What Golf Can Teach You About Financial Planning reveals links between fairways hit and dividends collected

You might not naturally see a connection between the game of golf and financial planning.

But Minaz H. Lalani, an actuary, investor and golfer does see a strong connection. That’s the focus of his clever, entertaining book entitled What Golf Can Teach You About Financial Planning.

He starts by noting that both golfers and investors assess their own strengths and weaknesses prior to teeing off – a “SWOT analysis, or evaluation of Strengths, Weaknesses, Opportunities and Threats,” before starting off a game or building a portfolio.

“Golf and finance both require mastery of timing, temperament, and terrain. A golfer must adjust to wind, slope and the pin’s position. An investor must respond to interest rates, inflation, and market sentiment. In both, content matters — and adaptability is not just a valuable skill but an essential one,” he writes.

Moments of pressure, he continues, can test golfers and investors.

“You are three holes from finishing your best round, and tension tightens your grip. You are approaching retirement, and a market downturn challenges your confidence,” he explains.

Whether you are protecting a lead or trying to catch up, you will need to make “decisions that align with your strengths and goals,” he writes.

“Are you a long hitter who takes bold shots? You might favour growth investing. Are you a precision player who avoids mistakes? You might prefer dividend stocks or bonds,” he continues.

To improve at either golf or finance, Lalani tells us, requires setting SMART goals – specific, measurable, achievable, realistic and time-bound.

In his example, John, age 45, has a 20 handicap and wants to get to 10. He also has limited retirement savings and mounting credit card debt. So a SMART approach to both objectives, writes Lalani, would be:

• Take one golf lesson per month
• Track stats on fairways hit, greens in regulation, and putts per round
• Practice three times a week focusing on weakness (short game).

For finance:

• Set a SMART goal to save $100,000 in five years
• Use an app to track spending
• Reallocate investments to low-fee exchange traded funds
• Pay down high interest debt first

The golf/finance parallels continue. Where golfers improve by using “a pre-shot routine to control nerves,” investors should “follow a regular review process for budgeting and investing.”

A bad hole – a double bogey – “is just one hole, learn and move on,” similarly, “a bad investment does not define your plan; assess and adjust without self-blame,” he writes.

Later, he notes that key golf attributes – grip, posture and swing path – have financial cousins. “Savings are your grip – your control over future options,” he notes. “Budgeting is posture, your ability to stand balanced against monthly pressures. Net worth is the swing path – a reflection of your long-term form and rhythm.”

Just as golfer take note of the numbers of fairways they hit, greens reached in regulation, and penalty strokes, investors should conduct regular “round reviews” of their finances.

“Did I save or invest at least 15 to 20 per cent of my income? Did I stay within budget this month? Did I pay down any debt? Did I review my portfolio performance? Did I avoid emotional spending or rash investment decisions? Am I closer to my key goal than I was 30 days ago,” he writes.

Just as Jack Nicklaus used to “visualize” every shot before swinging his club, we can all try to use the same approach with our finances, writes Lalani.

“What does financial success look like for you? Is it living mortgage-free? Retiring early? Supporting your children’s education?” he explains.

Take note, Lalani adds, of your “qualitative” success.

Recovering well after a bad hole, or maintaining your composure, are examples of experience that matter, he writes. In finance, “a six-figure income does not mean financial health if you are drowning in debt. A modest salary can still lead to financial peace if you manage it wisely.”

It’s a long game, he concludes.

“You do not fix your whole game in one round,” he explains. “You keep swinging, reflecting, and adjusting.”

This was a very entertaining read, and we plan to make a gift of the book to a long-hitting friend who is all-in on tech stocks, just to show that maybe there’s more than one club in the investment bag!

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