Why You Need to Play Defense & Offense With Your Money

And how money bloggers can join forces to help you

At FinCon’s Investor meet-up last week, the handful of investors at the conference brainstormed ways to make FinCon more investor friendly. Some mentioned creating an investing-specific track, while others suggested holding a separate “InvestCon” simultaneously nearby.

Personally, I think creating an entirely separate space for investors at FinCon is the wrong way to go. Why?

Because further isolation among the FinCon community will only perpetuate the stigma of investing.

After numerous conversations with writers who blog about credit, student loans, and budgeting, it became clear that even they, whom many readers look to as experts, feel that investing is somewhat out of their realm. Or they think that robo-advisors are the be-all end-all of investing, and shy away from other strategies (likely fueled by affiliate relationships with said robo-advisors, which I completely understand #hustle). So, when introducing myself as a millennial investor and former hedge fund analyst, I was sometimes met with blank stares. It was as if I didn’t belong unless I had a similar “I paid off $X of debt in X months” story. Many of the puzzled looks I received seemed to beg the question “Why are you here?”

Why was I there? Because I care about the same things as they do! I want to empower you, my audience, to take control of your finances. I want to give you the tools you need to establish a game plan for your money. I want to help you achieve financial freedom, whatever that may look like to you. And I believe investing is a powerful, yet sadly forgotten or avoided tool that can be used to accomplish those goals.

My fellow investing educator, Eric at Black Market Exchange (BMEX), explained it best with a sports analogy. He said we’re all on the same team, it’s just that the debt decreasers and budget balancers play defense while we growth gurus play offense. To “win”, our viewers must learn how to do both.

I thought that was such a fitting analogy that I decided to flesh it out further for you and for the FinCon audience using my favorite spectator sport, football, as an example.

Let’s start with the definition of defense, as it pertains to sports: 

Defense is the action of defending one's goal against the opposition.

In football, the goal is to defend your end zone and get into the other team’s to score. When it comes to money, the goal is to defend your financial position and “score”, which could mean building wealth and/or reaching financial freedom. The opposition represents any number of outside factors, some out of your control like prices, interest rates, market returns, etc, and some under your control like your spending habits, credit cards, and student loans.

Personal finance experts teach you defensive tactics to combat these external factors.

They show you how to keep the “opposition” at bay, but rarely ever teach you how to score yourself. These defensive tactics represent a reactive approach to money; they’re actions taken in response to a situation, after events have already transpired, rather than actions meant to control the situation.

For example, if you graduate from college with a boatload of student debt, a personal finance blog that focuses on debt pay-down can teach you how to consolidate your loans, refinance at a lower interest rate, and choose your payment schedule. If you have nasty spending habits and have racked up thousands of dollars in credit card debt like recovering spender Lauren Greutman, a budgeting blog may teach you how to cut your discretionary spending or start couponing to free up cash. Or maybe cutting spending isn’t an option, so you look to a side hustle blog for ideas on how to increase your income instead.

Either way, these are all inherently defensive measures. They’re ways to deal with issues that have already reared their ugly heads, and methods to prevent them from transpiring again. They are reactive strategies, not proactive strategies.    

Investors, on the other hand, are offensive players.

By definition, an offense is an organized, forceful campaign to achieve a goal.

In football, that goal is to score. When it comes to your money, the goal is to build wealth and put your money to work for you. Investors aim to triumph over external factors like interest rates and inflation by seeking out and exploiting various fiscal opportunities. We can show you how to use offensive tactics like leverage and rate spreads to generate positive returns, and teach you how to recognize mispricings and other discrepancies in valuation. In this way, investors take a proactive approach to money. We react to market conditions, sure, but more so try to control our situations by making things happen, by making calculated plays.

For example, in addition to spending our hard earned money as a consumer, we look to invest some of our money in ways that will pay us dividends in the future. Rather than buying things like new(er) cars that depreciate in value over time, we buy assets like property and stocks that we think will increase in value over the long term. Rather than fearing debt, we know that it can be used strategically to fund growth and generate future returns. In short, we investors focus our efforts on scoring instead of on preventing the opposition from doing so.

Think of it like this:

We all come into the world on the 50 yard line, with a neutral (net zero) financial position. No inherent wealth or debt. We face off against the “opposition” (prices, interest rates, inflation, credit cards, student loans, debt, etc) at the line of scrimmage. And so begins the game.   

When you start making money, you’re on offense. But as soon as you start spending your hard earned money on consumer goods, you’re on defense. As you budget, you push the opposition back toward their own goal line, making it harder for them to score. They lose yardage, and you may reach a positive net worth.

Then you take on debt like student loans, auto loans, and mortgages to pay for things outside of your means. The opposition advances and you lose yardage, going into negative net worth territory, getting further and further away from scoring.

Over time, it becomes this constant struggle to keep pushing the opposition back. Even if you successfully force them all the way to their own goal line by paying off your debt or becoming the budget queen, keeping the opposition at bay is all you can do from a defensive stance. Are you supposed to just live frugally for the rest of your life? That’s a consumer’s mindset, not an owner’s mindset.

You won’t be able to “score” until you force a turnover and take possession of the proverbial money ball. Then, whether you’re 1 yard or 100 yards away from the end zone, you’ve got a chance to win. If you’ve paid off your debts and budgeted well, you may find yourself in a fortunate 1st and goal position when you get on offense. In that case, you’ll be able to play it safe, maybe hand the ball off to your best running back, and slide swiftly and painlessly into the end zone.

But what if you haven’t budgeted well or are up to your eyeballs in debt? You may find yourself pushed all the way back to your own goal line with 100 yards to make up. Is it impossible to score from that position? No. But you’ve got a hell of a lot more ground to cover than someone who managed their budget and credit more effectively.

Ultimately, your success will depend on how much time is left in the game and how many yards you can gain per snap. The goal is to not have to resort to risky, Hail Mary style plays. Sadly, because of primarily defensive strategies, that ends up being many people’s only hope when it comes to achieving financial freedom.

That’s why it’s SO important to play a balanced game of defense AND offense from the start. When constructing your budget, allocate money to both debt pay-down AND long-term investing goals. That money “game” may not be as exciting to watch, but at least it won’t be a nail biter to the very end.

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Tara Falcone, Founder of ReisUP | Facebook: ReisUP | Twitter: @reisupllc | Instagram: @reisupllc