Executive Summary: Sports and Financial Planning have many similarities. Goal based actions, need for commitment and discipline, getting better over time and with practice, identifying mistakes, seeking professional help and keeping out bad practices are some of the things which are common between sports and Financial Planning.
- Goal based actions: When you play a sport, the aim of the sport is to achieve a certain goal, which ultimately results in a victory over the opponent. In Financial Planning, you don't aim to win over someone else; rather, you seek to achieve the goals you set out in the first place. For example, buying an insurance cover, making goal based investments or managing your liabilities in a better manner are instances of achieving the respective goal in financial planning.
- Need for commitment: Both in sports and in Financial Planning, you need to have commitment. Great sportsmen like Sachin Tendulkar or Leander Paes have become what they are only because of their commitment to the sport. Similarly, in order to lead a comfortable financial life, you would need to be committed to the Financial Planning exercise.
- Get better with time: It is said that 'Practice makes you perfect'. This holds good in the case of both sports and Financial Planning. The more you practice, the better you get at your game. In the same way, over time, you get better at identifying the right investments and taking the right financial decisions.
- Identify mistakes and learn from them: When a sportsman loses or performs badly in a match, it is logical that the reason behind this is that he committed certain mistakes in his game. A true sportsman identifies these mistakes and learns from such mistakes. Similarly, when you start off Financial Planning, it may happen that you commit some mistakes. An expensive ULIP policy, spending excessively on your credit card or taking a personal loan which is not necessary may have happened. These mistakes can prove to quite expensive, especially if they are repeated. Therefore, the more important thing is to learn from these mistakes and to not commit them again.
- Having a coach helps: Taking professional help can be beneficial both in the case of sport as well as in Financial Planning. Most great sportsmen in the world have achieved laurels only because they have received the right coaching and guidance on the sport. For example, the current world No. 1 in lawn tennis - Novak Djokovic has been on a winning streak not just because of his hard work and good game, but also because of his coach, the former champion - Boris Becker. Similarly, in Financial Planning, although it is possible to plan your finances yourself, taking professional help from an advisor or planner can help in following a methodical approach to solve your financial challenges.
- Discipline and humility in what you do: A sportsman should be disciplined in his training and game. He should keep a track of his performance and seek to do better if his game dips. He should not be over confident or arrogant if he has achieved the No. 1 position. In the same way, Financial Planning requires you to be disciplined and keep track of your actions. For example, evaluate the performance of your investments regularly. Assess your insurance needs and make changes if necessary. If your investments are performing well, do not become arrogant; instead, strive to make them grow more.
- Bad conduct comes at a cost: Conducting yourself badly in a sport can result in undesirable consequences. For example, cheating in a game or resorting to malpractices can have sportsmen barred for life from playing that sport. Similarly, an improper conduct of finances can upset your future financial standing. For example, if you miss an EMI payment, your credit rating is affected and this is a permanent blotch on your credit health.