One sport that has plenty of analogies for personal finance is football. You might wonder what football and finance have in common, but there is plenty of overlap between the two. By keeping these ideas in mind, you’ll be more likely to succeed financially.
Take advantage of the first half
There are many times when a football team will win a game in the first half. In personal finance, it’s possible to win in the first half of life. Because of compounding, saving relatively small amounts in your 20s and 30s will allow you to win with money in the second half of your life.
If you haven’t started saving for the future in the first half of your life, don’t give up. Don’t quit at halftime. It’s still possible to come up with a great nest egg by staying focused on the goal of winning with money.
You might get booed
A draw on third-and-20 is a very conservative play. Fans who want to see the coach go for a first down with an aggressive play call will frequently boo. In order to win with money, you’ll need to be conservative with your spending.
This might mean staying in on the weekends when your friends decide to go out and blow a few Benjamins on high-priced drinks. Your friends might laugh at you and question your strategy. That’s fine. Let them boo you. You’ll be more likely to have success with your finances by staying conservative with your spending.
In addition to staying conservative with your play calling, you’ll want to focus on defense. This means that you’ll need to have adequate insurance protection. If you own a home, you’ll need home insurance coverage. Those who rent will want insurance to protect their possessions.
Health insurance is a necessity for taking care of catastrophic medical expenses. Additionally, if you have any dependents, you’ll want to purchase life insurance to protect them. Maintaining adequate insurance is a conservative move, but protecting against major risks is necessary for successful financial planning.
Stick with the fundamentals
There are some fundamentals that are stressed during a football season. Proper blocking and proper tackling are not as exciting as a 90-yard touchdown run, but they are usually necessary for making the 90-yard touchdown run happen.
Those who focus on the fundamentals of personal finance will prepare to win with money. The fundamentals of personal finance include things like budgets, emergency funds and 401(k) plans. Nailing the fundamentals will make success more likely.
Follow the game plan
Before going into a game, successful coaches have a plan for attacking the weaknesses of their opponents. They also play toward their strengths. Bill Belichick has used effective game planning to win six Super Bowls. In personal finance, a good plan involves saving 15-20% of your annual income.
This might be difficult to keep up during a down year in the stock market. Don’t give up and change the plan. Those who are successful with personal finance come up with a solid plan, and they stick to it. It doesn’t have to be fancy, but it has to work over the long haul. Stashing money away in an investment account over time is a sure-fire way to win with money.
While it might seem that football and personal finance have little in common, there are several areas in which the two are analogous. By coming up with a game plan for personal finance, it’s possible to win with money.
Getting started early is key, and playing defense with adequate insurance can protect the investments you’ve made over a lifetime of good decisions.