In high school, I played two sports that I classify as psychological opposites. I ran (distance), and I played tennis. I was a much more successful runner (as is evidenced by the fact that this was my collegiate sport), but I liked to play tennis a lot more (I think if I would have taken a year off after high school to only focus on tennis I probably could have played college tennis instead).
The most common links between personal finance and sport liken the appropriate financial mindset to the mindset of a distance runner (or a generically fit person). Which is to say, that the "competition" is mental, that the primary person you should be trying to beat is yourself, pacing is important, over training and under training are both going to hurt you, etc. To many people, the parallels between running and personal finance are obvious.
Actually the parallels are obvious to me too, but I hate running psychology. In a race, there is only one winner, and most of the time it wasn't me (by college it was never me). I hated walking up to the starting line and realizing that my best would not be good enough to win.
I ran with everything I had within me. I relied on my training, and I would go for broke at the end. Sometimes, I would vomit on the end line. When most runners crossed the finish line they looked at their wrist to check their time. I didn't run with a watch. A watch couldn't tell me what I already knew. I hadn't won.
One might expect that my attitude towards racing might improve over time, but it never did. If this is my attitude towards running, I think it's fair to say that if I view life or finances as a long race, then I will hate the journey and be disappointed by the outcome.
Can personal finance be a little more like tennis?
If you've got a runner's mindset, then personal finance can be a race. However, if you change your mindset, personal finance can be whatever you want it to be. And I choose a tennis match.
Aside from the fact that I love thinking about tennis, I see many advantages to approaching your finances from the tennis player's mindset as opposed to the racer's mindset.
The Match isn't over until it's over
Tennis is not a timed event, and as such there is no way that you can just coast to the end of the match. You have to win the last two points to win the match. Similarly, in finance, you can easily blow a huge lead by attempting to rest on your past laurels. Life is complex, and it continues to come at you. Even if you've reached financial independence, lifestyle inflation or foolish investing (not to mention a black swan event) could undo everything you've worked to achieve. You will need to continue to work on your finances until you die.
On the other hand, no matter how far behind you are, you can always make a comeback. In Tennis, it's possible to come back from a match point, and fight for a victory. It's not easy to do this. You not only have to overcome your opponent, you have to continue to believe that you can win.
In personal finance, I believe that as long as you are fighting to improve your situation, you can win. I will make one note, and say that in tennis, it's considered cheating to do things like sucker punch your opponent in the face, whereas life can kick you in the groin, and nobody calls that cheating. What's worse, life can kick you repeatedly while your down, and then you have no choice but to get up and play again. I'm not sure what to do about that situation. You're welcome for all this inspiration.
Not every point is worth fighting for
Another parallel that I see between finance and tennis is that not every point is worth fighting for. If you've ever watched a tennis match, the moments you remember most are the points where a player scraps for every ball, and wins on an amazing shot. Here's a great example of that.
However, if you've ever played a tennis match, you will know that you do not in fact fight for every single ball. You have to save your fight for the most important points, or you will exhaust yourself even if you are a very physically fit player. I've even strategically lost a point where my opponent got me running. I knew that if I lost the point within a 1-2 shots, I could maintain my momentum, whereas a long point with a decisive "winner" of a shot can yield a momentum shift.
This is absolutely true in personal finance too. There are points where its worthwhile to fight to win, but can you imagine trying to fight every single battle? Do you pursue every single money making opportunity that you can think of? Do you cut every expense to the bare bones? Sometimes, it's just not worth it. The most important thing is stringing together enough wins in a row that you are in control of the match, so you can eventually win.
A single moment can change the momentum
Oftentimes, in a close tennis match, a player can actually feel the momentum shift in a single moment. Sometimes this happens when your opponent makes a mental error and hits the ball out; sometimes, you hit an excellent shot, and you suddenly feel like you can't miss. Sometimes you get lucky, and your opponent double faults, or hits a ball that would have gone out. Whatever happened, you suddenly have the opportunity to take mental control of the game.
Sometimes, it's not even a good thing that happens, it's just the motivation suddenly hits you, and you know that you can win.
This is absolutely true in personal finance too. You might feel like your life is spiraling out of control, when you suddenly catch the tiniest break, and all of a sudden you believe you can win again. Or sometimes, you just use your anger to fuel your debt payoff or your job exit strategy, or whatever goal you're working towards.
At the moment of the momentum shift (what I call my personal finance moment), it's not about your income, or your net worth, or any other numeric representation of your financial life. It's about the feeling that when you put in the effort, you will come out on top.
Unfortunately, the reverse momentum shift can happen at any time too. Suddenly, no matter what the scoreboard says, you feel that you are doomed to fail. This is not a circumstance problem, but a mindset problem (and a self-fulfilling prophesy problem). It's easy to give up when you've lost the momentum, and it's hard to fight to get it back.
My strategy in tennis to regain the momentum in tennis was to chase down every single ball, and to hit every ball cross court until I saw a clear opportunity to win. This is my personal finance strategy too. I work hard to create my own luck, but I also focus on making safe decisions. I take zero risk (hitting cross court), unless I feel nearly certain that it will pay off
When you feel desperate, it's easy to swing like you've got nothing to lose, but that's a sure strategy to let your anger get the best of you. A safe strategy of "not losing" will get you to the point where later on you can focus on winning again.
Strategy trumps plans
In tennis, it's next to impossible to plan a point much less an entire match. Sometimes you can effectively map out three or even four shots, but usually a plan goes awry within one or two shots. However, you can stick with the same strategy for an entire match and win, even if your opponent doesn't cooperate with any of your plans.
An effective strategy simply maps out the best possible method for you to create opportunities to win points, games and sets given your strengths and your opponent's weaknesses.
In personal finance, the best laid plans often go awry. The key to success isn't getting every single situation to work out the way you want it to, it's to continue finding opportunities that will yield a high probability of success (for you), and then taking advantage of those opportunities. Situations might break lucky or unlucky for you, but sticking to your strategy (this is our agile financial strategy) is a lot more likely to yield a win than going without a strategy or trying to adhere too rigidly to a plan.
What mindset do you use when you approach finances?
I'm a wife, a mom, an employee, and a personal finance nerd who is devoted to spreadsheeting my way through life.