How To Apply The Skills You Pick Up At The Poker Table To Managing Or Improving Your Personal Finances

Understand the “risk versus reward” relationship

Poker players learn “pot odds” to help evaluate the risk versus reward of being in a hand. A good poker player knows it is better to risk $20 to win a $200 pot (10:1 pot odds) then $50 to win a $100 pot (2:1 post odds) . You need to know the upside and downside of each investment and understand the likely payout. Is calling a bet or making an investment worth the risk based on the size and probability of the return of the needed investment?

Have patience and be disciplined

Good poker players only play 20% of the hands they are dealt. Cards need to be played selectively. You have to wait for the right opportunity. Investments are the same way. Do some research and be selective and don’t be in a rush to get into the latest “hot” deal. Put your money in with the right opportunity.

Learn how to survive through money swings

In a poker game you can go from the chip leader to the short stack in a matter of one hand. You have to keep playing your game and not get frustrated or nervous or make any irrational decisions (otherwise known as going on “tilt”) until you build your chips stack back up again. Investing can be unpredictable especially in the stock market and real estate. You have to be able to survive the market ups and downs both financially and emotionally.

Don’t gamble or spend more than you have to lose

Beginner poker players usually play at the small stakes table until they learn the rules and nuances of the game. The more they play the better they get and as they get better they play for higher stakes. If you are just starting to invest start with small stakes. Get comfortable and be consistent. You won’t get rich (in most cases) overnight in poker or in the market.

Set your budget upfront

When you enter a poker game, you buy-in for a specific amount. If you lose your cash it is advisable to end that poker session until you can build up your bank roll again. If you have a budget of $100 to spend on shoes, don’t buy Jimmy Choo’s until you can afford them without going into debt.

Know when to get out

Sometimes you bet like crazy because you think you have the best hand, but as the cards come out you realize someone else has you beat. You may have a lot of money in the pot already but you need to know when to stop throwing good money after bad. Sometimes you will invest in something you thought was a sure winner only to later realize you have a dud. Get out before you lose it all. Don’t worry about having made a mistake, just learn from it.

Don’t be fooled by slick “trash talk”

In poker they call it trash talking when a player tries to say things to throw you off your game. They may be really nice to get you to trust them or try to intimidate you to stay in a hand you are probably losing. The same can be true of brokers and investment advisors. Don’t take everything they say at face value. Do your homework and make sure you know who you are giving your money to. If it doesn’t feel right it probably isn’t. Find someone else.

Get in the game

Walk into a casino poker room and you will not see very many women at the poker table. The ratio of men to women is probably 20:1 (take note single women!) You need to learn to play so you can get into the game and make some money. It might be fear or lack of knowledge that keep women from learning poker or investing. Do some homework, ask people you know, hire an advisor, take some small steps, but learn how to invest so you can be in the game.