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How to Manage Your Money | 18 Legit Personal Finance Tips
Money management and personal finance can be touchy subjects. Many people experience a lot of anxiety when they think about their financial lives, both as they are today and how they may look in the future. Maybe you didn’t start saving for retirement as early as you’d hoped or perhaps you didn’t get an emergency [. ]
Money management and personal finance can be touchy subjects. Many people experience a lot of anxiety when they think about their financial lives, both as they are today and how they may look in the future.
Maybe you didn’t start saving for retirement as early as you’d hoped or perhaps you didn’t get an emergency fund in place and ended up in debt. Whatever your circumstances, deciding to take control of your situation now is always the best choice.
You simply have to follow a few key steps and you’ll be well on your way.
How to Manage Your Money
There are three important money management levers, all of which you can control:
- Making Money
- Saving Money
- Investing Money
While each of these is important, when you manage all of them well, you’re going to be making the most of your money and your time.
See, the sum is much greater than the parts. It’s like a formula, where the more things that you do right the more money you’ll be making and the faster you’ll reach financial freedom.
It’s also important to track everything using a simple free app like Personal Capital.
When you manage your money well, it’s like making money in your sleep.
Now let’s dive into how to manage your money well.
18 Money Management Tips to Improve Your Finances
Managing money and learning how to manage money is easier than you think. If you aren’t sure where to begin, here are some of the most amazing money management tips to help you win on the personal finance front.
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1. Make the Most of Your Full-Time Job
Even if you don’t like your full time job or dream of launching your own company, today it is the most immediate place where you can probably make more money.
The simple fact is most people are underpaid but they accept the amount of money they’re getting paid because they’re either afraid of getting fired if they ask or they don’t know how to get a raise.
You have the power. Don’t be afraid of your boss.
For many years employers had the upper hand and have been taking advantage of their employees, but this power dynamic has shifted and in many company’s and industries, employees now have the leverage.
There are too many open jobs in the economy right now to get filled and talent is in high demand. Don’t settle for the status quo.
Most people spend more time planning for their vacations each year than they do optimizing their careers. If you’re not making the most of it your full time job and making as much money as you can from it, you’re selling yourself short.
Figure out how much you should be getting paid by analyzing your current market rate for someone with your skills and experience by using websites like Indeed and Glassdoor.
You should also contact and build relationships with at least two recruiters in your industry.
Because recruiters live so close to the market they not only know what you should be getting paid, but they can also recommend additional skills you can develop (check out my post on best skills to learn), and potentially even recommend a new higher paying job or company.
2. Start A Side Hustle
Diversifying your income can be just as important as diversifying your investment portfolio. By starting a side hustle, you can bring cash in and give yourself additional financial security.
A side hustle is anything you do to make money outside of your full time job.
While you can side hustle doing anything, you’re more likely to have success if you start a side hustle you enjoy doing and one where you set your own fee and hours.
While it’s not bad to drive for Lyft or Uber, there are real limitations with these types of side hustles because you are limited by the hours you can drive in a day and how much you get paid is set by the company, not you.
Any side hustle where you manage your own time and decide what you can charge has the potential to make you more money.
Some of the best side hustles:
- Blogging: Read my guide on how to start a blog with Bluehost and get my FREE 7 day blogging side hustle email course — where I share the step by step blueprint thousands of people have used to start a blog that makes money)
- Online Surveys: While you can’t necessarily earn a living by doing online surveys, you can earn some quick cash by sharing your opinion. If you want to make a little extra money, checkout the best survey sites.
- Becoming a virtual assistant: Sound interesting? Find out how to become a virtual assistant.
- Start a YouTube channel: If you think you’re worth watching, here’s how much youtubers make.
For more side hustle ideas, check out our series on side hustle success stories.
To learn more about side hustling check out Chapter 10, More Money in Less Time: How to Launch A Profitable Side Hustle in my book Financial Freedom: A Proven Path to All The Money You Will Ever Need.
In the chapter I lay out a very detailed step by step strategy to picking, launching, and growing a side hustle.
3. Start Budgeting
There are two types of people: those who like budgeting and those who don’t. I’m in the latter camp. I’m definitely not a fan of budgeting.
I find that budgeting often reinforces a scarcity mindset where you spend so much time cutting back on the small purchases that often bring you the most joy.
You track every penny going in and going out and it just takes so much time. But if you’re the type of person who thinks they might be into budgeting, then you should learn how to budget.
Instead of budgeting I simply focus on optimizing my three biggest expenses, housing, transportation, and food.
The average American family spends almost 72% of their incomes on those three expense categories.
