It’s Week 16 for the National Football League and after nearly an entire season, I’ve finally collected enough ammunition to put together a post that ties together personal finance and America’s real pastime – tackle football (baseball? what? steroids?). So, after the week in which the Miami Dolphins won their first game over the hapless hometown Baltimore Ravens, losers of eight straight, and a week after my Jets gave the undefeated Patriots a pretty good run for their money – what can football teach us about personal finance? Let’s begin with the basics.
Lesson 1: Offense, Defense, Special Teams
Coaches often talk about winning the three phases of the game: offense, defense, and special teams. Sometimes it’s okay to win only two, but if you want to dominate then you’ll have to win all three phases of the game. Surprisingly, personal finance has three phases as well: income, spending, and investing. Income can be seen as your offense, since you go out and earn that money. Spending is really defense, you need to defend against unnecessary spending, fight off those emergency spending situations, and protect your loot. Finally, investing is where I see special teams. Special teams plays infrequently, about as frequently in a game as you want to be touching your investments. However, once and a while, especially if you have Devin Hester of the Bears  on your team, an investment can bring in a big play that can change your financial picture.
Lesson 2: Clock Management Is Crucial
Some coaches are great at clock management, some coaches are terrible. I’ve never seen a team win a championship when led by a coach known for terrible clock management. Why? It’s because in the closing seconds of halves and games, being able to control the clock with smart play calling and timeouts can mean the difference between winning and losing. How does this apply to personal finance? The game is your life, the clock is your age, and your decisions depend on both. The easiest example has to do with retirement planning. If you’re young, go aggressive in your investments and save as much as you can. If you’re older, become more conservative with your investments and protect the principal you’ve built up over the years. If you’re in retirement, you want capital preservation and income generation, taking a bond that yields less may be prudent here and to go aggressive would be a mistake.
Lesson 3: Defense Wins Championships
Defense = spending and controlled spending will win you championships. That’s right, how much you earn and how well you invest are important, but runaway spending will down you each and every time. Think of all the lottery winners who are now bankrupt and living worse off than they were before the big win, there are a lot of them. Why? Spending. Controlling your spending is much easier, more impactful, and more reliable than increasing your income or improving your investment decisions.
Lesson 4: Understand The Conditions
Teams know that when it rains, footing will be sloppy, passes will be difficult, and overall the game speed will slow down. Teams also know that on field turf the game plays much faster, that indoor stadiums are more conducive to passing, and some open-air stadiums are difficult to kick field goals in. Understanding the conditions under which you’re operating in is crucial for optimizing your performance, this is again true for anything in personal finance. If you were to invest in real estate right now, I’d recommend you tread carefully because it’s in a delicate time for that industry. If you were to invest in gold, it’s important to know that it’s at record highs because of the instability of the dollar. It’s important to understand the environmental conditions before you make a decision to do anything, to act without that information would be foolish.
Lesson 5: Rely On Experts
Head coaches always have assistants, coordinators, and other people on their staff to support them. Why? No one human being can possibly do everything. No one human being can possibly know everything. To be so arrogant is foolish and would only bring down the effectiveness of the team, that’s why many teams have such large coaching staffs. In personal finance, there is simply too much information out there for you to read, understand, and then put to use. That’s why relying on experts when you can, after you’ve vetted them out, is crucial for a successful personal finance strategy. It may be tempting to sell your own home, but is it truly feasible for you to reliably handle all the paperwork, prepare your home, list your home, manage the legal issues, and run the rest of your life? While you probably could do it, would you get the optimal result? Maybe, but you’ll definitely pick up a few gray hairs as well.
Lesson 6: Big Plays Are Nice, But Not Required
In football, kick returns for touchdowns and breakaway passes or runs are wonderful to watch – but they aren’t required. The Pittsburgh Steelers, until recently, have had an attitude and reputation of smash mouth football. The Steelers would use hard hitting runs of only a few yards to string together a touchdown drive and you couldn’t do a thing to stop it. Jerome Bettis was near perfect within a few yards of the end zone and the Steelers didn’t care if you know he was coming, there was no way you were stopping The Bus. With money, it’s always fun to hear stories of people winning the lottery or getting a huge pay raise, but those things aren’t required for you to live a financially prosperous life. What is necessary? Slow and steady wins the race, consistent saving, even if it’s a small dollar amount, can yield significant dividends down the road.
Lesson 7: It’s Never Too Late
In football, you play sixty minutes and a lot can happen in that time. Just when you think a team has been put away, something miraculous can happen as victory is snatched from the jaws of defeat. In 2000, I remember watching the NY Jets vs. the Miami Dolphins in which the Jets came back from a seemingly unsurmountable deficit . The Jets were down 30-7 with only the 4th quarter to play and they finished as victors, 40-37. Okay okay, so other than pointing out one of the greatest moments for me as a fan of the Jets (which are vying for a great draft pick this year), how does this apply? Often times people think that they’re too old to be saving for retirement. They’re too old to be doing this, that, or the other thing. You’re never too old to do that which makes you happy and saving for retirement will allow you to do whatever you want when that time comes. Even if you’re five years away, start saving because you never know.
Lesson 8: More Than Football or Personal Finance
I wanted to end the post on a somber note and that’s to say that there’s more to life than football and they’re more to life than personal finance. I think the passing of Sean Taylor, much like the sacrifice of Pat Tillman in 2004, underscored the fact that life is much greater than a game much like your life is much greater than the amount of money you’ve earned, the things you’ve acquired, and the investments you’ve made. Don’t let your happiness be dictated by the money, let it be dictated by your accomplishments and the other things in your life that truly make you happy. Whether it’s watching your kids grow up or dropping your golf handicap, personal finance should be seen as a means to an end – enabling you to enjoy your life and do the things that you want.