Football, group

Football season is (finally) here. For those of us that love the game, it’s one of the best times of the year. For those that love those of us that love the game, there’s a mutual understanding that football season is here and there might be some distractions on the weekends.

Believe it or not, football can actually teach us some lessons about finances. Here are five lessons that football can teach us:

  1. Have a Game Plan
    During the game and the week leading up to the game, the coaches have put together a game plan. They have worked through the strengths and weaknesses of the opposing team and decided the best way to win. They’ve also discussed their strategy with the players so that everyone is on the same page during the game. Having a financial plan or investment plan (whichever is more appropriate for your situation) is the first step to being prepared to accomplish your ultimate goal – financial freedom. Your goals are unique to you and the game plan put together should be unique as well. (Coaches don’t use the same game plan against every opponent!)
  2. Dump the Losers
    Yes, fantasy sports aren’t for everyone. There are times when someone might draft someone in the first or second round of their fantasy draft (or even the real NFL draft) that don’t work out for one reason or another. When this occurs, you can bury your head in the sand and hope they get better or you can move on. With your investments, there should be a process in place for monitoring your investments to make sure they’re still doing what you want. If they don’t continue to warrant inclusion in your portfolio, it’s time to move on to an investment that does.
  3. Talk with Your Family
    My son can tell you who the greatest of all-time (GOAT) is: Tom Brady. (We can have a spirited discussion about this sometime if you’d like.) He and I can also have discussions about which pro teams will be good and which college teams should be good this year. According to the National Financial Educators Council, less than 50% of people have passed their financial literacy test. One of the likely culprits? Not talking with your family about finances. I know it’s not necessarily a comfortable topic for people. With my job, it’s natural for me to speak about finances with mine. While you might not have the depth of conversation that our household has, it’s important that you do talk about important financial matters. A few to start off with would be budgets, insurance, importance of saving and how to recognize a financial scam.
  4. Everyone Needs a Coach
    During the season, an NFL team is allowed to have 53 players on their roster. NFL teams also average 15 coaches per team. Some of these coaches are very specialized. Even Tom Brady (the aforementioned GOAT) has a coach to improve his game. With finances, the coach has many different names (financial planner, investment advisor, etc). Whether someone is just starting out or near retirement, living paycheck to paycheck or wealthy, everyone needs a financial coach to help improve their financial situation.
  5.  Diversification
    If you watch professional football (or play auction-style fantasy football) to any degree, there is one item that inevitably crops up for each team – the salary cap. I’m not going to sit here and try to explain the salary cap in great detail (feel free to read more HERE), but, in its simplest form, it is the amount of money each team has to spend on their players. The more a team spends on one player, the less they have to spend on others. If they can spend less money on one position (like quarterback), they can make the team stronger in other positions. That, in turn, can make the team better. A team that dedicates a large portion of their cap to one player might randomly do well during any one season. Where are they if that player gets hurt or has a bad year? While there aren’t salary caps with investments, it is important not to put all of your eggs in one basket. Putting all of your money in one or two investments might deliver oversized returns in the short-term. However, history has shown that your risk is reduced and your long-term returns are improved through diversification.

Unfortunately, football season does not last the entire year. (Okay – unfortunate for those of us who enjoy it!) If you like football, be sure to enjoy it while it’s here. If you’re not a fan, count down the days until the end of the season. Whether you like football or not, be sure to pass along some of the financial lessons that you’ve read here to someone you know.