While small purchases like daily lattes, glasses of wine, or your Netflix subscription can add up, you’re going to be able to save the most amount of money where you spend the most money.
Through house hacking (a form of real estate investing), you can easily save 30% percent or more of your income. Your rent or mortgage is likely your biggest expense each month so reducing it as much as possible and investing the savings will add up quickly.
In addition to your housing expense, it almost always makes the most economic sense to buy a used car instead of a new one and investing the savings.
It’s also worth taking the time to reduce your food expenses and work hard to save money eating out.
There you have it: save on your homeownership, car ownership, and food. It’s the only budget you’ll ever need. Then instead of budgeting, you can spend your time going out and making more money.
4. Get Out of Debt
Whether its student loans, credit card, or mortgage debt, being in debt often keeps us up at night and is incredibly stressful.
But don’t worry a lot of people get out of debt every day and you can too. Also, all debt is not created equal.
To learn more check out my post on good debt vs bad debt, but the basics are pretty simple.
Managing debt is just a numbers game. Always pay down your debt with the highest interest rate first.
In almost all cases, credit card debt carries the highest interest rates, followed by private loans, student loans, and mortgages.
While there are many strategies for paying down your debt, like paying off your smallest balance first and then moving onto your next biggest debt (aka debt snowball) or paying down your biggest debt first (debt avalanche), these aren’t great debt repayment strategies because they don’t focus on saving you the most money.
Pay off Credit Card Debt
You save the most money by paying down your highest interest rate debt first, no matter what type of debt that it is.
Credit card debt is bad debt because the interest rates are typically so high, often 20%+ or more. Credit cards make financial institutions a lot of money because most people don’t pay off their debt each month, so the debt grows.
Take the Sting Out of Student Loans
Student loan debt is somewhere between good debt and bad debt depending on 1) the interest rate 2) if you’ve used student loans to fund a degree that helped you get a job or a more lucrative career.
If you haven’t yet taken out student loans, it’s worth thinking really hard about whether or not they’re worth it. If you’ve already taken out student loans and the interest rate if above 5% then you should consider student loan refinancing and other ways for you to reduce student loan debt.
There are many types of student loans, so it’s also important to figure out what types of student loans you have before refinancing.
Over the life of an average student loan, borrowers can save up to $20,000 if they choose to refinance. By refinancing your student loans, you can secure lower rates and consolidate your debt, making your payments more affordable and convenient at the same time.
Pay off Your Mortgage Debt
Mortgage loans are another popular form of debt. It’s very common when buying a home or investing in real estate to take out a mortgage from a bank or lender to help pay for the home.
Mortgage rates vary widely so it’s worth taking the time to shop for a good mortgage rate if you haven’t bought a home yet.
If you already have a mortgage, you might be wondering whether it makes sense to pay off your mortgage rate as quickly as possible.
In most cases, it probably makes sense to keep your mortgage and invest any additional money you have into the stock market, especially if your mortgage rate is low.
For five years I had a 2.3% mortgage rate even though I could have paid off my mortgage entirely, it was a better financial decision to keep using the banks’ money and investing my money in the stock market instead.
I ended up making over $100,000 on my investments because they grew over 10% each year (10% is a lot better than 2.3%).
Pay Off High-Interest Debt with a Personal Loan
If you’re plagued by high-interest credit card debt, paying it off with a personal loan can be a smart move. Not only will you get a fixed interest rate, but the finite nature of the loan also makes your payments predictable. Plus, you’ll know exactly how long it will take to wipe out your debt, and may even see a credit score boost after paying off your card.
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5. Build Passive Income
When it comes to making money, building a passive income lifestyle business is the holy grail. But there are a lot of myths about passive income ideas and a lot of shady products being sold online that promise to help you build passive income sources.
Is it actually possible to build passive income streams? Absolutely.
But does this mean that you can make money doing nothing? We’ll not exactly Most passive income businesses actually take quite a bit of time to set up, but if you find the right one, then the time investment is totally worth it.
Best Ways to Build a Passive Income
Other ways to build a passive income business include: starting any side hustle or business where instead of trading your own time for money, you broker other people’s time.
I call this becoming the “uber of your life,” because Uber doesn’t own or drive cars, they simply connect people who need a ride with people who will give you a ride.
They’re actually a connector between supply and demand. You can do this in any industry. For example, instead of walking dogs for a dog walking company where you’re going to be limited by both the hours you have in a day to walk dogs and your dog walking rates are set by a company like Wag.
Instead of walking dogs for someone else, start your own dog walking company and focus on getting clients, so you can hire other people to walk the dogs instead of always walking them yourself.
