Profitable poker is a lot of work. One of the the most commonly ignored poker skills is in the basic financial management of play. Although most good introductory poker books include a section on bankroll management, a quick discussion with other players indicates that very little attention is payed to money management by the non-professional player.
Assuming you don’t have such deep pockets that poker losses are of no consequence, you’ll need to manage your money in order to safely continue this avocation. Further, you can’t play optimal poker if concerns about your financial viability weigh on you.
There are 6 main financial principles to follow to get you off on the right foot:
- Do you have the money to play? You need to determine whether your financial situation allows for regular play. Look at your bills, bank accounts, and needs for the future and determine whether you have the resources to play, how often and at what stakes. It sounds obvious and simple, but there are clearly players deciding to play rather than using their money for bills. Make sure that even if you lose a specified amount over the next year, your life won’t change substantially.
- Designate a stake. Once you know it’s OK to swim into the poker pool, set your stake apart from other checking accounts, savings, and investments. A common rule of thumb is to have 25 to 30 buy-ins to protect against the inevitable swings that will occur. So if you are playing $1/$2 cash and you buy-in for $200 each session, you should have $5,000-$6,000 set aside as a stake. If you play in a weekly $100 tournament, you should have $2,500 to $3,000 too start.
- Don’t move up until you’re reliably profitable at your current level. Although the higher percentage rake often associated with the lower cash and tournament games, can make them challenging to turn a profit, don’t move up to higher games until you have consistently shown good results at your current level. Don’t follow a great three month run of winning poker by saying “I’m up $4,000 in the past three months, I’m going to buy-in to the next $1,000 WSOP circuit game at my casino and give it a shot.” It is so tempting to do so with what feels like “found” money, but see how it goes when you return to baseline before you venture into more expensive games.
- Track your results. Everyone is a profitable player at the table. Players recount a spectacular run and forget the 15 consecutive losing sessions that preceded it. Open a spreadsheet, put a date in column 1, your buy-in in column 2, and your profit/loss for that session in column 3 (if a tournament, make sure to subtract your tip). Keep a running tally and never omit a session. Better yet, include a column with notes about key hands/issues from that session. At minimum, you need to be able to answer the the question “How has the year been going?” not with “Not too bad,” but with “I am down $548” or “I am up $345.” Always know exactly where you are.
- Be aware of ancillary costs. If you have to drive a distance (gas $) or tend to buy drinks (alcohol $) at the table, or tend to go out to dinner after a session (food $) make sure you understand what your costs are and try to minimize them. My wife and I realized we were spending more on dinners after playing poker than were were on the poker itself. When we curbed that and planned cheaper ways to eat, suddenly the cost of poker became much easier to absorb.
- Never borrow money to play. “I haven’t seen Teddy in a couple months, do you know what’s up?” I once asked another player, referencing a former regular. The response was “He borrowed money from Mike the dealer and never paid it back, so he’s ducking him and playing at the room across town.” Shakespeare’s sage advice from Hamlet “Neither a borrower nor a lender be” is never more true than in the world of recreational poker. If you are borrowing, your stake is gone, and so should you be from the tables until you are viable once again.
While the 6 considerations above are not the most enjoyable aspects of poker to think about, they may well be the most vital in keeping the game a fun part of your life.
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