A previous article on our site revealed that nearly 31% of Australians’ household finances had worsened. As a result consumer spending has declined and more people are looking for opportunities to save money. In fact, research showed that the average Australian adult has $39,439 stashed away (as at Aug 2022), a 75% increase from six months prior. High inflation and increasing interest rates have driven consumers to be more financially conscious.
Seemingly unconnected, poker has become very popular worldwide. Surprisingly, playing a game of poker can teach individuals how to manage their personal funds to help them achieve a financially stable future. Strategy and tactics used in poker are skills that can be transferable to the real world of finance.
Here are three money management strategies you can learn from poker.
1. Following a budget
Experienced poker players know that setting and following a budget is essential to ensure they don’t overspend during the game. Even if it’s tempting to keep playing to retrieve their losses, they practice self-control to prevent themselves from losing more money, especially when they’re experiencing a bad run.
Just like in real life, you need to set a budget for everything, from entertainment expenses to travel costs, and learn self-control when purchasing items outside of your necessities. CNBC shared that one of the methods you can use to budget is the 50/30/20 budgeting framework. With this approach, you spend 50% of your after-tax income on essential costs, 30% on other expenses such as eating out and luxury goods, and 20% on savings.
2. Taking calculated risks
Because poker is a game that involves risk, it’s impossible for poker players to win all the time. So, utilising the right strategy at the right time is an important part of every poker game, especially in Texas hold’em. When playing Texas hold’em, game strategies may include choosing the right move when putting down money or relinquishing one’s hand when the odds are unfavourable. Although folding means forfeiting in the game, it’s a necessary part of poker strategy because it will help players avoid losing more money than they could afford.
In life, knowing when to avoid and exit risky situations is essential to protect yourself from scams and fraud. However, it doesn’t mean you shouldn’t take some calculated risks. Deciphering which risks will be profitable or not is a poker skill you can use in everyday life.
3. Staying level-headed
When players are on a winning streak, it’s possible for them to feel overconfident, which can hinder them from making rational decisions during the game. One of those easy-to-make mistakes is playing hands that are no longer to their advantage, making them lose more money. That’s why experienced poker players know that being level-headed during games is important to avoid making impulsive moves.
When it comes to money management, you also need to stay level-headed to avoid investing in or purchasing items without thoroughly thinking about them. An example of this is impulsive buying behaviours. A study by Rosa Isabel Rodrigues described impulsive buying as a sudden and strong emotional desire to purchase goods or services without evaluating their consequences. Ultimately, playing a game like poker can help you learn to keep your emotions in control, which can also help you strive for financial freedom.