Then you can set your own rates and you’re not limited by the hours you have in a day because you can hire other people to walk the dogs.
6. Make Your Checking and Savings Accounts Work for You
As I’ve discussed before in a post on how to start investing, there is a direct relationship between the percentage of your income that you’re saving (your savings rate) and the number of years it takes you to retire early.
When you combine a high yield savings account and a high-interest checking account, you make sure that all of your money is always working for you instead of just sitting there.
If you are looking for great high-interest checking and savings accounts, check out Discover Bank at 1.60% APY. They offer free options that can help you make the most of your money. Discover Bank Review
If you need to build a cash nest egg, automating your savings makes it simple. Decide how much you want to add every month or paycheck and schedule a deposit to move the money every time, ensuring you won’t forget to pay yourself first.
7. Invest Early, Often, and As Much As You Can
While you can invest in literally anything, the three most dependable investment classes are:
The reason they’re the most dependable is that we have a lot of historical data about how they perform, and you’re able to control a number of the key variables to maximize your investment returns while minimizing your risk.
While I’m not going to get into too much detail here (if you want to dive deeper check out how to start investing and my investing strategy posts).
But the basics are simple and in fact, the best investment strategies are actually simple.
Invest in index funds, like VTSAX, which has low fees and incredible diversification. Instead of buying individual stocks, buy the entire stock market. Stick with what works.
Once you’ve settled on an investment strategy, the next step is to invest as much money as you can.
The more money you invest the faster and more your money can grow due to compounding.
Here’s a simple example of investing $100 if we keep it invested at 10 percent annual growth for forty years, without adding any more money to it. Just simply because of time the $100 has turned into $5,370 in forty years.
This chart originally appeared in the Financial Freedom book by Grant Sabatier.
If you haven’t started investing yet the most important step is to simply start today using one of the best investing apps, which allow you to invest your spare change automatically.
If you’ve already started investing then you should try to increase how much you’re investing every month by as much as you can.
One easy way is to increase your investment contribution amount 1% every 30 days by talking with your human resources department or 401(k) provider.
Trust me, you won’t notice the extra 1% and within a year you’ll be saving 12% more of your money.
If you prefer to think in terms of dollars instead of percentages, then try to invest an extra $50, $100, $1,000 or more each month over the next few months. Every dollar adds up.
Try Real Estate Crowdfunding
Until 2020, real estate investing was the domain of the wealthy. Now, thanks to the JOBS Act, anyone can get into the game with real estate crowdfunding.
If you’re looking for a portal and don’t have a lot to get started, consider trying Fundrise.
Fundrise provides access to eREITs and eFunds, a form of real estate portfolio with a level of diversification.
By using the money management tips above, you can gain control over your financial future. Try one (or several) of them today and see if you can’t get headed in the right direction.
8. Plan for Emergencies
If you own your home, house repairs like roof replacements can easily cost $10,000 or more, depending on where you live. Similarly, if an appliance like your refrigerator fails, getting another one usually can’t wait and can quickly set you back hundreds or more. This is why an emergency fund is crucial.
Even if you don’t own a home, that doesn’t mean there aren’t major costs on the horizon. Replacing your vehicle usually costs several thousand, if not tens of thousands. Home computers can be as expensive as a major appliance and are deemed necessities in many households.
If you have something big you can’t live without or face regular maintenance costs, make sure to plan for them. Break down the expense by how many months you usually have before it hits (you can look up average lifespans for most things online) and set the cash aside to make sure it’s there when you need it.
Prepare for Medical Emergencies
Even if you have insurance, a broken arm, head injury, heart attack, or similar medical emergency will still be expensive. Ideally, you need to maintain an emergency fund that can not only cover your portion of medical costs but also handle a few months of living expenses. That way, if you miss work, you can pay your bill and keep up with your bills until you heal.
If you do not have an in case of emergency binder yet, make one now!
9. Take Control of Your Credit
Your credit report and score play a massive role in your financial life. By monitoring your credit, including your score, you can make decisions that improve your situation, both today and in the future.
While there are tons of credit monitoring apps out there, Credit Sesame helps you keep an eye on your report and score for free. You’ll receive customized recommendations and access to helpful tools, empowering you to make better choices every day.
10. Optimize Your Taxes
The average American pays over 20% of their income to taxes, so finding ways to save money on your taxes can really add up over time.
While you might think taxes are boring, it’s definitely worth learning the basics of tax optimization because it can not only save you money, but it also gives you more money to invest.
