The game that is financial planning

(Part 1)

By the time I finished this article, San Mig Coffee has already won its championship and the different nations would be engrossed in the World Cup. Of course, Brazil’s loss from Germany still has its historical overhang, and Argentina is grinning from ear to ear.

For sports teams, winning is the name of the game: they do not play to lose. Thus, much time and effort are spent training, making strategies, studying the opponents, practicing, and perfecting the game.

And the one who wins is usually the most prepared, most disciplined, and one who clocked in the most effort whether physically or mentally.

Yet a lot can be learned about personal finance just by looking at games and how they are won. In fact, they are very much applicable and will yield the same results: winning. Here they are:

Have the end in mind

The winning team always has the ending in mind: victory. Whether it is getting the highest score or fending off the opponent, the winning team and their coach are very clear in what they want and how they want the game to end.

The same is true for personal finance: having the end scenario in mind, like the lifestyle desired or the financial freedom is the key toward achieving them.

Set goals to achieve the end-game

Having the end-game is one thing, but setting specific goals to get to that is another. While the end-game is a scenario or an event (for example, a “comfortable lifestyle” or “a sufficient retirement fund”), goals lead to them (like “having a net income of X pesos or “investing X amount regularly for my retirement fund”).

Know your opponents

Expert players and coaches study their opponents: their style, their strengths, their weaknesses. With personal finance, the opponents would be inflation, volatile markets, risks, inefficient costs, uncertainties, and even oneself (like the tendency to overspend, living beyond one’s means, etc.). Knowing these opponents and how to best overcome them will greatly enhance the chance for success.

Have your strategies

Knowing the opponent is only the beginning. After knowing the opponent, the team and the coach should craft ways on how to best counter them.

Be disciplined

Sports analysts credited the discipline of Germany as the key in winning against Brazil. The best player and the best team are disciplined, and they will defeat the undisciplined like the strike of a bowling bowl. In order to achieve the goal, the team has to have the discipline to train, to follow the game plan, and follow the coach. Without these, the team goes haywire and would be chaotic during the game.

Just like in personal finance, having the discipline to do regular investments, living within one’s means, saving diligently and controlling the urge to buy wants, and following a financial plan will ensure that the financial goals shall be achieved.

 

I shall be writing on the other lessons on the second part of this article. – Rappler.com

 

 

 

 

 

Rienzie is also an accredited investment fiduciary of Pennsylvania-based fi360 and an international member of the Financial Planning Association, the largest association of financial planners in the US. You may reach Rienzie at rienzie.biolena@gmail.com, his Facebook account or Twitter @rbiolena.