Daunting as it may be, your financial decisions can be formative to your future. Many things can go wrong, but making financial decisions is a matter of being strategic and pursuing the best decision possible.
In many ways, this makes it similar to poker, which requires you to be flexible and consider all your circumstances. Like poker, financial decisions require keeping a level head, managing stress, and having good coping mechanisms. That’s why some of the best financial tips can come from poker players.
Here are some valuable insights you should hear.
Don’t let social conditioning affect your strategy
While men are taught to be go-getters and women are cautioned to make conservative decisions, you shouldn’t allow your social conditioning to limit your strategies and performance. This is what Maria Konnikova learned in her own journey as a poker pro. She describes this in detail in her book, ‘The Biggest Bluff: How I Learned to Pay Attention, Master Myself, and Win’ — one of the best poker books you can read.
Initially reluctant to take risks in online poker, Konnikova realized that her defensiveness was due to her upbringing, which frowns upon aggressive women. In approaching live poker games, she realized that she had to remedy this. Instead of folding, she bet according to the conditions of the game. She began to strategize more critically. Similarly, when it comes to finances, you should adjust your strategy according to the conditions you are presented with rather than sticking to your unconscious biases. Like Konnikova, this can result in more frequent and bigger wins.
Weigh decisions based on net benefit
Making big financial decisions can often be paralyzing. This is because you have to weigh the opportunity costs, or potential benefits, you miss when choosing one alternative over the other. Professional poker player Chris Sparks, the author of ‘Experiment Without Limits,’ states that you can overcome this paralysis by considering not benefit but net benefit.
He explains that all actions have benefits, but not all have the greatest total benefits. When playing a live poker game, you have to make choices that will serve as the biggest investment. Since you can’t play at every table, you must choose the best one to sit at. In this case, it’s not a matter of time management but pursuing the course with the highest net benefit. Similarly, when making investments, you should choose not only what will yield high returns but strategize based on what will yield the greatest net benefit based on your current choices.
Go for the long game
When you have made big or consecutive successes, you must not be complacent. Arshad “Sheddy” Siddiqui, a South Florida-based poker player, explains that you should manage your bankroll to ensure you can sustain the stakes you want to play. Just like poker, your investments are a long game. While you may feel confident to go for higher stakes than usual, you should be tactical in your decisions.
Just as you would spread your bets over several tables in poker, you should approach your finances with the same safety measures. Make sure that you’re not playing a game so big it becomes intimidating or stakes so low you won’t be getting value for your time. Instead, manage your bankroll and know when you need to shift your tactics to make your finances sustainable.
Many factors can affect your finances, but these poker players exhibit how valuable strategy can be in making good choices.
If you enjoyed this piece, you might alos find our look at basic accountancy tips useful as well.