You don’t have to become an expert on tax laws, but it’s worth taking the time to really understand your own taxes each year, even if you’re using a service like H&R Block, TaxAct, or using an accountant, getting to know your own tax situation at a detailed level is an important step in managing your money well.
Over time as you do your taxes each year it gets easier to spot where you can save money next year, what new deductions you can take, and more.
Also, if you’re a side hustler you should consider launching an LLC so you have more opportunities to deduct your side hustle expenses from your taxes.
A big benefit of launching any lifestyle type of business is that you can actually reduce your tax bill in many ways as your business gets more integrated with your life.
11. Get Cheaper Car Insurance
Many people don’t reevaluate their car insurance regularly, and they pay a penalty for not taking a look. For example, if you recently paid off a car, you might not need full coverage anymore, presenting an opportunity to save, even if you don’t change carriers.
However, doing a little comparison shopping is always wise. You can get quotes from competitors for absolutely nothing, and might discover an option that costs much less than what your current provider charges.
If you don’t put a lot of miles on your car each year, you very well could be overpaying simply because most traditional insurance isn’t ideal for incredibly low mileage drivers. For those who barely take their car out of park, Metromile, a pay-per-mile option, could help you save a ton.
12. Get Life Insurance
No matter what stage of life you are in, life insurance should be viewed as a must. Otherwise, you saddle your loved ones with your expenses if you pass away, or leave them unsupported if you are the primary breadwinner.
If you want to compare life insurance options, check out our instant quoter below.
Money Management Strategies for Sports Betting
Becoming a successful sports bettor takes more than just making good bets, it also requires strong sports betting money management strategies.
Picture this: it’s Sunday night and you’re watching the last football game of the day. You bet the underdog which is down by six points in the fourth quarter. As the clock ticks down and your team drives the field, your heart is pumping as you cross your fingers in hopes of pulling off a big upset.
Sure enough, your team pulls out a huge fourth-quarter comeback, resulting in your biggest win of the day.
You’ve scored a big win but how do you make sure you’re smart with your profits? Money management strategies are ways to maximize your chances of continuing to win while minimizing your risk of losing it back. These bankroll management methods are extremely powerful and they’re an absolute must for winning gamblers.
On this page, we’ll clearly explain everything you need to know about how to manage your sports betting bankroll, easy to follow tips and strategies and important things like win and loss limits.
What Is Bankroll Management and Why Is It Important?
All across North America, online sports betting is becoming more and more common. Betting on sports can not only enhance your viewing experience, but you can also make money by doing your research and playing the odds.
Gamblers love the thrill of being in high-risk, high-reward scenarios. Making big, risky bets is a good strategy if you want to get the blood pumping and the adrenaline flowing but if you don’t have a plan, it will eventually end in disaster. That’s where money management strategy comes in.
There are lots of things you can do to give yourself the best chance of coming out on top and that’s exactly what we’re going to teach you on this page.
The concept of bankroll management is one of the most valuable sportsbetting strategies you can learn. It has to do with the amount of money that you’re able to invest in gambling at a particular time and how you choose to invest it.
Many of us have to put together a monthly personal budget that accounts for our expenses, set limits as to what we can spend and maybe even helps us build our savings. Bankroll management in gambling operates in the same way.
If you only have $1,000 to gamble on a given weekend, it would be poor bankroll management to put everything you have on the first game and potentially walk away empty-handed.
Here are some of the other terms that tie into bankroll management:
- Betting Bankroll: Lots of gamblers set limits on what they are willing to bet in a day or a week, for example. This is different than your total bankroll which should never be put at risk on a given day or week.
- The Pot: Synonym for Betting Bankroll.
At the end of the day, you only want to use money in your bankroll that you can afford to lose. Even though it sounds simple, there are some who choose to gamble instead of paying bills. Practicing good bankroll management will guarantee you’ll never be in that position.
Tips for Sportsbetting Money Management
1. Play within Your Budget
If you’re a recreational sports bettor, not betting too much is a really important lesson to learn. You should only gamble with money you’re comfortable losing. That way it’s always going to be fun and you don’t have to stress unnecessarily about a bit of bad luck.
The goal is to have fun and enjoy the experience. If you’re risking money that you can’t afford to lose it’s never going to be fun.
2. Have a Separate Gambling Bankroll
This is a lesson many gamblers learn and never actually put into practice but it’s really important. Separate a certain amount of money from your personal finances and make a plan not to spend more than that on gambling in a certain period of time, whether it’s a week or a month.
When you’re dipping into your personal bank account every time you make a bet it’s really easy to lose track of your overall wins and losses. It’s also way easier for your gambling to negatively affect your overall finances if you’re not keeping track.
