(Guest Post by Stu at Pennywise 2 Pennyworth)
The Miami Heat have already had an up and down year. They struggled to start the season, and of late have come to dominate their opponents. I’ve been following them a little more closely ever since Lebron uttered the words “I’m takin’ my talents to South Beach.” I knew it would be an entertaining ride watching three superstars try to mesh their individual skills in the team oriented sport that is professional basketball.
Now that it’s the mid-point of the season, I’ve had some time to reflect on their early struggles and recent success. Early on in the season they were still feeling themselves out and I saw that they were definitely still used to “being the man” on their own teams. Now it looks as if they’ve figured out how to work together.
As I was thinking, it occurred to me that we (those of us who struggle with our finances) could learn a lot from the Miami Heat this season. A wise man once said, “sports are a metaphor for life,” so as basketball goes, so does your finances (I think it might have been former Vice President Cheney who said, about the slow progress in Afghanistan, “”It’s sometimes 3 yards and a cloud of dust. There’s no home run…ur, touchdown”).
In other words, a successful team should exhibit the same qualities that a financially successful person would, if we look close enough, that is.
So what can we learn from the struggling Miami Heat basketball team?
Plenty.
1) You can’t just freestyle with your budget and go “one-on-one” with your finances. What does that mean? You’ve got to have a written budget or spending plan, telling every penny of your income what to do. You have got to have some discipline here too. The budget is your game plan month in and month out, so once you’ve created something that works for you, stick to it.
2) No matter how good your individual talent is, you have to work as a team in order to win.. If you are married, or share expenses with someone, you’ve got to work together or even the best game plans won’t work. Having secret spending habits, or keeping credit card purchases from your partner, will spell disaster sooner or later…and not just for your finances.
3) You can’t just go out and “get your own to pad your stats” and expect to win (or make your teammates happy). Once personal finance becomes all about “you,” you’ve lost sight of the big picture. Yes, you should keep track of your progress and make sure you spend within your means. But don’t lose sight of the big picture.
Sticking to a budget, living frugally, and saving money consistently makes the future more sustainable for everyone. Cultivating and honing your frugality will lessen your impact on the planet’s resources. Saving consistently for your own future will lessen your impact on financial resources of future generations. Its not all about “your stats” or “getting yours,” its about living a more sustainable life and that benefits everyone.
4) Making progress takes time, especially if you have new teammates. If you are just starting to track your spending, making a budget for the first time, or figuring out just how much damage you’ve done by borrowing money, seeing progress takes time and you are likely to fall down in the beginning.
In other words, you can’t expect immediate results or to be “good” at the game of personal finance right away. Especially if you are $50,000 in debt and only make $30,000 a year, have never tracked your spending, or can’t resist the daily latte. Don’t give up. Keep plugging away at your debt until you’ve conquered it. Work harder, two jobs if that’s what it takes, just keep at it. If budgeting is your problem, keep refining yours it until it works for you. The point is to keep going until you succeed.
5) Finally, its never too late to get back on track. The Miami Heat may have struggled early in the season, but now that its mid-season they’ve gotten it together and by the time the playoffs begin they will be among the favorites to win it all.
If you are struggling with your finances right now and feel hopeless, just remember everyone has to start somewhere. Whether you are $500,000 in debt or just inherited $500,000, it’s not where you start, it’s where you finish. So if you are frustrated, hopeless, or just don’t know where to begin…
just start. Too often we become paralyzed to start something because of the enormity of the task. Just by starting though, you can begin to find your direction.
6) *Bonus lesson*: You’ve got to play great defense. No matter how good your offense is (your ability to create an income), you’ve got to play good defense to win. Good defense means watching your expenses, eliminating unnecessary purchases (defined as superfluous purchases that don’t give you any real personal value or fulfillment), and saving for your future while meeting your current responsibilities.
There was never any need to panic over the Heat’s early struggles. They always had the tools to be a great team and succeed.
I suspect too, that you have the tools to succeed financially and you can, and will, succeed if you use these 5 principles in your own life. Stay in the game and don’t give up, and eventually you too will win financially.
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Guest post by Stu at Pennywise2Pennyworth.com — a teacher who decided to blog about personal finance after trying to teach high schoolers how to become millionaires… and decided he’d better up his game to make personal finance more interesting. He wants to help you to grow your financial worth through wise decisions and have fun while you do it. Check him out at pennywise2pennyworth.com.
(Photo by StuSeeger)
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Team work is extremely important in finance. Your partner can either help you or blow you out of the water. You gotta be picky and get a good team mate so the team can make progress.
Great Defense always beat Great Offense as we’ve seen from all the big games. Especially in the championship game where the team has a long time to prepare. This is especially true in personal finance. No matter how much you make, if you spend it all then you will never be able to build up your net worth. Of course it’s best to have both great offense and defense. :)
I agree with retirebyforty, team work with the right team mate is the end all, be all of finances. If my husband and I didn’t agree on our long-term goals, all the budgeting in the world couldn’t help me. :-)
@ Retirebyforty and Budgeting in the Fun Stuff:
Being in the same page should be rule numero uno, the rest doesn’t matter if your partner doesn’t share the same goals or if your not on the same page to reach your goals.
There’s a reason divorce rates are so high in our country and the number one argument revolves around $$. It’s important to be on the same page financially.
Stu
I like the last one that you have to play defense. This is a lesson that is going to make the Heat learn the hard way.
#2 is definitely crucial. If you want to win, it has to be a team effort. There’s no I in team, and “me” is spelled backwards :)
I completely agree on the teamwork aspect. My wife and I have always dealt with financial decisions as a team.
Persistence is also key. Learning to manage money is a skill, just like basketball and piano are skills. You don’t get good at it without practice. You don’t get good at it by giving up when something doesn’t go your way.
The one thing I do take issue with is the idea that you need to have a written budget and manage every penny you make always and forever. The amount of detail you need in a budget is in direct proportion to how close your income and expenses are as well as your experience in managing finances. Those with less breathing room or less experience will need much more detail than those with lots of breathing room and a long track record of successful financial management.
@ Donny Gamble: Totally agree about the importance of defense in both basketball and personal finances.
@ 20 and Engaged: Congrats on your engagement, sounds like you and your future spouse are starting out on the same page and will make great teammates. ;)
@ MyMoneyMess: You make a valid point about budgets, my friend. As I have gained more experience with my own finances and I learn more and more what I am capable of doing within my budget or spending plan, I find I put less and less detail into my budgets. They are now more like loose plans for my money than anything else. Detailed budgets are much more useful for those just starting out or for those who don’t have a lot of breathing room; perhaps that’s why so many people start budgets, just to give them up within a short amount of time.
I guess to take the basketball analogy further, it’s okay to deviate from the game plan if you’ve got the skills and confidence to do so, but just make sure you know the how to do it within the framework of the game plan.
Stu-
I agree with most of your points, especially about writing everything down, recognizing that it takes time, and acknowledging that it’s never too late to start! I never believed I had to track every penny in order to keep a good budget — but it works!
I just started budgeting this year with the help of Mint.com (You can read about my first attempts here… http://creditshout.com/tracking-debt-and-managing-my-budget-with-mint-com-month-1/ if you’re interested) and the sense of security I’ve achieved, just knowing where my money is going helps me now in every area of life!
I second the notion that you don’t have to budget for every single penny all the time. That’s what drives most people crazy enough to just stop doing it altogether. Should you track it all in the beginning until you get a good grasp of your finances though? Absolutely. Then once you start killin’ it you can round up or categorize more since you’re on track.
This was a great one Stu – thx again for guest posting while I was gone :)