October 24, 2014

Improve Your Life with Poker

Poker offers a little something for everyone: chance, strategy, and fly-by-the-seat-of-your-pants decision making. When it's not Friday night around the card table, transfer the thrill of the game and your ability to work the odds to your daily life.

Some of the spillover benefits of smart poker playing have been well documented. Physicists, for example, prove to be incredibly adept at the poker table because their brainpower is so focused on probability and statistics. They are known for keeping their cool while playing since they have had loads of practice in testing out theories and seeing many of them fail. In fact, if they weren’t so naturally good, you might even want to invite a physicist to your next game since they’re more likely to keep their cool when things get heated.

Even if you’re not a scientist, you can employ some of the strategic game theory that gave you that winning hand and the ire of your friends to see some real life changes. Do it right and you could see your money situation improve as well (after all, gambling is not a safe, long-term investment strategy). Ante up!

Know the rules.

At the poker table: No one would risk their fortunes during this game without first figuring out how to play it, knowing who bets when and what hand gives them the best odds of winning.

In real life: This lesson applies equally to “playing” the stock market. But, admittedly, it’s a tougher game to crack. Before putting your money on the line, use online resources for learning the basics of the market and investing, identifying your long-term goals and defining the language of Wall Street.

Know when to fold.

At the poker table: Realizing when it’s time to throw in the towel challenges even the best poker players. Amateurs tend to focus on endurance rather than withdrawal.

In real life: In the same way, we often opt for endurance in relationships when it might be more advisable to end them. Get to the root of why you have stayed in a relationship that's been troubling you (it could be more out of habit than an actual mutual feeling), and consider ways of backing away in a healthy, open way.

Do count your money.

At the poker table: That famous line about never counting your money at the table makes a good song but a bad policy. You can’t play effectively without knowing how much you have to gamble.

In real life: In planning your family budget, this same rule of thumb applies. By knowing how much you can afford to spend before hitting the mall — or even the grocery store — you’ll be better prepared to live within your means. Budgeting apps can make this process easier than the old pencil and paper method.

Use reason, not emotion.

At the poker table: The emotional flush of competition can send you into a losing frenzy if left unchecked. Feeling high on a good hand could lead to rash decisions, and showing rage from a bad hand could leave a bad taste in your poker buddies’ mouths — or give them the upper hand when they place their bets.

In real life: A study by University of Illinois research found that people who are angered by something they see as wrong are more likely to lash out if they feel there has not been accountability for what they witnessed. Sometimes we have to bone up on our humble pie and take some responsibility for our anger and the mistakes we’ve made. By making yourself accountable — for the sock left on the floor, the forgotten phone call or the totally wrong decision on an investment — you can get past the mistake and so can those who are affected by it.

Stick to your strategy.

At the poker table: Since you can’t control chance, poker ultimately becomes a game of strategy. The best players develop a strategy that works for them and stick to it, no matter what.

In real life: As it turns out, this can be the best way to manage your retirement portfolio as well. For example, while many investors responded to the 2008 financial crisis by moving their money out of equities, those who left their 401(k)s alone gained as much as 64%, because they didn’t shift their strategy.

Don’t throw good money after bad.

At the poker table: You’ve just had a run of bad luck at the poker table. Now what? Bet big to recover your losses? This gut response is called “escalation of commitment” and can creep into your everyday life as well.

In real life: Sometimes it’s sticking by a pricey home project you are emotionally invested in or keeping the old, money-guzzling Chevy because you’ve already spent thousands to repair it. Step away from the table (say you’ll get a round of beers), and do some big-picture thinking before pulling out your wallet the next time you’re facing a big money decision.

More from CreditDonkey:

10 Life and Money Lessons from Running

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