3. Don’t Take Money from Your Bankroll
The best bettors in the sports gambling world work on slowly building up their bankroll over time. One big way they do that is by not withdrawing money from their total bankroll every time they chalk up a win.
You should be gambling on sports for fun, and a big part of that is by using the money you win to buy something or do something fun. For that reason, you can have some leniency here in terms of taking from your bankroll, especially if you’re just an occasional gambler.
However, if you want to become a better sports gambler and work your way up to making truly big wins, it’s really important to keep as much of your winnings in your bankroll as possible. Money is like ammo for gamblers and the more you have, the more damage you can do with your bets.
4. Keep Detailed Records
What good is bankroll management if you don’t know how much money you have in your bankroll, or how much you’ve won and lost in a given month?
This might sound like a simple tip but it’s definitely one that is vastly underutilized in the sports gambling world.
Tracking your bankroll management and bets is also a quick and easy way of keeping track of your betting history. This can help you review your past bets, to give you an idea of where your successes and failures came from in the past. You can do this in an Excel document, or even in a good old fashioned notebook.
Look at where your profits are coming from. What sports, teams, and bets are making you the most money? Alternately, where are you taking most of your losses? It takes some work but by focusing on your strongest areas and avoiding your weakest ones, you can make a massive difference to your bottom line.
How Much Should I Bet on Sports?
How much you should bet on sports depends on lots of things and it’s different for everyone. One thing that’s the same for everyone, however, is that it’s really important to be consciously aware of how much you’re betting and how it relates to your overall finances.
With online casinos and sportsbooks making it easier and easier to gamble, it’s now more important than ever to set aside a separate budget for gambling. It’s really common for beginner gamblers to take money right out of their regular bank account each time they make a bet. If things don’t go their way in the beginning, the sting of losing can turn them off of sportsbetting in general.
One great way to make sure that doesn’t happen to you is by asking yourself that one question: how much are you willing to lose? Separate that money from your regular day-to-day cash and mentally tag it as money you’re spending for recreational entertainment.
Prepare for the Worst
We’ll explain the best strategies for diversifying your bets and generating income later on but in sportsbetting, there are never any “true” guarantees. Even teams like the Browns win eventually.
By setting aside a budget for gambling every month, you can protect yourself from runs of bad luck by minimizing your losses. Once you eventually do start winning, your bankroll will still be intact so you can take advantage of the good luck.
There are always ebbs and flows in betting, so always set a ceiling on your spending so you don’t stress out too much during the rainy days.
Work for the Best
It’s easy to get jealous of those who are blessed with beginner’s luck in gambling. Whether it’s picking based on logos or team names, chances are you know someone who’s won their pool with no experience whatsoever.
While a lucky play can induce jealousy, long-term success at sports betting is all about putting in the work and research that will pay off time and time again. After establishing a bankroll and a budget, the building blocks are in place for using that hard-earned cash to find value in your bets.
Combine Bankroll Management with Value
We’ve established that maintaining and tracking your bankroll is one of the single most important aspects of sports betting. Deciding on a responsible amount of money and setting it aside for gambling is crucial if you want to start off your sports betting career on the right foot.
The second-most important aspect of gambling is finding value in your bets. It takes experience, good statistical research, and even building stats models in order to find good value. And once you make good bets, hedging these value bets is another powerful and prudent way to invest your money in sports betting.
Once you’re able to find value bets within your sports, it becomes a matter of how much of your bankroll you want to spend on value bets. Diversifying is always a good strategy, but you can also use these to strategies to both make smart bets while preserving and growing your bankroll.
Let’s take a look at a few popular ways to do it:
Calculating Bets Based on Units (Set Percentile Strategy)
One of the best ways to preserve your bankroll is to make bets based on units instead of dollars. By this we mean:
- Take your total bankroll and divide it into 100 units.
- If you have $5,000 to gamble, one unit would equal $50.
- When you place a bet, think of those units as a percentile.
Calculating your bankroll as 100 units makes it easier to understand the size of your wager in relation to your total bankroll. A good strategy is to wager one unit on each bet. That way you can make sure that you aren’t eating into your bankroll too much, especially early on as you just begin placing bets.
This is a relatively safe betting strategy, known as the Set Percentile strategy. The safety of it may mean it takes you longer to earn more, but it’s a powerful strategy to adopt if you want to enjoy both longevity and success in the sports betting world.
What is a Stop Loss Limit?
You might think that winning money is the hardest part of sports gambling, but sometimes the hardest thing is knowing when to stop.
