4 Financial Lessons from Golf

financial lesson of golf

If you didn’t know it, this week is Master’s week. It’s the first major PGA golf tournament of the year. Watching the Master’s is the annual tradition for my wife’s family as they anxiously wait to see who will don the green jacket (maybe Phil or Jorden Speith?). This is their “must see” event like the Super Bowl, Daytona, the Kentucky Derby, or March Madness might be for you.

Since the golf season is getting back into full swing again now that the fairways are green once again and the trees have budded, I thought it would be appropriate to look a the financial lessons of golf that everybody can learn.

The Long Game (Drivers)

Financial Lessons of Golf

We all have dreams, financial and personal, about doing the best we can each day & how tomorrow will always be better than today.

The same is with golfers as that first shot is crucial when they step into the tee box for each hole. It’s not uncommon for the average driving distance of a professional golfer to be near 300 yards. That’s pretty far. If they were to only hit the ball as far as you or I (way less than 300 yards) it’s going to be a loooong day at the course for them.

Lesson #1: Identify Your Long-Term Financial Goals

In the game of “financial golf,” your tee shot with a driver is making long-term financial goals. You may think it’s crazy to make these goals first, but, your long-term vision will influence you follow-up shot (financial decisions) to get the ball in the cup.

If you don’t have a vision, you have no clue where to swing. 
You may land on the fairway or out of bounds.

Knowing where you want to go makes it easier to know what to do until you get there.

My Personal Example

To give a personal example, one of our long-term goals was to build a house of our own & repay the mortgage (i.e. be debt-free) before we turn 40.

It took my wife & me a year or two to make a solid plan & get everything in place like having enough money to cover most the construction costs to get the smallest loan possible & I had to change careers.

Medium Game (Irons/Chipping Wedges)

Financial Lessons of Golf

After your initial drive stroke, you essentially have 1 to 3 more follow-up strokes (assuming you only putt once) to make par for the hole.

This means you are going to use your shorter clubs like irons & wedges to get you on the green without overshooting it.

Lesson #2: Make short to medium term goals that ultimately accomplish the big goal.

What you don’t want to be is Jean Van De Velde at the 1999 British Open who all but had the tournament won, but, lost because he forsook his vision by being overaggressive.

While you may hope to get an eagle or a birdie, sometimes, it’s not possible on the financial golf course.

Since your short game can be just as crucial as the first stroke, you need to make reasonable financial goals.

My Personal Short-Term Goals

Our long-term goal was to build our own house & have it totally paid off by the time I turn 40 in 10 years.

To make this goal realistic, we made several medium-range goals:

  • Use a mortgage payoff calculator to see the minimum monthly payment required to repay our mortgage in 5, 10, & 15 years.
  • Save $xx,000 before we built the house to serve as a down payment & buy materials to reduce our total borrowing amount.
  • Complete “non-essential” expenses like planting trees & buying better appliances, furniture, etc. as additional cash come available in the future instead of borrowing money upfront to make the “perfect” house.

 

Putting

Financial Lessons of Golf

Finally, the last way to complete each hole is to put the ball in the cup. Ideally with one stroke. This is your day-to-day

These are your day-to-day financial decisions that you make without thinking. Depending on how well you did on your driving & chipping can determine how your putting game is as the “little mistakes” can add up quickly & completely undo how you did from the tee box and fairway.

Lesson Tip #3: Make Smart Money Habits

Look at your daily activities and how you manage your money. You might decide to track your spending by using the Free Financial Tools at PersonalCapital.com.

It also means saving a portion of your income by living frugally (not cheaply) that way you might even be able to accomplish your goals even quicker than anticipated.

Most importantly, it means paying your bills on-time and in full every month. To quickest way to bogey is to not follow the fundamentals of daily money management.

My Personal Experience

My wife & I track our spending on a bi-weekly basis & compare it to our monthly budget goals.

We also make sure we do three other things as well:

  • Pay our bills on-time
  • Never touch our emergency fund to pay our daily living expenses
  • Try to look for the cheapest option when buying (Craiglist saved us $4,000 in building expenses & it’s still our best friend for buying & selling)!!

Hazards

Financial Lessons of Golf

The one thing no golfer likes is landing in a hazard like sand or water since it usually makes it very hard to make par.

Lesson #4: Plan for the financially unexpected

Financial hazards happen in real life too, so, you have to plan for them. It’s why we have an emergency fund.

Here are some ways you can prepare for the unexpected:

  • Save at least 6 months living expenses in a “no-touch” emergency fund.
    If you don’t have one, start small with setting aside $500 and gradually doubling it to $1,000, $2,000, etc.
  • Diversify your investments to limit risk (just ask the Enron employees that had a large portion of the 401k invested in company stock in 2001).
  • Spend less than you earn
My Personal Experience

We had a few hazards with our house so far. The most expensive has been a water leak.

