Can you smell it in the air? It’s almost here.
That time of year when brackets flutter around the office like confetti, when bars fill with rowdy fans, and when people who don’t know the difference between a bucket and a block crowd around the TV to cheer on their picks. I’m talking, of course, about March Madness. Not only is this annual event a lot of fun, but it’s also a good opportunity to examine your money — taking into account everything from your budget to your banking app.
That’s because, if the year were divided into basketball quarters, we’d only have a few minutes left of the first quarter. This leaves you with enough time to forget about your financial resolutions — yet plenty of time to recover before the December buzzer.
So, using this month’s tourney as inspiration, here are three ways to apply the March Madness frenzy to your finances.
1. Write It Out
No one records their brackets in their head. First off, there would be no way for anyone else to tell how well (or, in my case, how badly) they’re doing.
And second, it would get insanely confusing to track the swirl of teams, games, and picks without having it on paper.
If this sounds obvious, then what makes you think you can get away with keeping your budget in your head? While it probably has fewer than 64 line items, your budget is way more important than a silly sports bet.
So, taking a cue from your bracket, write out your entire budget. If you’re not a fan of traditional budgeting, then at least create a visual layout of where your money’s going. This way, you’ll ensure you’re paying yourself first by funneling money toward your goals.
2. Look at the Records
While it’s easy to get caught up in the excitement and pick teams without any background or knowledge, this usually won’t nab you the first place trophy.
There are always going to be people who have never watched basketball who somehow win it all. Similarly, there are always those people who invested in Netflix when it was $15 a share and made a small fortune. But, most of us need to rely on research.
Case in point: Investing in your friend’s new organic dog biscuit company might be tempting, but it’s probably not the safest bet. To give your nest egg the best chance of growing over time, do what’s worked before — and invest in low-cost index funds.
Over the past 50 years, the S&P 500, for example, has offered a 5.78% annualized return (after adjusting for inflation). This means that if you invested $5,000 back in 1969, it would now be worth almost $350,000. I’d call that a pretty good bet.
3. Prepare for the Unexpected
When it comes to March Madness, there’s only one thing you can count on: upsets. Some top-ranked team will fall to some underdog. That, after all, is what makes March Madness so much fun.
Though you can’t call many of life’s surprises “fun,” they are, as in the Big Dance, guaranteed. Yet only 39% of Americans could cover a $1,000 emergency. What about you? What would happen if your car broke down or you received a large medical bill? Would you lose your ability to get to work, and therefore to cover your rent?
You don’t want one financial surprise — one March-Madness-like upset — to topple your entire life. So, start putting money into an emergency fund today. Eventually, you’ll want to get to the point where you can cover at least three months of expenses.
At Chime, we make it easy with our automatic savings program. You can quickly funnel up to 10% of every paycheck toward your savings account. By saving just $100 per week, you could accrue $5,200 over the next year.
Let March Madness Inspire Your Finances
Even for a college basketball greenhorn like myself, March Madness is a blast. I always look forward to the mayhem, the upsets, and the friendly competition.
From now on, though, I’m not only going to think about basketball when March rolls around — I’m also going to think of it as an opportunity to make sure my bank account is ready for anything.