Adventures in Personal Finance

I love the Olympics so it was just a matter of time before I started seeing parallels between downhill skiing and personal finance. No, really. A lot of the qualities that make these astounding athletes so successful would translate into financial success as well. Let’s take a look at a few Olympic sports and see how it compares to money management.

Downhill skiing: Feels like the stock market to me. A lot of ups and downs. And if you don’t know what you’re doing, you’ll end up in a heap at the bottom of the hill. The successful skiers know what they can and can’t do. They’re fearless and push themselves to the edge. But long hours of training give them the knowledge they need to make the best decisions when it comes to risk-taking. 

Take-away: If you play the stock market, train hard. No, this doesn’t mean getting on the slopes. It means studying the markets, reading the Wall Street Journal, and staying on top of economic trends. There will be ups and downs, and if you can’t handle the risk, put your investment money elsewhere.

Figure skating: This feels a little like reading the fine print on your credit cards’ disclosure statements or making sure you balance your checking account. This is a very detail-oriented sport. The skaters lose points for things I can’t even see when they’re skating. But when I see it in slow motion–and the announcer tells me what to look for–I see it.

Take-away: If you don’t pay attention to the details, you’re going to lose money and you won’t even know it right away. For example, if you’re being charged inactivity fees on your credit cards and you don’t know it, you’re giving your money away. Pay attention to the details of your financial life and you’ll prevent a lot of wasted dollars.

Curling: Feels like an IRA to me. Curling is like the Olympic version of your favorite restaurant’s combination platter. I see traces of pool, shuffle board, hockey, and marbles (the stones they use remind me of giant marbles). The games are long and it takes a long attention span plus skill to win.

Take-away: Building your retirement takes a long time. And if you don’t keep paying attention and notice trends, your IRA might lose value. Not that everyone could’ve salvaged their IRAs in the recent economic meltdown, but paying attention to the market over the long haul can help you make better decisions about where to put your stone, um, money.

Bernanke says the recession is likely over. Well, okay, then. Start your engines and get to the mall!

I”m only partly joking about the “getting to the mall” part. Retail sales in August did increase. And the Dow did go up today after Bernanke’s statement. This is good timing for such a declaration, too, because September, even when there’s not a recession going on, is historically a bit of a downer for the Dow. The “Bernanke says the recession is over!” sound bite is what you’ll see all over the Internet, but Bernanke also warns that things might not look too good on the job front for quite a while. So while the slide may be over, there’s a recovery period ahead.

I don’t want to sound like I’m crashing the party because I’m actually very encouraged and quite optimistic about the economy. I’m self-employed and business is hopping for me. A post today in the Wall Street Journal blog, “Real Time Economics,” is about how people are starting to buy the little things again. Cash for Clunkers, some say, did give retail a boost, but folks are also spending money on things they’d given up for a while. Things like  dining out, buying sporting goods, and yes, shopping in department stores at the mall. 

So while the end of the recession doesn’t mean everyone’s pain suddenly disappears in a poof of smoke, there’s at least an end in sight. And sometimes glimpsing a few signs of life can help you make it the rest of the way back to financial stability.