5 Essential Rules of Bankroll Management

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Is money the root of all evil?

A very smart man posed that question at a Network Marketing seminar I attended.

I nodded in the affirmative.

I come from a working-class background; raised on a council estate. I had three sisters. My mother didn't work. My father barely earned enough to feed and clothe us.

That history created a strong bias towards poverty and “not-enoughness”. I grew up surrounded by a profound sense of lack.

That's why I nodded in the affirmative.

While it's true that the largest proportion of people opt to play poker for free; there are hoards of people who prefer the adrenaline rush of playing for money.

With this in mind, it's important that poker players throughout the realm of the community understand the importance of solid bankroll management. If you choose to play poker for money, then you need to compare money with fuel. Consider your game like it's a car. With enough fuel you can keep going, but once you run out you come to a standstill.

Here are five foundational pieces of advice that will keep your engine from stalling.

Where Are You At?

Before choosing to play poker for money, it's important to assess your current financial situation.

Grab a piece of paper and create three boxes.:

  1. Income
  2. Expenses
  3. The Nest Egg


Note down every form of income, including any form of passive (residual) income you may have from any assets you own.


Note down all your monthly expenses. For variables such as eating out, groceries or other material goods you will have to estimate. But you should have a series of fixed monthly expenses that are easy to note down.

The Nest Egg

Deduct your expenses from your income. The remainder is your nest egg.

The Negative

If the number in your nest egg is negative, you are overspending. The author of the superb financial book Rich Dad Poor Dad, Robert Kiyosaki wrote:

"Rich people buy luxuries last - poor and middle-class people buy them first."

Examine your spending habits. What can you cut back on or eradicate? In general, poor people have poor spending habits. Figure out what they are and work hard at changing them.

It goes without saying, but if you are in the negative each month, then you are in debt. You cannot play poker for money if you are in debt. Some people believe playing poker is a way of getting out of debt. The opposite is true.

Deciding to play poker to get out of debt is lazy. Dipping into savings is lazy. Taking a loan is lazy. If you refuse to take any of these outs, then you are forced to find more imaginative ways to get out of debt. Do not choose the path of least resistance when it comes to your finances.

The Positive

If the number in your nest egg box is positive, then it's time to figure out a way to use those excess funds. Before we do that, let's go back to the negative box for a second and deal with the issue of debt, and we will segue into that topic via something I like to call, The Emergency Fund.

Goal #1: The Emergency Fund

There is a tragic truculence about debt. It can leave you marooned in a pit of quicksand, slowly dragging you down until you can no longer breathe. Life's little mysteries that pop up unexpectedly like cardamom seeds in an Indian curry fuel the debt cycle.

The washing machine has broken; the Hoover has packed up; the car needs a new exhaust. Without reliable financial systems in place, these untimely interruptions create more debt. The first step towards removing debt is creating an emergency fund.

Tolerance to risk determines the size of your emergency fund. As a poker player, your risk tolerance is probably quite high. I base my emergency fund on six months expenses. If you are a little risk-averse, you may want to extend that to 12-months.

My Example:

I need £1,800 each month to support my family. Multiply that by six months, and I need an emergency fund of £10,800.

In my example, my first goal would be to siphon every excess penny into an emergency fund until it contained £10,800.

Goal #2: Pay Off Debt

I have said it before, but it's worth stressing again. You should not be playing poker for money if you are in debt. Instead, if you love your poker, use it as leverage to get into a financial situation where you can play whenever you want.

During your emergency fund accumulation, you will need to pay off the bare minimum of your debt. Next, start snowballing every penny you have into your debt load, once you have reached your emergency fund goal.

Debt mainly takes the form of credit cards and loans. Always choose the debt load with the highest interest rate, and focus on that first. Then, move down the chain.


  1. Credit Card Debt - £3,000 (4% interest) - Min payment £25
  2. Credit Card Debt - £15,000 (0% interest) - Min payment £75
  3. Loan - £15,000 - (2% interest) - Min payment £150

Using the above example, you would be forced to pay £250 per month in overall minimum payments. All excess cash in your nest egg should be used to pay off as much (C) debt load as possible because the interest payment is the highest at £300 per month.

Once you have finished paying the debt load of (C), direct the £250 per month and all excess cash in your nest egg towards the next highest interest rate - that happens to be (A) at £120. Once finished, move on to the debt load in (B), and take the same approach.

