Spending Wisely: Youth Sports vs. College Savings

Spending Wisely: Youth Sports vs. College Savings




Spending Wisely: Youth Sports vs. College Savings



Having a son who just graduated from high school and is heading to college, I am keenly aware of the costs and benefits of today’s college education. As a parent, it is extremely difficult to prepare for college due to the unknowns of 18 years of your children’s development, interests, motivation, and desire to attend a university. Add in varying degrees of a child’s academic achievement, different tuition options, and various financial aid options, and you have a highly volatile mix of variables to try to prepare for.


Saving for College

During planning with parents we say that doing “nothing” is not a good option as more than 69% of female and 54% of male high school grads go on to college. Instead, we focus on planning for something tangible. Using the local large state school as a proxy for costs, we inflate that and try to solve for the years of college funding our client desires. With a tangible monetary goal and a defined timeline, parents can decide how much they want to contribute over time. Typically, we recommend a 529 plan to help fund those goals, given their ownership and beneficiary characteristics along with their obvious tax advantages (more on this another time).

Rarely (if ever) have I had a client who lamented “over-saving” for college. If the child earns a scholarship and there is money left over, it may be used for another sibling, or the parent will have funds available after graduation to figure out what to do with. However, many people scramble later to save or “catch up” their savings to prepare for the onslaught of college costs. While a solid number of parents do save or plan for college (64%), only 30% of parents are saving into 529 plans. These parents have an average of $30,287 in their 529 accounts. ¹

While the average balance in 529 plans is fairly impressive, full tuition and expenses at the University of Nebraska Lincoln (my local in-state large university) are running at $22,012 in 2021-22. This means that even the most prepared, on average, may have only a year and a half saved of college costs.

So, in our planning, we look at other variables to tweak if we want to solve for one. What could one adjust to help solve for a goal? Surprisingly, it may be just reallocating the current resources in our children’s budgets. 


Financial Impact of Youth Sports

A Harris Poll on behalf of TD Ameritrade in 2019 examined the financial impact youth sports are having on parents. In this study, parents were asked how much they spend per month on youth sports. The results were significant and not trivial amounts. More than 27% of respondents spend more than $500 per month on their kid’s athletic activities. Adding the 53% of parents who spend between $100-$499 per month, more than 80% of parents with child athletes spend thousands of dollars on youth sports annually.


There are many positive benefits of children participating in sports. But when asking the parents why they think they should spend the money on sports, it is based on the hope that they will earn a college athletic scholarship. The TD Ameritrade study showed that 20% of parents are certain/counting on scholarships.  More than 30% were highly hopeful/fairly sure of scholarships. Roughly 28% hope to obtain a scholarship but had realistic expectations. To summarize, more than 78% of parents were hoping or planning on their kids receiving a college athletic scholarship. 

According to the NCAA, only 2% of high school athletes are awarded some form of athletic scholarship to compete in college. So, while 78% of those parents with athletes are hoping for a scholarship, the grim reality is that almost all of them will be disappointed. 

Is the monetary investment in youth sports worth it? At a purely financial level, if the goal is to get a scholarship, it is clearly a poor investment. Granted, it is impossible to measure the value that a child receives from the lessons of teamwork, effort, practice, and social interaction. However, one could argue that those can still be achieved in sports that would be less costly but aren’t as competitive. 


Investing In Your Child’s Academic Future

From a purely financial standpoint, re-routing a portion of the investment in athletics to their future academic plights will prove significant. Simply investing $200 per month into a 529 over 18 years at a 5% growth rate will provide for nearly $45,000 in funds inside of that 529 tax-free if used for schooling. That is currently half the tuition/room and board for the University of Nebraska. In a sense, you are funding your own “partial ride” to a university by moving the investment in sports to the investment in their future education. This also guarantees they will not be disappointed when the dream of an athletic scholarship meets the reality of the actual probabilities of receiving one.

Obviously, I am not advocating against youth sports, but if you play sports to try and gain a scholarship, you give yourself slim odds of any return on investment. Using some of those funds for a 529 virtually guarantees to have some of those dollars work for you over time to fund college. It may not come with a big signing day ceremony, but hopefully, a future graduation ceremony!

If you have any questions, please contact us.


1. Hanson, Melanie. “College Savings Statistics” EducationData.org, October 13, 2021, https://educationdata.org/college-savings-statistics

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Justin Vossen is an Investment Advisor and Principal at Lutz Financial. With 21+ years of relevant experience, he specializes in providing wealth management and financial planning services for high net-worth families, business owners in transition, endowments and foundations. He lives in Omaha, NE, with his wife Nicole, and children Max and Kate.

  • Financial Planning Association, Member
  • BSBA in Economics and Finance, Creighton University, Omaha, NE
  • St. Augustine Indian Mission, Board Member
  • Nebraska Elementary and Secondary School Finance Authority, Board Member
  • St. Patrick's Church, Trustee
  • Mount Michael Booster Club Board
  • Lutz Gives Back, Committee Chair
  • March of Dimes Nebraska, Past Board Member


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