What the Super Bowl Can Teach You About Money
On Sunday, Peyton Manning will take the field with his Denver Bronco teammates for what could be his last game in the National Football League. The Broncos will be taking on the high-flying Carolina Panthers and the even more electrifying Cam Newton. It will be the ultimate clash of two opposites. Youthful exuberance meets veteran experience. Athleticism and raw talent meets one of (if not) the greatest quarterbacks the NFL has ever seen.
So what does the Super Bowl of all things have to do with money for young professionals, and what lessons can it teach us about how to best manage our own money?
Surprisingly, a lot.
The Role of Luck and Process in the NFL
Sports are a world where luck plays a role in determining outcomes from play to play or, in some circumstances, from game to game. However, it doesn’t determine outcomes over the course of a season or the course of a career. That is ultimately reserved for skill, which is created in large part by following a consistent, long-term process of improvement.
The takeaway, the only way to combat luck is to consistently and diligently stick to a process. Ultimately, that is the only way to combat the unknown.
Following a diligent process of practicing and preparing for games is an attempt to increase the chances of winning on any given day. Teams are preparing themselves to execute in the short-term to diminish the role that luck plays within a game.
Connecting the Dots to Your Finances
When it comes to young professional’s money, many aspects cannot be controlled from day to day. Take your investments for example. You have zero control over what the U.S. stock market does. The same goes for international stocks and bonds.
It’s also safe to say that on any given day you have limited control over what you spend. Think no further then when the annoying empty light on your car comes on. No control. Or when you drop your phone down the steps and you’re forced to buy a new one. Again, no control. These are all examples of how difficult it can be to control your finances in the very immediate short-term.
How to Create a Process around Your Money
The point is not simply to throw your hands up in despair, but rather to recognize the importance of creating a process and structure that will pay off over the long-term. Just like the Broncos and Panthers will combat many of the unknowns on Super Bowl Sunday by following a diligent process of preparation to give themselves the best odds of success.
What follows is a quick breakdown of a few simple steps that can be used to help you create a process around your money. Tips that can help you over the long-run, if repeated consistently, achieve your goals.
Step 1: Get Clear on Your Why
There are few things capable of delaying your ability to follow a process more than your inability to get clear on your “why.” Why do you want to save? Is it so you can afford to spend more time with loved ones or is it because you want to be able to travel?
Try a simple exercise known as the “Five Whys.” Start by defining a goal. It might be saving more money or becoming adequately insured. Then ask and answer for yourself repeatedly “why,” “why,” “why,” “why,” and “why?” This clarity around “why” helps create focus around why it is that the process exist and what you are actually working towards.
Step 2: Define Your Process
Athletes are notorious for being superstitious, all because they want to execute the process to the point of almost OCD. Think “right shoe first, tap foot twice, then left shoe.” Whatever the process, it is there to create the best opportunity for success to occur. Finances are no different.
Once you’ve defined your why, create a process to give yourself the best chances for success. Maybe that process is to consistently save $100/month that will help you achieve the goal of a big family trip. In the short-term, that money invested conservatively in the market can easily go up or down, but if you consistently save over an extended period of time you dramatically increase the likelihood of achieving your goal.
Step 3: Automate Your Process
To define your process is to take a giant leap in the right direction, but ultimately it comes down to your ability to execute and follow the process consistently. Thankfully, in today’s world of technology, it is becoming increasingly easy to execute on money processes.
To ensure that you are giving yourself the best chance of “winning,” automating your process can be extremely effective. Take for example, the concept of rebalancing your portfolio on a quarterly basis. Rebalancing forces you to sell high and buy low, which works to help keep your investment allocation in-line with what you originally intended it to be.
Many investment platforms can now do this automatically (including Lifewise Invest) which helps individuals keep their allocation in-line with what the process dictated at the beginning.
Step 4: Review Your Process
Lastly, like any good football team it is important to review your process. Football teams spends literally hundreds, if not thousands, of hours each season watching game tape and tweaking their process. They are in desperate pursuit of the process that will give them the greatest chances of success.
As you work on reviewing your process, try setting a reminder on your phone to take ten minutes each week to review. Even amidst your busy life as a young professional, just find a way to make the time to review your process for budgeting, saving, investing and each aspect of your finances. Sticking to and refining the process over the long-term will increase your chances for success.
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Providing the perfect blend of powerful technology and human guidance, Lifewise is geared toward young professionals searching for a better way to make wise choices and sound financial decisions. Backed by BerganKDV Wealth Management, Lifewise is supported by a team of CPAs, CFPs and CFAs who stand ready to guide you through every financial challenge and windfall.
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