Recently, developing a good financial strategy has become a seemingly gargantuan task. Pandemic period layoffs and reductions in hours, coupled with rising prices on everything from utilities to food, mean it can be stressful to work out a solid financial plan in a time of such flux. Financial strategizing can be learned from book smarts – particularly for those young enough not to have direct experience of such parlous times – or possibly from something external that can be related back. While we must make it clear that poker should not be considered an investment activity, the money management involved in the game may furnish a useful microcosm to resource allocation and budgeting on a larger scale.
Compare providers
Poker players – whether in a casino or online – will spend a reasonable amount of time deciding where they’d like to play. A poker website may have low rakeback fees, but if its security looks questionable, players may be risking deposits made. By the same token, investors must choose wisely as to who they entrust with financial assets. How long have they been established? How are their funds performing? In both cases, it can pay to do some homework.
Learn the basics
Before entering into a poker game, or a financial strategy, it’s important to know what’s what. How much are we bringing to the table? What’s our appetite for risk, and how much of our bankroll are we prepared to lose in worst case scenarios? How much importance should we place on keeping records of our transactions? The answer to both cases is plenty, because an informed player or investor has a better chance of being a successful player or investor.
Stay flexible
In poker, a compulsory bet – a blind – must be made by at least two players to start off each hand. Much like some months will have more expenses than others – when a big ticket item like car insurance is due or when holidays and travel need to be accounted for ¬– players can work out that if it’s their turn to make the blind, that may be the time to try to extract maximum value from the hand, given they’re compelled to spend. However, that may lead to missing other opportunities at different times in the game. If one sees value in making a move – whether that’s in poker or the market – timing can often be everything.
Reinvest gains
In the same way as we wouldn’t withdraw interest from a plan each year (as inflation would mean we’re losing money by only holding an initial lodgment), but rather let it grow as part of the portfolio going forward, part of managing your bankroll in poker is employing restraint with your winnings. If one thinks of a player’s initial bankroll as an investment, then one can appreciate that caution should be exercised when moving up in stakes. It’s often a better idea to do so gradually as one’s game improves, rather than hitting the high value tables with proceeds and risk losing it all to bigger players. In much the same way, if one has budgeted a fairly conservative investment plan, it could be foolhardy to take steady gains and plunge them into high risk stocks or markets.
Stay calm
Poker and finance are primarily exercises in mathematics. In the same way a poker player wouldn’t play a hand of 2 and 10 because their birthday was October 2nd, it’s not a great idea to base financial strategy on emotional ties. While humans are endlessly complex, numbers are simple, so don’t overreact and base decisions on logical analysis. To repeat, poker shouldn’t be taken as an investment activity in itself, but some knowledge of the game may help in financial strategizing. Reading the table becomes reading the market. Knowing when to go big and when to back off is a valuable skill. Maintaining discipline and not letting bad decisions in difficult times derail the whole plan is paramount.