- A stop-loss limit is a predetermined amount you’re willing to lose in a certain period of time. When you reach that number in losses, you stop gambling.
- If you give yourself $100 to gamble within a day, for example, once you lose $100 you stop gambling.
- Self-control is crucial in order to preserve your bankroll and setting up a stop-loss limit strategy helps you reach that goal.
Why Should I Use a Stop Loss Limit?
Not everyone employs a stop-loss limit when sports gambling, and it’s an easy way to fall into a big hole fast. It’s easy enough to type in a credit card number a gamble more money away, which is why it’s important to find practical ways to be diligent with your money.
If you followed our earlier advice about having a separate gambling bankroll you’re already ahead of the game. If not, follow these tips to get a handle on things.
If you’re betting using cash, keep only the cash you want to use in an envelope and keep separate from other ways of taking out money. For debit cards, try transferring the money you want to use for gambling into a specific account.
However you want to go about it, setting up a stop-loss limit is one way to make sure you preserve your bankroll for future bets.
Types of Stop Limits
Here are some of the stop-loss limit modes employed by the pros.
1. Session Stop Loss
The idea of splitting your gambling into sessions helps you set a certain amount to gamble in a specific period of time. For sports betting, you might set $200 aside for the day, and bet it on 20 different matchups or lines.
The important thing to note is that your session ends once you run out of money, If you want to bet on sports throughout the day, you might want to split your sessions so that you have enough money to last all day even if things go poorly early on.
Just make sure not to dip back into the wallet once the bankroll for your session is exhausted.
2. Stop Win Limit
Deciding when to stop when you’re losing is important but, perhaps counterintuitively, so is deciding on when to stop when you’re winning.
Even the best luck in the world will run out eventually and it’s usually a good idea to quit while you’re ahead and lock in a big win. Creating stop-win limits is also a great way to help you develop your discipline which will help you in sports betting across the board.
Choose an ambitious number and if you hit it, stop making bets and spend the rest of the day counting your winnings.
Best Money Management Strategies
We’ve set you up with a good base for money management so far. You now know what your bankroll is, how you can establish it, and some best practices for managing it.
Now let’s dig into a few more advanced ways to expand your bankroll management toolbox.
Using a fixed staking strategy is the most common way of placing bets. Remember when we talked about calculating your bankroll in units? Well, now it’s time to figure out that calculation before you start using stakes.
Fixed stakes are simply placing the same number of units on every bet.
Say you want to have two sessions in a day and make ten bets in each session. A fixed staking strategy would be betting five units of your daily bankroll for each bet you make. This is generally the easiest way of going about your bets, and you might surprise bookies who might consider this to be a beginner strategy.
Calculating Potential Profits with Fixed Stakes
Your potential profit will vary depending on the odds, but here’s the basic calculation:
Odds (In Decimals) X Stake = Winnings
To figure out the profit just subtract the original bet from your winnings.
Here are the three most common scenarios in which you can calculate potential profit for fixed stakes.
So you’re picking the favorite this time? Safe move. An odds-on bet means that your profit is less than your stake.
Say you place two units on a stake at odds of 1.5 (or 3/2). A win would net you three units, for a profit of one unit.
Say the odds increase to 2.0. A bet of two units would net you four units, for a profit of two units.
These are certainly the best bets to win, both in terms of emotional feelings and monetary value. If you take your two units and place it on 5/1 odds (5.0), then a win would net you ten units, for a profit of eight units.
Using a fixed stake certainly makes it easier to keep track and calculate your bets. It also prevents you from heavily skewing your bets towards either a big gain or big loss. Essentially, it’s a lower-risk, lower-reward strategy.
Variable staking isn’t hard to grasp, and it focuses on calculating the value in bets. In this way you can put more of your money towards the bets you feel have the best value. It’s higher risk but also comes with a higher potential reward.
Which is Better?
In a nutshell? Neither. Or Both. It depends on your style of gambling.
Fixed stakes are easier to track while variable stakes take a bit more research and allow you more flexibility for what you want to bet on. Neither strategy is proven to be more effective, so it depends on what you want to try for your gambling experience.
Our tip: try with both methods, and track your results. That’s one way to learn which style works better for you.
Best Advice for Money Management
It’s always best to practice good habits when sports betting so that you can turn this hobby into a money-making opportunity. After you’ve set up your bankroll and found a style of betting that suits you, continue with these money management tips:
1. Diversify Your Bets
This goes with the old adage “don’t put all of your eggs in one basket.” In fact, putting your eggs in just two or three baskets generally isn’t a good strategy either.
