Money Management The Art Of Making Money Work For You
Surprising as it may seem, the most fundamental factor in sports betting success is not making the right selections but managing your money.
Even if you are very good at predictions, a bad series of bets will inevitably come so if you are not prepared and fail to manage your money, you will go bankrupt faster than you can imagine.
It is exactly the risk of a losing streak that makes money management so essential. This is one of the key skills to develop if you want to get a chance at winning money. Even if you intend to bet only for entertainment, knowledge in the field will be equally necessary.
Let me explain what exactly Money Management (MM) is and why it is so important. I will also offer you several simple tips that will considerably improve your bankroll.
Money Management: Essence
The basic concept of MM is really simple. It all boils down to setting aside a particular amount of money for placing bets. This is your bankroll and it should be used solely for the purpose of sports betting.
While you might deposit or withdraw money from your account, you should always maintain a fixed amount designated for betting in there.Once you have your bankroll and know exactly how much you could spend on betting, you can start using your money reasonably and efficiently.
Money management requires you to set strict rules in advance for making the most out of your money. At best, your bet size should correspond to a percentage of your overall bankroll.
There are several major principles when setting money management rules but those will be discussed later. First, I need you to understand what makes MM so important.
Why Is Money Management So Important?
There are four major reasons why proper money management is vital to your success as a bettor:
- it helps you stay disciplined if you experience a run of bad luck
- it protects you from bankruptcy
- it enables you to manage the risk you take
- it helps you estimate your real hit rate
Remaining disciplined in the face of all odds gives you a HUGE advantage in sports betting. There are numerous examples of bettors who are very skilled at making predictions but they fail to generate consistent profits due to lack of discipline.
Good money management might not necessarily protect you from lack of discipline but it will certainly help you overcome this problem more easily. Having pre-defined rules governing the size and timing of your bets makes it more likely to avoid a stupid move.
Besides, if you always stake a fixed percentage of your bankroll, it is almost impossible to go bankrupt.
You can manage the risk if you come up with a rule to stake small amounts on speculative bets with high odds, and larger amounts on the matches you are more confident in. Even if you like taking risks, you need to know how to manage them, or else you will be bankrupt before you have even started betting.
When you keep your bet sizes within certain limits, you can analyse your performance with a relative degree of accuracy and estimate your exact hit rate. If your bet sizes vary randomly, this is much more difficult to do because a massive win or loss will distort your results.
In a nutshell, good money management will help you take the right decisions and enhance your chances of making money but most of all it will protect you from losing too much.
Money Management Tips
The best tip on money management I can give you is simply to take advantage of it. There is no excuse for failing to manage your money properly because first, it is easy, and second, it will help you win. Here are several principles to keep in mind:
- Your bankroll should only be used for betting and nothing else. When you allocate funds to your bankroll, you should immediately forget about them. Think of this money as already lost. Never bet with the money for your utility bills, or with any other amount which, if lost, will affect your life in any way.The problem is that when you fear losing your money because you need to pay your rent with it the following week, you automatically compromise your perceptions and stop taking reasonable decisions. This issue is dealt with in more detail in the psychology-related section. Look at your bankroll as a tool for making money.
- Set very clear betting rules. I suggest that you keep things as simple as possible, especially in the beginning. Choose a fixed percentage of the bankroll to stake every time and stick to it. The lower the percentage, the more relaxed you will be, plus you will have ample time to accumulate experience.I know it is difficult to play 1-5% per bet with a small bankroll but believe me, this is extremely important. I didn’t get that back in the days so I lost lots of money. When you begin playing, don’t be obsessed with making money right from the start.
Instead, focus on gaining knowledge and experience. Money will come with time and greater experience.
- Use stops when on a losing streak. Sooner or later you will go on a losing streak and then MM will get you out safe and sound. Set weekly and monthly stop loss limits, e.g. upon reaching them, you stop playing until the end of the week or month. Alternatively, you could reduce the bet sizes dramatically and wait for the bad streak to come to an end.
You should take two things away from this article.
- THERE IS NO CONSISTENT PROFIT WITHOUT PROPER MONEY MANAGEMENT
- KEEP THINGS SIMPLE, ESPECIALLY IN THE BEGINNING
Money management will save you from going bust during difficult losing streaks, and you will be able to manage your risk more easily. I had a big problem as a result of complicating things, and it was a real pain in the neck while in fact it wasn’t worth it.
As a beginner, don’t go deep into complicated bankroll management strategies. Come up with the simplest of rules and follow them. When you have gained enough experience, you might add something new such as the Kelly Criterion for calculating bet sizes, etc.
Let me give you an example on Money Management. If you follow it, you will save lots of time and money.
- Stake 3% of your bankroll per bet (the percentage might vary between 1-5% based on how comfortable you are with a given bet size).
- Upon losing 15% of your bankroll, stop playing until the end of the week. Alternatively, reduce your bet size to less than 1% until the losing streak comes to an end.
- Upon losing 30% of your bankroll, stop playing until the end of the month. Alternatively, reduce your bet size to less than 1% until the losing streak comes to an end.
If you follow the three basic rules outlined above, you will easily survive long enough without going bankrupt. That way you will gain the experience necessary to become a more skilled and successful bettor.