Personal Finance Lessons to be learnt from the Cricket World Cup

 In India, where cricket is a religion and the cricketers are respected, emotions run high during every match.

You would be surprised to know that this age-old sport consists of rules and features which can be used as analogies to learn parallel lessons in the world of personal finance. 

Drawing parallels between cricket and personal financial planning, we see that the strategies applied in cricket can help you achieve your financial goals.

We bring you lessons that the cricket world cup can teach us about personal finance.

    1.    Don’t step out into the field without protective gear:

Not taking adequate precautions can make players vulnerable to injuries on the field. Similarly, for your financial planning before you start investing for wealth creation, secure yourself against the risks to finances, life and health. An emergency corpus, a health cover and life insurance term plan are a must to safeguard your and your family’s financial interests. 

     2.    Know your goal:

Defeating the opponent is the goal of every team. To prepare yourself for the game, it is important to know your opponent. First rule of preparation is never underestimating your opponent, even if you have an impressive success record.

In personal finance, your opponents are escalating real inflation and the googly of volatile market conditions.

Hence, your first step to preparation should be setting S.M.A.R.T i.e. Smart, Measurable, Achievable, Realistic, and Time-bound financial goals. You can win only if your goals, be it big or small with short-term or long-term horizons, are properly defined.

     3.    A well – balanced team achieves overall target:

Players are the biggest asset of the team and can make or break the World cup dream. Therefore, the team members should be selected carefully and must comprise of right mix of players such as batsmen - the big hitters as well as the slow and steady ones, all-rounders, spinners, fast bowlers, and super agile fielders/wicket keeper.

If the batsmen fail to score a decent total, the bowlers and fielders can make up for it by trying to take early wickets, the same principle is applicable the other way round. Every player contributes to the team in their only expert way to win the world cup.

Similarly, your investment portfolio should consist of different asset classes and types depending on your goals. For long-term goals like retirement, children's future expenses, your portfolio should include wealth-creating assets like equity-oriented mutual funds along with a small allocation towards debt.

For short to medium term goals, you can include a balanced mix of debt, money market, gold, and bank deposits.

4.    Follow the rules:

Players are expected to follow discipline while playing and required to adhere to the rules of the game. They face a penalty whenever there is a breach in rules.

There may be times when a player from the opposite team may try to provoke a team member or at times a player may be under serious pressure during a crucial point in match. At such times, the players need to keep their composure and stay calm to avoid making any hasty decision and mistakes.

Like a player under pressure, as an investor, you too need to keep field panic away and adopt the 'slow and steady' batsmen's approach during short-term fluctuations in market. You should also not heed to the financial advice from friends or relatives who may not have enough knowledge about the subject.

Follow a disciplined approach towards investment by staying invested for long-term to overcome volatility and get higher returns. This will help you counter inflation and ultimately achieve the goals.

5.    Re-evaluate the team strategy:

Back in 1983 when our country was playing its historic World Cup finals, captain Kapil Dev famously said just one thing to his team “If this is not a winning total it’s definitely a fighting total.” Even today, the match is considered as an epic win in cricket history. Many a time thing don’t go as planned, thus giving that impending fear of losing the game all together.

However, if the team remains calm, re-evaluates its situation, then it can look forward to a good win. Likewise, no matter how prudent a planner we may be with finances as with our other life responsibilities, there can be those unexpected expenses. In such a situation, one needs to stay calm, re-evaluate the situation and see what can be done now by staying focused on achieving the long-term goals.

Like sports, to excel in investing, we suggest that you practice regularly, stay disciplined, avail professional guidance through financial advisors and manage risks judiciously. We don’t know if our team is going to create history once again at the World Cup championships, but what we definitely know is that by following all the things we discussed above, you could create a future for yourself that is financially secure and well-planned.

6.    Match review:

Winning and losing is part of the game. Regardless of this, after every match, players and their coach sit together and analyse the overall game along with individual performance of each player. They also determine if there is need of change in overall strategy or if any player needs to improve their performance. Likewise, investors should review the schemes' performance in their investment portfolio regularly and evaluate the progress. If an investment is consistently generating lower returns, then you must check for better alternatives to invest in.

Research is core part of investing; without it your investments will be just based on speculations. However, not everyone may have the time and knowledge to select the best avenues suitable for their needs. In such a case, it is advisable to consult a financial coach i.e. a financial adviser who will be able to handhold and guide you on your journey towards the financial goal.

Whether India didn’t win the World Cup, but by following the lessons mentioned above, winning the Wealth Cup will surely be within your reach.