If at any time during this process, there is an emergency, then you take those funds from your emergency account. Once your emergency account dips below £10,800 (in my example), you revert to paying your debt load minimum and redirect the surplus funds into your emergency fund until it's topped back up again. As soon that happens, you can now move back to your debt and continue paying it off.

What if I Can't Pay Off my Debt?

Remove the word ‘can't' from your vocabulary. Robert Kiyosaki wrote in Rich Dad Poor Dad:

"If your pattern is to spend everything you get, most likely an increase in cash will just result in an increase in spending."

You need to change your mindset before you spend another penny. Otherwise, it doesn't matter how much you earn; you will still find ways of spending it.

"If you are going to build the Empire State Building," wrote Kiyosaki, "the first thing you need to do is dig a deep hole and pour a strong foundation."

Adopting a different mindset, establishing your financial position, creating an emergency fund, and paying off debt - this is creating a strong foundation.

If you still doubt yourself try this little exercise that I picked up from Vicki Robin in the beautiful book Your Money or Your Life. Note down how much money has passed through your fingers in your lifetime (wages, gifts, prizes). I did this exercise in my mid-30s, and I had earned well over a million pounds sterling. I had nothing to show for it except the knowledge that I could make a million pounds. It gave me tremendous confidence that I could do it again.

"What is missing from their education is not how to make money, but how to spend money - what to do with it after you have made it," wrote Kiyosaki. "It's called financial aptitude - what you do with the money once you have made it, how to keep people from taking it from you, how long you can keep it, and how hard that money works for you."

The Positive Nest Egg Process

Perhaps, you are debt free. If that's the case, then it's time to manage the money that's in the positive nest egg box.

Goal #3: Pay Yourself First

Most people get paid, pay their debts, and then go into more debt to live because they have nothing left in surplus. It's a lazy way of living created by the ease of access that we all have to money these days.

"Thinking is the hardest work there is. That's why few people engage in it." Wrote Henry Ford.

In George S. Clasen's magical little book The Richest Man in Babylon, he writes about The Five Laws of Gold.

The First Law of Gold

"Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family."

The law states that when you get paid, you should immediately save no less than 10% of your gross income for the future safety and security of your family.

The best way to do this is to automate the process. Either ask your company or your bank to do this for you. I'm self-employed, so I take care of this as soon as I get paid via internet banking.

A lot of professional poker players fail to observe the First Law of Gold believing that a greater ROI is reinvesting it in their skill as a poker player. Only exceptional players can do this.

Goal #4: Create a Poker Fund

Once you have set aside 10% for savings, then you need to establish how much money you have available to play poker.

If single, you can set this limit as high or as low as you want based on your priorities. You may love poker more than buying clothes or eating out, and create a bigger pool for poker. The key is not to get stuck on a nominal figure. Play with it until you settle on the right amount.

If in a relationship, this becomes slightly more complicated, but it's even more important that the money set aside for poker is the correct amount.

Poker is a game where you can lose money even when you are playing well. It's a concept that's difficult to understand if you don't play the game. The last thing you want is to place stress on your relationship because you are spending too much money playing poker. Creating a poker fund that is separate from all other accounts creates a clear divide between family funds and your own.

Once you have your poker fund in place, the amount you have, coupled with your risk tolerance, determines the stakes at which you can afford to play. You can find numerous articles that shed wisdom on the right amount of your bankroll to have in play at any given time. Put in the research and then create goals that suit you. You can adjust them on a monthly basis depending on your progress or changes in your life goals.

Goal #5: Control Pride and Ego

All of this smart money management means nothing if you can't balance your ego. Everybody's favourite Hobbit, Bilbo Baggins, once said:

"I feel thin, sort of stretched, like butter scraped over too much bread."

Don't end up feeling like Bilbo, and if it happens, make sure that, instead of trying to find more butter, you find the discipline to cover less bread.

I have been around enough poker players to see this one vital flaw. Once a person grows accustomed to playing at certain stakes, pride kicks in and stops them from dropping lower when their bankroll diminishes.

These players start spreading their butter too thin.

At the beginning of this article, I asked you if money was the root of all evil?

Money is not the root of all evil.

You are the root of all evil.

If you cannot move up and down in stakes and control your ego. If you cannot park pride on the porch next to your Pumas. Then all of this is for nothing. You will be back to square one quicker than you can say Rich Dad Poor Dad.

"The only difference between a rich person and a poor person is what they do in their spare time," wrote Kiyosaki.

Now, what are you going to do with yours?

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