People who make fewer bigger bets generally don’t want to put in the work and they want a big rush, but these aren’t the guys who enjoy longevity in the sports betting world. The best in sports gambling slowly build up their bankroll by placing a wide variety of smaller bets.
2. Quality Over Quantity
Just because diversifying your bets is a good strategy, doesn’t mean you should just blindly bet on everything that comes your way.
This is where doing research on your bets can put you in a better position to figure out what odds are best. Oddsmakers often make odds not just off of what the research dictates, but how they think people might bet.
The rise of the internet has given everyone the tools to really dig into the data that you think might give you an edge.
3. Stick To Your Plan
If you bet just for fun, then you probably don’t mind losing a bit of money. However, if you treat betting more like a business, then it’s easier to both win money and manage your bankroll.
Sticking to the plan may sound simple but the truth is, this is where most people fail. A lot of people know what they’re supposed to do, whether it’s stopping after losing a certain amount or keeping their bet sizes low, but that doesn’t mean they actually do it.
Making a plan doesn’t mean a thing if you don’t stick to it when it counts.
What is the Kelly Criterion?
Ever since the Kelly Criterion was founded more than 60 years ago, it’s been widely considered one of the best strategies for maximizing bankroll growth. Whether it’s the best strategy or not is up for debate, but the popularity of the Kelly Criterion is hard to deny.
The Kelly Criterion was developed by AT&T Bell Labs researcher John Kelly in 1956. It compares the perceived odds of a bet winning with the payout odds offered by the sportsbook to tell you how much of your bankroll you should wager on that bet.
How Do I Use the Kelly Criterion to Bet?
We’ll get into the equations used to figure out how much of your stake you should use in a bet, but here’s the simplistic version of how the Kelly Criterion works.
Say you’re about to place a bet on a coin-flip which has a 50% chance of winning. The person you’re betting against really wants the action and is willing to pay 2 to 1 odds when you win.
You shouldn’t need any special math to see that this is an amazing bet that you should take all day long. The Kelly Criterion is a way to analyze bets that are less clear.
The easiest way to use the formula is to find a free Kelly Criterion calculator online and plug in the numbers to see how much you should bet. If the odds work out poorly, the Kelly Criterion will tell you not to bet at all.
Speaking of Staying Away From Bets…
There is a well-known flaw involving the Kelly criterion. Often, the math could work out to tell you that you should be betting 20%, 30%, or even 40% of your bankroll.
The Kelly Criterion is designed to take advantage of good odds and it will often tell us to bet a huge chunk of our bankroll. The downside in real life is that if that bet fails it will take a huge bite out of our bankroll.
Just remember that when it comes to the Kelly Criterion, it’s best to use it as a general guide rather than following the numbers no matter what.
Let’s dive into the different components of the Kelly Criterion so that you can start using it for your own bets.
Manage Your Bankroll for More Betting Profit
Studying and understanding everything in this article will give you a firm grasp on the basics of sports betting money management.
We can’t emphasize it enough: managing your betting bankroll properly will pay off huge in the long run. Not only will it help you win more money, but it will also take a lot of the stress out the entire sports betting experience.
Proper money management also lets you track your results in a much more objective way. You won’t have to guess about how much you won or lost in a given month which lets you be a lot more realistic about your results.
If you live in a state where sports betting is legal, you can put your new bankroll strategies to work right now.
Алгоритмическая и автоматизированная торговля: 13 книг по теме
Недавно мы публиковали материал нашего читателя о терминологической путанице, которая окружает алгоритмическую и автоматизированную торговлю. В продолжение темы сегодня речь пойдет о том, как эта путаница влияет на профессиональную литературу (а вот еще один материал о книгах и образовательных ресурсах по теме).
Сам термин «Алгоритмическая торговля» сейчас настолько на слуху, что некоторые нерадивые авторы пользуются этим и втискивают его в название своих книг, чтобы привлечь читательское внимание.
Читатель видит такие книги и убеждается в том, что читает про алгоритмическую торговлю, когда на самом деле ему рассказывают об автоматизированной.
Запрос на Amazon.com по словам «Algorithmic trading» выдает более 900 книг, и несколько десятков имеют это словосочетание в названии. Рассмотрим некоторые из этих книг подробнее:
(2008) The Evaluation and Optimization of Trading Strategies,2nd Edition (ISBN 0470128011)
Книга для индивидуалов-трейдеров. О том, как разработать свою торговую систему, как ее проверить и как ее использовать.
