“Champions keep playing until they get it right.” ― Billie Jean King
March Madness is upon us. It’s a time when anybody who is even remotely a sports fan gets glued to the spectacle of promising young athletes engaged in the drama of sudden elimination. One lost game can’t be made up by the rest of a brilliant season. One lost game is, well, lights out.
That got me to thinking about the similarities between managing money in our lives and sports. Take basketball, for example. In order to be a great basketball player, you need a certain physical stature, but most importantly, you need to have great skills – running, dribbling, shooting, passing, stamina, hand-eye coordination, etc. To learn those skills, young players run drills, starting with the simple things and working up to the more complex. But above everything else, a champion player needs to transcend the drills and practice playing the game itself. Mastering a drill might win you a contest, but it won’t make you a great player – because great players have learned how to integrate the individual skills that they have learned and how to apply them creatively in the context of a real, live game. That integration and application happen on a plane above the one where mere drills reside.
It turns out that the same general principal applies to managing our financial lives.
Keep Your Eye on the Endgame
What does it mean to integrate individual elements – ‘money drills’ – into one’s larger game of financial management? It means understanding that everything in the game is important only in relation to something else. Money drills can be useful if they support your long-term goals and fit into your overall strategy. If they don’t, then all they do is give you a false sense of virtue and distract you from what is truly important.
In a world where people have very limited time to attend to non-essentials, working on the most important things is critical. Do you love to practice money drills that save you a buck? That’s great if your biggest problem is that you’re trying to live on a fixed income and have no options to improve your cash flow. But if you’re an affluent professional, indulging in drills to save small dollars is probably a less-than-optimal use of your time and attention. Instead, you’re probably better off improving your overall tax efficiency, protecting yourself against undue risk, or simplifying your financial structure in order to enable more automated and therefore more efficient management of your finances.
Integration and Application Are Difficult
In most cases, people who allow money drills to substitute for really getting into the game of holistically managing their money do so for one of two reasons. The first is that they simply don’t know that there’s a higher plane that they can, and should, be playing on. The credit monitoring industry, for example, spends billions trying to convince consumers that financial success is to be achieved by ‘managing’ their credit score. Indeed, sellers of financial products of all kinds present their own products as the key to one’s financial success and security. But no single product will ever make you successful. Financial success results from a dynamic combination of vision, resources, personal practices, emotional engagement, and skill. If you’re struggling to see how this could work for you, talk to your personal financial planner. Helping clients integrate all the pieces of their personal financial lives is exactly what we do.
The second reason that people stay with money drills is that they would have to overcome emotional barriers in order to deal with money on a higher plane. Some people, for example, grow up believing that money is bad, and that – by extension – anybody who has or consciously manages their money is also bad. Such individuals don’t allow themselves to deal with money, except in very narrow terms, because to do so would be tantamount to seeing themselves as bad. Even in such cases, however, I believe that progress – or at least an evolution of one’s perspective – is possible. After all, different people play basketball for different reasons. Some are intensely competitive, want to make lots of money, or yearn to be famous. Yet others play for the sheer joy of the game or may simply want exercise and comradery. And just as you can play a basketball with different goals in mind, so too can you manage your money holistically with a perspective that is consistent with your individual goals and values.