4 Ways March Madness Underdogs Can Inspire You Financially

by Kevin on March 23, 2013

I love March Madness.

It is my second favorite time of the sports year. (College football trumps all for me.)

Even though I love college football more than anything, the dominate team is almost always going to win. If you line up a SEC team against a Division II team, the SEC team is going to win 999 times out of 1,000. The speed of the game compared to basketball is a lot slower because you call specific plays, have time to huddle up after each play, and adjust to what your opponent is doing. The size and speed at the SEC level dominates the smaller players at the smaller schools.

Not so with March Madness. A 16 seed has never defeated a 1 seed in the tournament, but plenty of 15 seeds have taken down 2 seeds, 14 seeds have defeated 3 seeds, and so on.

Upsets are much more likely to happen in March Madness which is why many of us watch the tournament.

Last night we got to see another great upset. 15 seed Florida Gulf Coast took down 2 seed Georgetown. This wasn’t a last second buzzer beater, this was a solid defeat. At one point FGCU was up by 19 points on the Hoyas in the second half, and ended up winning by 10 points.

Okay, basketball is great and all, but Kevin… what does this have to do with my finances?

How March Madness Relates to Personal Finance

Underdogs in March Madness win games by four primary factors:

  • a solid game plan
  • execution on the game plan
  • sticking to the fundamentals
  • a little luck

The exact same things are true for financial success.

Financial Success with a Solid Game Plan

Want to struggle financially? Go through life without a financial game plan. Don’t track your dollars and don’t give every dollar a name. Don’t have saving goals and don’t know what it would take for you to be able to retire.

You simply can’t be successful without a game plan. Your month to month and day to day activities should be dictated by your goals. Without goals we just wander through our financial life aimlessly. We might save a buck or two every once in a while, but that won’t get us to the financial rewards we truly want.

Financial Success with Execution on the Game Plan

Simply putting a great plan together on paper (or in a spreadsheet) won’t get us to success, either.

You must execute on your plan.

Not once, not today and tomorrow and quit, but every day, every week, every month, and every year.

Yes, you will make mistakes. You will slip up. But you can’t know that you’ve missed if you never had a plan in the first place nor if you aren’t engaged in your current plan.

Take the plan you put together (it can be simple) and execute on it first before trying something complex.

Financial Success by Sticking to the Fundamentals

Reaching financial independence or other financial goals doesn’t have to be super complicated. We instantly think you need to do things like win the lottery, pick individual stocks that will generate 100% returns each year, and so on.

(The ideas above are terrible and will result in financial failure almost every time; please do not try them!)

We miss the simple facts of building toward financial success through:

  • spending less than we earn (stopping the bleeding as it comes to debt)
  • saving an emergency fund out of our excess cash each month
  • investing the remaining cash in a conservative, simple manner (like index ETFs and mutual funds)

That’s it. No crazy financial schemes. A simple plan, execution, and time.

Financial Success with a Little Luck

I’m a firm believer in making your own luck. Could you argue that in a basketball game you might get a call you shouldn’t, or the basketball bounces your way when it seemed impossible? Sure.

But most of the time the “lucky” part of winning a basketball game comes down to solid execution. Was it lucky that the 3 point shop to tie the game goes in, or did you execute on the play and use correct form when shooting?

The same is true financially. Being lucky is great; you might pick the best employer in town to work for or you might be placed on the big project that leads to your next promotion.

Yet your luck is often self-created. You got lucky that you had an emergency fund saved right when you needed it by actually saving up for the emergency fund. You got that big promotion because you performed well on that big project.

No one is going to knock on your door to offer you a million dollar check. You can make your own luck by executing on a simple financial plan.

Don’t let your financial life surprise you. Execute on a game plan, adjust accordingly over the years, and keep it simple. Have you seen success running your finances in this way?

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