Financial fitness: He shoots, he scores
For most of my life, I have been involved in basketball and financial management. For this article, I wanted to combine those two great passions of my life to assist you in staying “financially fit”.
Financial fitness and success is a lot like basketball. John Wooden, one of the greatest basketball coaches of all time, defined success the following way: “Success is peace of mind, which is a direct result of self-satisfaction in knowing you made the effort to become the best of which you are capable.”
Many of us have different capabilities in basketball and finance. The following strategies will help you become “the best of which you are capable” when dealing with your financial situation.
Defense wins championships
All the great teams in basketball understand that in order to be consistently great, you must play defense. You have worked long and hard to accumulate assets in your portfolio; a proper defense or protection of your assets is critical to avoid catastrophe. The following ideas will help you protect what you have scored:
- Properly diversify your portfolio
- Protect yourself from renters by having a proper entity such as LLC established
- Formalize informal partnerships
- Use proper contracts and procedures
- Purchase appropriate personal and business insurance
There is no 15 point play
During one game, our team was down 15 points at half-time. As part of our half-time adjustments, I reminded the team that there is no 15-point play in basketball. We developed a strategy with goals and benchmarks. Each 4 minute increment we would cut the lead. The team was diligent in following the game strategy, and we ultimately won that game and then went on to win the championship.
Similarly, there is no 15-point play in the world of finance. You must diligently set goals and benchmarks. If you have multiple credit cards, commit to pay one off, and then another. Consistently invest money into your retirement account and save for a rainy day. Slow and steady will definitely win this game.
Scoring is part of the game
Occasionally, I have had teams that seem to have forgotten that they need to score to win. Maybe they were afraid of missing a shot, or turning the ball over to their opponent. As important as protecting what you have earned is, in order to come out on top you must get off the sidelines and become part of the game, and you must shoot to score!
There are places on the court that each player feels more comfortable scoring. In financial management, this may be the case as well. Find places or opportunities that you are familiar with and understand. Set your base, keep your eye on the target, release the ball and follow through. There is nothing better than seeing that ball go through the hoop, or the investment you have made grow in value.
Over the years, I have won championships with players who were not as talented and teams who didn’t have as many resources as other groups. The major contributor to their win was the fact that they played as a team. On teams there are people with different roles and abilities. Surrounding yourself with individuals who understand their roles and play together as a team is important to success.
When dealing with your finances, there are a few necessary team members that will help you win your financial championship. Every team needs a good accountant who knows tax laws and strategies. Your financial team should also include an attorney to help you craft documents and procedures to help you along the way. Financial advisors are key players who understand the market, portfolio allocations, and other investment strategies. In addition, insurance agents and bankers are instrumental to running a smooth offense.
When it comes to the team, the most important team member is you. You will play point guard for this team and cannot sit idly by without being involved in the offense and defense.
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