than men (Dietz et al., 2003), potentially sports provide a buffer for collegiate female athletes allowing them to have higher self-efficacy than their counterparts allowing for the small sample of athletes to have a higher rate of self-efficacy as a result of the gender differences.
Another possible reason for these differences is because self-efficacy is an underlying focus of athletic training. Moritz et al. (2000) found that there have been over 60 research articles published on how self-efficacy can impact sports performance. This has implications as “perceived efficacy in one behavioral-situational domain will generalize to other behaviors and situations depending on the extent in which the behaviors and situations share crucial features and require similar skills and functions” (Maddux, 2013, p. 118). Potentially, since athletes have had such a marked experienced training in athletic self-efficacy, their self-efficacy has increased across multiple domains. This has implications for athletic programs, as it provides additional support for the claim that athletic participation is connected to overall well-being. This focus on the need for self-efficacy has implications for colleges and universities, as well.
Conclusion
This paper sought to fill the void in research on the intersection of financial knowledge, financial self-efficacy, financial stress and the impacts on the financial well-being of collegiate student-athletes. Previous studies have shown that college students have low financial knowledge (e.g. Joo et al., 2003), so it was no surprise that this sample of college students had similarly low levels of financial knowledge. It was interesting that collegiate athletes had even lower levels. This study should be seen as a call for action, as colleges and universities have a responsibility to provide tangible life lessons essential for setting students up for success. Responsibly educating student-athletes in financial matters contributes to their financial health and overall well-being.
This study also showed that financial literacy is only half of the equation. Financial self-efficacy plays a key role in the participant’s financial management, as well (e.g. Farrell et al., 2016). Interesting findings arose when comparing collegiate athletes from their counterparts. More specifically, collegiate athletes who have more financial knowledge will have much higher rates of financial self-efficacy than non-athletes. Financial planning practitioners and college financial planning programs could be utilized to benefit student-athletes in the design of financial education programs. This could reduce the risk of overconfidence, risky financial decision making and mistrust of financial professionals among collegiate athletes.
Finally, collegiate athletes need to find a balance between financial literacy and financial self-efficacy. Kevin Durant, a professional athlete that has acquired a fiscally strong portfolio, once said, “You have to remove the ego of it and realize that you don’t know it all. I want to learn more about this life and this business and this world. So I’ve got to ask questions, and I’ve got to have an open mind to it all” (Rovell, 2018, para. 6). There is a balance between financial knowledge and financial self-efficacy that superstars like Durant and LeBron have achieved. Everyone, athletes included, will always benefit from increasing both their financial knowledge and financial self-efficacy.
Estimated marginal mean financial knowledge with standard error bars, by athlete status
Model-estimated mean financial self-efficacy with standard error bars by athlete status and financial knowledge
Model-estimated mean financial stress with standard error bars, by athlete status and financial knowledge
Participating institutions in the 2014 National Student Financial Wellness Study
| Two-year public | |
| Asheville-Buncombe Technical Community College | Cuyahoga Community College |
| Belmont College | Sinclair Community College |
| Chippewa Valley Technical College | Stark State College |
| Columbus State Community College | SUNY Orange County Community College |
| Four-year public | |
| Indiana University | University of California-Berkeley |
| Iowa State University | University of Cincinnati |
| James Madison University | University of Idaho |
| Kansas State University | University of Missouri-Columbia |