(2009) Quantitative Trading: How to Build Your Own Algorithmic Trading Business (ISBN 0470284889)
Книга предназначена для проприетарных торговцев-индивидуалов (retail investors). Которым Чен рекомендует начать свой бизнес, проверить свои способности и стратегии, а потом замахиваться на профессию трейдера в проп фирме или в каком нибудь фонде
Книга не об алгоритмической торговле несмотря на близкое название. Автор в тексте упоминает алгоритмическую торговлю, но подразумевает под ней обычную простую автоматизированную торговлю.
(2020) An Introduction to Algorithmic Trading: Basic to Advanced Strategies (ISBN 0470689544)
Книга хоть и называется «Алгоритмический трейдинг» на самом деле рассказывает об автоматизированном трейдинге
Смешно читать, как авторы обещают рассказать про алгоритмическое исполнение ордеров, хотя сами собираются рассказывать том, как они занимались автоматическим трейдингом.
Типичный случай путаницы. Перескакивают с термина «алгоритмический» на «автоматический» свободно, прямо посреди абзаца. Не делая никакого различия. Как будто само собой все и так понятно.
В конце книги просто от балды они перечисляют алгоритмы брокеров, которые те используют для исполенения ордеров. Это чуток интересно тем, кто действительно работает над алгоритмическими движками.
Книга рассчитана имеено на индивидуальных трейдеров, которые пытаются заработать деньги с помощью автоматизированного трейдинга, автоматизация у авторов делается в Экселе. Вода про алгоритмы twap, vwap, inline, pov здесь совершенно не к месту и не имеет отношения к теме книги.
(2020) Algorithmic Trading: Winning Strategies and Their Rationale (ISBN 1118460146)
Название книги вводит в заблуждение. Эта книга про автоматизированную торговлю, а не про алгоритмическую. Предназначена для проприетарной торговли в стиле quantitative trading. Не про исполнение ордеров, а про статистический анализ рынка для зарабатывани денег с помощью разработки инвестиционных стратегий и автоматического их исполнения
В примерах часто используется matlab.
(2020) Building Algorithmic Trading Systems: A Trader’s Journey From Data Mining to Monte Carlo Simulation to Live Trading, + Website (ISBN 1118778987)
Несмотря на название речь в книге идет не об алгоритмическом трейдинге, а об автоматизированном.
(2020) Inside the Black Box: A Simple Guide to Quantitative and High Frequency Trading (ISBN 1118362411)
Книга, рекомендуемая для чтения проприетарным трейдерам, мечтающим создать свою автоматизированую торговую систему или окунуться в мир high-frequency trading.
Прочитав ее вы поймете, что в реальном мире high-frequency trading правят бал глубокие карманы, и партизанам-одиночкам с их скриптами на MQL4 в этом бизнесе делать просто нечего.
(2007) Statistical Arbitrage: Algorithmic Trading Insights and Techniques (ISBN 0470138440)
В заголовке заявлено, что книжка про алгоритмический трейдинг, но про алгоритмы ничего не говорится. Это крепкая книжка про статистический арбитраж и автоматизированную торговлю на его основе.
(2020) Algorithmic Trading and DMA: An introduction to direct access trading strategies (ISBN 0956399207)
Самая правильная книга про алгоритмический трейдинг в самом строгом его понимании – алгоритмическое исполнение ордеров.
Крайне рекомендуется для чтения всем, кто занимается именно разработкой алгоритмических движков в брокерских конторах, инвестбанках, или под инвесторским крылом. Эта книга не об автоматизированной торговле. В ней нет ни слова про «роботов», «японские свечи», «волны Эллиота» и «числа Фибоначи».
(2020) High-Frequency Trading: A Practical Guide to Algorithmic Strategies and Trading Systems, 2nd Ed (ISBN 1118343506 )
Хорошая крепкая книга про high-frequency trading.
(2020) The Science of Algorithmic Trading and Portfolio Management (ISBN 0124016898)
Книга настолько насыщена математикой, что ее просто трудно читать. Пока у меня нет мнения об этой книге, просто потому что я ее еще не осилил.
Далее список книг для общего развития в области финансов и торговли ценными бумагами. Полезно почитать как и будущим трейдерам, так и программистам, мечтающим работать в сфере финансов.
(2009) The Practical Guide to Wall Street: Equities and Derivatives (ISBN 0470383720)
Книга, написанная опытным трейдером, расчитана на тех, кто хочет найти работу в сфере финансов, но при этом еще не имеет большого опыта в области торговли на бирже.
(2006) The Complete Guide to Capital Markets for Quantitative Professionals (ISBN 0071468293)
Хорошая вводная книга про финансы и торговлю ценными бумагами. Есть небольшой раздел о том, как и чем может зарабатывать программист в финансовых компаниях.
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