The 2018 World Series of Poker is over and plenty of players now have some big money. But what’s next? Poker is full of stories of players who’ve gone broke, owe others, and hoping they score at that next event to make ends meet.
Isn’t there a better way? Many who’ve socked some money away may not know what to do. Poker players aren’t alone. Many Americans struggle with personal finance as the New York Post reported about a new study of Americans and money:
- 48 percent don’t understand interest.
- 48 percent don’t understand the concept of bankruptcy.
- 34 percent don’t understand how inflation works.
- 55 percent feel lost regarding long-term financial planning.
USPoker reached out to some who have experience for some advice.
Zak Zimbile, Kondler & Associates
Zimbile is a CPA specializing in tax and financial advice, and first advises to plan for taxes. The most important thing is awareness, he says, and to consult with an accountant to determine year-to-date earnings to estimate taxes owed.
“This gives you a better idea of how to plan the rest of your year and how future tournaments and expenses will impact your tax situation,” he says. “It is much easier to have a plan in place before the year starts [or halfway through the year in the case of a WSOP win] and follow through with that plan, rather than realize you left money on the table at the end of year because of improper planning.”
Keeping money for the future is also important – planning for retirement, a family, business endeavors, and a poker bankroll. The bankroll depends on the player. But once players determine how much to set aside, Zimble offers some ideas to make that money last and grow.
Investments depend on factors such as age and risk tolerance, but players should always consider investing a portion in retirement vehicles. A professional player is basically an independent contractor and Simplified Employee Pension (SEP) or solo 401K can help players invest in stocks and mutual funds for the future.
With a little forethought, a player can ensure a bright financial future.
Curtis Hearn, SmartMoneyNation.com
One of the first things Hearn usually suggests to those who come into a large amount of money is to plan.
“They first need to decide what the money is for – short-term goals or long-term investing,” he says. “The answer to that will drive their next set of decisions.”
For example, if an immediate goal is to set aside 20 percent as a down payment on a house, park the funds in low-risk accounts such as savings, money markets, or CDs.
“You don’t want the stock market, which can drop 10 percent at any time for no real reason, to derail your ability to buy a house,” he says. “However, if the funds are allocated to long-term goals, such as retirement, then they can be invested in higher risk and higher return vehicles, such as stock mutual funds and ETFs (exchange traded funds).”
Consult a tax professional to determine how much to set aside or pay in estimated taxes, and help with any possible deductions.
Poker bankroll is an individual choice, but the goal is to make some of that money last. Hearn encourages players to take time and track their spending with the goal of coming up with a monthly living expense number that is comfortable for them.
“Don’t let your winnings tempt you into lifestyle creep, the tendency to spend more just because you’re earning more,” he says. “Instead, save and invest whatever you make above your baseline level of expenses, and if you do that long enough, eventually you’ll reach what I call financial independence – where your investments produce enough income for you to live without ever working again.
“How much better of a poker player would you be then if you had a nest egg set aside, producing income, and never had to worry about getting a ‘real job’ again?”
Things to keep in mind:
- Take risks in areas you have expertise and can control, like poker.
- Don’t take unnecessary risks with investing – diversify, keep costs low, and don’t try to time the market.
- Poker should be the exciting part of your life; keep your investments boring and simple. For more on that, click here.
Alan Percal, CryptoMarket360 and PERC360
A trained actuary, Percal has $661,000 in live tournament winnings and a WSOP bracelet. Percal doesn’t play tournaments or cash games that could change his lifestyle – instead he plays within his own limits.
“I used to be a lot more risk seeking when I was younger, dumber, and not engaged,” he says. “Because of my new perspective, wins and losses don’t change my life too much and allow me to play my best game without being worried about downswings.”
He considers that one of players’ biggest financial pitfalls – games too big for their bankroll. Reviewing his own financial plan offers some advice for others.
“I’m a pretty conservative investor since I learned a few costly lessons in college,” Percal says. “I diversify quite a bit. I own a home, an array of stocks and mutual funds, and also some cryptocurrency.”
Advice from the Godfather, BrunsonPokerPro.com
As a lifelong player who has raised a family and found plenty of success, Doyle Brunson knows plenty about personal finance for gamblers. For beginners, he recommends setting a limit on losses. As a player matures and the bankroll grows, play as long as the game is good within reason to maximize profits. Investing wisely is also important.
“My investments are a horror show, so it’s a testimony to my poker playing I’ve survived,” Brunson says. “You have to have a disregard for money at the poker table, but when you are through playing, you have to respect money and be aware of your financial position and spend accordingly.”
To help ensure profits, he recommends being a good game selector – play where you have the best chance to win.
Dave Ramsey, Ramsey Solutions
As one of America’s biggest voices in personal finance, “The Dave Ramsey Show” airs on 600 radio stations. Ramsey’s overall advice can be boiled down to one catchphrase he repeats: “Debt is dumb and cash is king.”
Certainly, that last part poker players can identify with. Ramsey believes debt (credit cards, car loans, and other financing other than a mortgage) burdens too many Americans – hindering their ability to build wealth. He also points out the importance of living within one’s means and budgeting.
Many credit him for helping to rebuild their financial lives. His book Total Money Maker outlines his ideas in investing using mutual funds.
“Your largest wealth-building asset is your income,” he writes. “When you tie up your income, you lose. When you invest your income, you become wealthy and can do anything you want.”
Sean Chaffin is a freelance writer in Crandall, Texas, and host of the True Gambling Stories podcast. Follow him on Twitter at @PokerTraditions.