Our normal water bill is about $40/month, but, we received a bill for $150 in the winter when we weren’t watering the grass or playing with the sprinkler. Unfortunately, it’s literally two weeks from the time our water utility reads the meter and sends the bill, so, our second bill was also near $150 since the leak lasted two weeks on both cycles.

Our pipe had a slow leak at a coupling along our driveway because we have really high pressure. The incoming pressure is 195 psi, most houses have between 40-80 psi just to put that into perspective.

As we had two other leaks in other spots in our line when we first installed it the year before, we decided to install a $300 pressure reducer that drops the pressure to 50 psi & we haven’t had a leak since then.

Essentially, we spent $500 that we hadn’t budgeted for. Our emergency fund paid for the expense, but, as two-thirds of Americans would struggle to pay for a $1,000 emergency, let alone a $500 emergency, this could be a very costly hazard.

Summary

Just as golf has a long, medium, and short game….your financial golf game does as well.

It’s important to get off on the right foot (long-term vision), make the required follow-up shots to get on the green & still be able to make par (short & medium goals), & finally tap it into the hole (day-to-day money decisions).

I don’t wish a “Jean van de Velde moment” on anybody, so, do know your limitations yet still challenge yourself. And, prepare for the sand traps and water hazards that you will inevitably land in at some point during the 18 holes of life.

 

 

About the Author

Josh
I'm a personal freelance writer.

16 Comments on "4 Financial Lessons from Golf"

  1. Drive for show, putt for doe! It doesn’t matter how good you are off the tie if you can’t putt it in the hole.

    For investing, it doesn’t matter how good your long term strategy is if you don’t save at least 10% (more like 30-50%) of your income and investing over time.

    Erik

    • Very true about saving at least 10%. While I’m still relatively new to the savings game, having a 30-50% savings rate made affording future goals a lot easier. Right now we are closer to the 10% range, we still have a positive cash flow, but, it does leave less cushion if you have several large expenses coming up close together.

  2. Troy @ Market History | April 2, 2017 at 4:19 am | Reply

    Never played golf myself, but I can see how these lessons apply to one’s finances. I’ve heard that in golf, focus is the key. When you’re about to swing that club, it’s all about putting aside all the noise and focusing on what’s in front of you. I think that rule applies to business and life in general.

    • Golf is a mental game. The stronger you are will help you get longer drives,etc., but, if you aren’t solely focusing on hitting the ball squarely there’s no telling where your ball will go.

      Very good points about how this rule applies to life & business as well, because it does.

  3. I haven’t played golf in years but I always remember trying to avoid the hazards and always landing in them. Needless to say I don’t golf much anymore since I wasn’t any good. But I do love the analogies of golf to finances. So true 🙂

    • I wish I was better at golf myself. I’m getting ready to go for the first time since 2003 so I’m sorta of anxious in the bad way. But, I like to keep between the fairways (literally and figuratively).

  4. Excellent comparison! I played some golf years ago but haven’t for quite a while. Seeing those video clips brought back clear memories of why I gave up golfing for less stressful sports. 🙂

    • I’m glad you “liked” the videos. I enjoy golf but it takes time & money that I use for other, more important things. But, I do enjoy watching it on tv and dreaming of being the next Jack Nicklaus or Arnold Palmer.

  5. Good analogies mentioned above. I only played golf once, but I can see how you referred it back to finances. IF you focus with money you wont be disappointed, that’s what it all comes down to.

  6. I haven’t golfed for a few years now, but these are great analogies. I think hazards is the best analogy. You can play it safe and putt your way all the way to your goal, but sometimes taking a risk (i.e. using a driver) can pay off huge!

    • I like taking a small amount of risk. Especially because I’m young and still on the “front 9” so I have time to recover. Unlike Van de Velde.

  7. For the record, I am a terrible, terrible golfer. Can’t drive, can’t hit off the fairway. There are only two shots I am good at. 1. Putting and 2. The punch out from the woods. Agree with your conclusions on putting in your article and I guess number two means that I am good at dealing with really botched financials decisions haha

    In all seriousness, this is one of my favorite quotes from the article: “While you may hope to get an eagle or a birdie, sometimes, it’s not possible on the financial golf course.” You have to realistically assess your financial position. Of course everyone wants to retire early an save as much as possible, but every hole, every golf course is different. So you have to treat each one as such.

    Thanks for the great read tonight!

    Bert

    • You’re welcome. So true about how every hole & course is different. There isn’t a cookie-cutter way to being financially successful, but the fundamentals are the same.

  8. I don’t even golf – but I like this analogy. We might be getting a bit “overaggressive” (Van De Velde) always doubling up our mortgage payment. We’re leaving ourselves a bit exposed for the month of April. Hmm… Good advice here. Thanks!

    • I think the big thing, Ruth, is making sure you aren’t pulling from your emergency fund to make the extra payment and you are still contibuting to your other expenses like retirement.

      We’ve been making double payments on our mortgage, but, as I mentioned in my 2017 financial goals update, we might only make the regular payment during the summer months when we work fewer hours.

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