| Missouri State University | University of Missouri-St Louis |
| North Dakota State University | University of North Carolina-Wilmington |
| Northern Kentucky University | University of North Dakota |
| Ohio State University | University of North Texas |
| Ohio University | University of Northern Iowa |
| Pennsylvania State University | University of Tennessee Chattanooga |
| Santa Fe College | University of Utah |
| South Dakota State University | University of Wisconsin LaCrosse |
| Temple University | Utah State University |
| Texas A&M University | Washington State University |
| Texas State University | Weber State University |
| University of Arizona | York Universitya |
| Four-year private | |
| Berry College | Lafayette College |
| DePaul College | Oberlin College |
| Flagler College | Ohio Northern University |
| Gustavus Adolphus College | Otterbein University |
| Husson University | University of Denver |
| Indiana Wesleyan University | Wake Forest University |
Note: aYork University participated in the survey, but is a Canadian institution and not used in the analyses
Descriptive summary of student-athletes and all other students
| Student-athletes (n=580) | All other students (n=14,017) | |
|---|---|---|
| Institution type | ||
| Two-year | 69.5% | 82.1% |
| Four-year public | 21.4% | 9.2% |
| Four-year private | 9.1% | 8.7% |
| Gender | ||
| Male | 40.2% | 30.9% |
| Female | 56.6% | 67.4% |
| Transgender | 0.5% | 0.2% |
| Self-defined | 1.0% | 0.5% |
| Prefer not to answer | 1.7% | 1.0% |
| Race/Ethnicity | ||
| White | 67.4% | 72.1% |
| Black | 6.4% | 4.9% |
| Hispanic or Latino | 4.0% | 5.6% |
| Asian | 5.7% | 5.5% |
| Hawaiian or Pacific Islander | 0.3% | 0.2% |
| Native American | 1.0% | 0.3% |
| Middle Eastern | 1.6% | 0.4% |
| Multi-racial/ethnic | 9.7% | 7.7% |
| Other | 1.4% | 0.7% |
| Prefer not to answer | 2.6% | 2.6% |
| Age | ||
| Mean | 21.5 years | 23.9 years |
| Median | 20.0 years | 21.0 years |
| Range | (16, 66) | (15, 76) |
| Traditional age (18–23) | 82.9% | 69.7% |
| Younger than traditional age | 0.5% | 0.2% |
| Older than traditional age | 11.9% | 28.0% |
| No age reported | 4.7% | 2.1% |
Survey questions that comprise the scales
| Financial management: |
1 = never |
| Financial self-efficacy: |
1 = strongly disagree |
| Financial stress: |
1 = strongly disagree |
| Financial knowledge: | |
| Imagine that the interest rate on your savings account is 1% per year and inflation is 2% per year. After 1 year, would you be able to buy more than today, exactly the same as today, or less than today with the money in this account? | |
| Suppose you have $100 in a savings account and the interest rate was 2% per year. After 5 years, how much would you have in the account if you left the money to grow? | 1 = more than $102 |
| Suppose you borrowed $5,000 to help cover college expenses for the coming year. You can choose to repay this loan over 10 years, 20 years or 30 years. Which of these repayment options will cost you the least amount of money over the length of the repayment period? | |
| All paycheck stubs show your gross pay (the total amount you earned before any taxes were taken out for the pay period) and your net pay (the amount of your check after all taxes). The taxes that are commonly taken out include federal, state and local income tax, Social Security tax and Medicare tax. On average, what percentage of your income would you expect to receive as take-home pay? | 1 = 100% |
| Which of the following make up the TWO largest components of a credit score: amounts owed, new credit, types of credit used, length of credit history, payment history or do not know? |
Summaries and independent t-tests of financial variables by athlete status
| Score | Athlete status | N | Mean | SD | t | df | p |
|---|---|---|---|---|---|---|---|
| Financial knowledge | Athlete | 566 | 2.66 | 1.42 | −5.693 | 14,327 | <0.001 |
| Non-athlete | 13,763 | 2.99 | 1.35 | ||||
| Financial self-efficacy | Athlete | 575 | 3.10 | 0.61 | 1.458 | 14,505 | 0.145 |
| Non-athlete | 13,932 | 3.07 | 0.60 | ||||
| Financial stress | Athlete | 569 | 2.58 | 0.85 | −5.319 | 14,506 | <0.001 |
| Non-athlete | 13,939 | 2.77 | 0.82 | ||||
| Financial management | Athlete | 574 | 2.94 | 0.63 | 0.414 | 14,516 | 0.679 |
| Non-athlete | 13,944 | 2.93 | 0.59 |
© Emerald Publishing Limited 2019