Financial Basketball - From Rags to Reasonable

Ladies and gentleman… today is the greatest day of the year… I know we’ve had some great ones so far, but this one trumps them all.

It’s the opening of the NBA season. That’s right, basketball is BACK!!!

Now, I’m a huge basketball fan, but I’m an absolutely terrible basketball player. I can’t do anything.

So I pour all of my energy into being a fan. And because I’ve been absorbing all the pre-season podcasts and ‘crazy prediction’ posts,  my brain has melded basketball in with all my personal finance thinking and created a truly ungodly metaphor.

Personal finance as the good old game of basketball…

And honestly, it’s less of a stretch that you might think (so bear with me).

There are two ways you can win a basketball game… by your offence or by your defence (there’s technically a third way, but it has to do with being Lebron James… so for most of us that’s probably not a realistic goal).

And on the financial side of the metaphor there are two ways you can win your money battle and finally fix those finances: earn more… or spend less.

So what kind of a money player are  you? 

The played out genius of the offensive wizard

It doesn’t matter the sport… we love people who score points!

Basketball is no different. We’ll forgive someone for giving up an easy drive to the basket… if they manage to average 30 a game *cough* James Harden *cough*.

I think kids will always dream about being the guy who does the ‘dunking on’ rather than the person who blocks the shot.

And who can argue with the theory? More points give you a better chance of winning the game.

It’s the same thing with ‘money players’.

Great offensive money players know how to make money. They’re all about expanding their net worths, and looking for their best chance at a big return. Some of them are super risky, high volume ‘scorers’… but who can argue with the results?

Maybe it ends up in a life of luxury, or maybe just a life of never having to worry about ‘enough money’ ever again. Either way, having more money may not solve all your problems, but it definitely does give you more choices and you can’t deny it sounds like a great way to ‘win’.

The rise of the defensive juggernaut

Defense… it’s fun to chant when you’re at the game, but until recently it hasn’t had a lot of super fans.

But if there’s anything that players like Marc Gasol and Tony Allen have taught us … it’s that you really can dominate the game with your defence.

Great defensive teams know that they don’t have to score 120 points to win, they just have to make sure that the other team doesn’t score at all.

It’s not the sexiest way to win, but it works… so who cares.

Defensive money players aren’t people who don’t take risks… they’re those who have mastered the art of spending less. It’s not about creating a ton of money, it’s about making the most of the money that you do have, and making sure you’re getting every little bit out of it.

And just like the NBA, I think the financial world is starting to pay more attention to the money players who want to play with less – Like millennials who are more interested in building a fulfilling life than one with a huge net worth, and people who write about minimalism and cutting back…people who know that you don’t need a lot of money… to have a pretty incredible life.

The GOAT: mastering a two-way game

But if you want to play for the title of GOAT (Greatest Of All Time) these days, you can’t be a specialist. You need to master both on the floor.

Michael Jordan could score at will, but also destroy you defensively; Lebron James was the same way…

They knew that if they wanted to win, it wasn’t enough just to score, or to stop… they needed it all.

In life, it’s a bit harder

There’s the odd clear great like Warren Buffet: killer offensively and yet still lives in the same house that he bought decades ago.

We have lots of stats for measuring an NBA player… but money players are a bit harder to quantify. You can’t just look at their net worth, and yet it’s impossible to measure something like satisfaction… so I think we often default to idolizing the offensive players, because money is just an easier measuring stick.

But here’s one thing that’s true…

You don’t have to be great to play the game

The NBA is a collection of 300 of the greatest athletes on the planet. Even the worst player in the NBA is absolutely incredible at what they do.

In the financial game… it’s a bit different.

We all play.

Whether you want to or not, you’re playing the game. You may just be sitting on the edge of the court picking your nose, or attempting to dunk (even though you’re only 5 feet tall).

First of all… you shouldn’t be dunking if you’re 5 feet tall. That’s not your game. Secondly… the only sure way to lose… is not to play at all.

But don’t worry, there are a lot of ways to play. What are your strengths? Do you love to go out there and hustle? Or are you someone who likes to get the best bang for every buck?

You don’t need to be an all time great to do really well at the financial game, but I do think that no matter where you fit on the offence – defence spectrum… you need to take a lesson from the greats and remember that balance is key. You can earn all the money in the world, but if you spend it all… you’re going to be in a heap of financial trouble. On the flip side, you can be the most frugal spender there’s ever been… but you still need to be earning something, or you’ll have nothing to be frugal with.

Don’t be ashamed of how you play your game, but play it… and play it hard. Pick up the fundamentals like budgeting and investing, apply a big chunk of discipline and energy, and you’ll have a really good chance of coming out ahead.

You may never hold up the Larry O’Brian trophy… but that doesn’t mean you won’t end up a champion.

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