Sunday, November 11, 2007

Parallels: Winning Traits

I had the pleasure this weekend of watching my oldest daughter’s soccer team play in the Final Four of the State Cup. Her team overcame many obstacles this season and despite being rated an underdog made it to the Final and walked off the field with silver medals. My daughter’s personal journey included bouncing back from a serious car accident in the middle of the season. Fighting through injuries, struggling early on, and working to constantly improve during the season, the team of girls managed to peak going into the state cup tournament series held over the past three weeks.

While cheering for the team the banter among the parents on the sidelines included soccer, safe cars for teens, the weakening real estate market, public financing of sports venues, and personal finance. A couple thoughts struck me as I watched the game and conversed with the adults. The first was the disparity between the parents who were confident about their personal finances as compared to those whom were disorganized and adrift.

The immediate second thought was how the ideals that drive a victorious soccer team also align with the successful finances for families. Winning sports teams possess several attributes that also have investing parallels:

  • Have a plan - Each game is mapped from a plan of how you execute. Teams work towards creating strategies that play into their strengths and cover their shortcomings. Similarly, any financial plan is mapped to your strengths and needs. It is critical to have a well understood plan in sports or family budgeting.
  • Stick with the plan - It is not simply enough to have a plan, you must execute on the plan. Sports teams that don’t stick with a plan flounder, this is no different for the fiscal situation for families. Planning is important, but worthless if you do not stick with the plan over time. In order to have a successful financial situation, it is important for families to faithfully follow through each month to meet their objectives.
  • Solid Technicals - In soccer, technicals are how you touch the ball. In investing, it involves how you perform the minute details of the strategy. Do you know how to go online and sell your stock? Can you read a chart and figure out the current value? Can you go online and pay your bills easily while balancing your checkbook? Technicals are your “monetary touch”, in this case how you execute your basic financial tasks. Does every first touch in a soccer game need to be exactly perfect to win? Or should we ask do you have to always buy a stock at the exact low of the day to win? The answer is no, but the basic technicals must be place in order to be successful in either venue.
  • Tactical Strength – In soccer, tactical includes your structure, communication, and execution of your strategy. In a similar vein, the tactical side of investing involves proper implementation of diversification, and utilizing the instruments that will get you to the finish line.
  • Align with the Plan – On a soccer team all the players must be “rowing together” in order to be successful. Similarly, household finances quickly become shambles if one spouse saves while the other regularly runs up sizable credit card bills. It is important that both partners align with the same vision of planning their financial future and then jointly march to the same tune. Nothing causes chaos in households more quickly than not having members share the same fiscal outlook.
  • Passion – Athletes who win have a passion for the sport. Investors who win have a passion for making the right choices in terms of debt, credit, spending, investing, and finances. To triumph at personal finances it is important that you have passion to do what is right for your family over binge purchases using credit card debt and other prevalent omissions. In some sense passion is self-control. On the other hand, it is the ability to step up and make the right choices with heartfelt conviction.
  • Athleticism – Some facets of athleticism are innate; other aspects players can be trained on. Improvements in speed and strength can be achieved with training. In the same way, “financial athleticism” involves your understanding of investing. Similar to the situation on the field, it is not simply a situation of “what you are born with is what you got”. Investors can always work to improve their knowledge and savvy.
  • Proper Coaching – One of the most important aspects to winning is consistent, knowledgeable coaching. In addressing finances many families use paid planners; others may simply read advice from experts. There are a number of ways to get coaching for your investments. However it is critical that the coaching is does not drift all over the map, and is coming from sources with your best interest in mind as opposed as coming from someone who simply wants to make commissions or sell a product. Coaching for your finances is a valuable service, but it needs to be aligned with your long term needs with no improper bias.

    Clearly there is a mapping between qualities that drive achievement in sports and personal finance. More importantly, families that are successful financially demonstrate the attributes outlined above. Other families mired in debt and facing fiscal dilemmas appear to possess few of these characteristics. The good news is that it is always possible to turn around and become successful over time by focusing on the essentials; in the same manner that by concentrating on the fundamentals struggling soccer teams can become triumphant squads at the end of a season.

    I would like to thank the NCYSA for organizing another excellent State Cup playoff series, the Refs for putting up with the parents on the side lines, the Coaches for their dedication & time, and the Parents for their support of the players.