I have endured countless hours of poker over the last five years, playing upwards of two million hands. I started playing No Limit Texas Hold ‘Em with friends as a way to socialize and pass the time, but when I started to win I realized there was so much more to the game than just pushing your chips in the middle and hoping for the best. I started to develop my game while playing online and began winning consistently. I have had many ups and downs, but for the most part I played my best and reaped the benefits. Even though I spent so much time being consumed by poker, I don’t regret a minute of it. It has allowed many opportunities for me I would not have had otherwise. Poker even financed several trips for me to travel to Europe and South America to play in tournaments.
After graduating college recently, I knew it was time to walk away and start gaining experience toward a more stable career. I always knew I wouldn’t be able to play forever, however when it came to an end, it was still hard for me to accept. But all was not lost. I started seeing the parallels between poker and life toward the end of my playing days, especially when it came to money management and personal finance. I realized that I could use everything I learned at the poker table by trying to become a “winner” with my personal finances.
There are basically two mindsets when playing poker: you’re either playing to have fun or you’re playing to win. Playing to have fun means win or lose, the outcome does not affect you. If you’re playing to win, your goal is to turn a profit. It’s definitely a good time to just throw money in the pot for the rush, the laughs, or simply for the sake of doing it. If you’re playing to win, the strategy is simple: you’re trying to make the most optimal play for every decision. People ask me all the time about the luck factor in poker. I tell them that unlike roulette or slots, you can have a profitable edge on the competition. Casino games always have the edge because you’re playing against the house and these games were invented for you to lose. In poker, you’re playing against other players and there has to be a winner if there’s a loser. Practicing successful personal finance tactics is much the same as playing winning poker. The main concepts are pretty much the same and the strategies to achieve success are very similar. Here are ten tips to make sure you’re approaching personal finances with the right mindset:
Patience –There are many different ways to make the right move. But take your time and approach every decision thoughtfully. If you’re just beginning, take everything into account and be cautious at first. Eventually with practice, you will be confident that you’re making the right moves.
Position - Sometimes there is the opportunity to make the right play, but it isn’t the right time. Take everything into account before making a decision. In poker, this includes your stack size, how much is in the pot, your position at the table, and the position of others at the table. Position is also relevant with personal finance. Ask yourself, “is this the best time for this expense?” Take future expenses into account, your cash flow projection and anything else that will be affected by your decision.
Discussion – Talk to others to learn. Obviously you want to learn from people who have had success, but just like with poker, any discussion about personal finance can lead to beneficial lessons. You can see what others are doing right or wrong and take something from that. Seeing things from a different perspective may allow you to realize mistakes you’re making that you wouldn’t have seen otherwise.
Return on investment – How much are you putting in and how much are you getting back? See if the risk is worth the reward before making a decision. Try and determine the expected value for every play. This means asking yourself, “if I make this move, will the outcome be a positive one?”
Goals and Control – Always have your goals in mind when making a decision. It may not seem like a big deal when you stray from your goals once or twice, but these bad decisions add up and take you further away from ultimately achieving your goals. Always be in control of your personal finances. Don’t leave it up to chance. Poker becomes gambling when you’re acting on impulses, leaving the outcome up to chance instead of calculating odds and making the most optimal decision. Remember to play the cards, don’t let the cards play you.
Keep good records and analyze them – There are many different winning styles. If you think you’re using a winning style, stick with it and play by your rules. If you’re not yielding the results you like, then you might need to do some tweaking. Go out, learn more, and use helpful resources and tools to yield better results and add to your repertoire. Make good observations and keep good notes. One thing that separates a winning poker player from a losing one is the work you do away from the table. Go over critical hands you’ve played and look at what you did right and what you did wrong. You will learn the most from the hands you’ve lost because you want to prevent hand outcomes like that in the future. Don’t let winning cover up the mistakes you’ve made. Look at your decisions and judge success on whether you made the most optimal decision, not on what the results were. The best thing to reference is your memory. Getting better at the table means taking the time away from the table to analyze your hands and be more prepared for the next session.
Money management – In poker, once you go broke the game is over. You never want this to happen with personal finances. If your cash flow is a little tighter than before, then you have to cut back on expenses. If you’re not adjusting your lifestyle when your income has lessened, then you’re dealing too much in chance and risk. Eventually this will catch up with you and affect you in a negative way.
Make profitable decisions – Do not obsess over your short term results. Sometimes you will get lucky and sometimes you will get very unlucky. But if you’re making the right decisions, over the long term you’ll reap the benefits.
Experience – Like with all things, practicing and gaining experience are your best tools. But don’t waste the hours you put in, always go about life with desire to learn.
Acceptance - Sometimes no matter what you do, things are just not going to go your way. This is true for all aspects of life. Before going into anything, you must accept the things that are out of your control. Don’t get bent out of shape if you blow a tire on the freeway and fixing it was an unexpected expense. If you’re making proper financial decisions and give yourself a good buffer, you’re prepared for financial hits like this. If you let things roll off your back, you will avoid letting the aspects that are out of your control become your obsession, just like that devastating card hitting the river. It is already affecting your wallet, don’t let it affect your mind and its ability to make future proper financial decisions as well. When you accept things that are out of your control, you free yourself.
To take the gambling out of personal finances, you have to be able to adapt. Smart players will always be winning players, but the style that may have worked several years ago may not work today. It is the same with finance. You have to look at all aspects of the current climate and use your intelligence to make the appropriate financial decisions. I’m just beginning to take my personal finances and money management seriously, but just like poker, I want to make sure that I have the right mindset and ideology before diving in. I am confident that with time, I can become a winner when it comes to personal finance.
