Life Bankroll Management For Professional Poker Players
Full time poker players are often stuck in inconsistent salary situation, where they may go months without receiving a salary. MTT players are very used to these situations, where they can be buried deep in makeup with their backers and any wins they have will go towards their makeup losses. But what happens when things are going well and full time players are on the upswing? How does this affect your spending habits and your overall outlook?
This article is advice for full time poker players and how to manage their spending and life roll. Note: this is very different than their poker bankroll, which they use for purely poker purposes (if you are doing it right, you should have the two totally separate). This article is not about taking shots or poker bankroll management. This article is really about the importance of one main thing if you are a professional poker player: Save your money and live within your means.
I have been involved in poker since 2004 and have played as a professional and backer for over a decade. I have seen every type of run good and run bad in existence and I have also seen hundreds of poker players who have come and gone through the years. I’ve seen poker players who have won hundreds of thousands of dollars in one year and then be broke the next year, begging for stakes at 1/10th the limits they were playing the year before.
Poker is a humbling game and fortunes can come and go in the blink of an eye. From my playing career, I never won so much money that I could buy Ferrari’s or anything like that. While I won an ‘ok’ amount for a full time player in 2009, that amount was on the average side of the spectrum at the time (these days, I feel that the amount I won annually would be considered pretty solid in today’s climate). All that being said, I still spent stupidly at times, blowing money in situations that I did not need to do. Being young and rich for your age is generally a recipe for spending more than you need. You think that the money will never stop flowing and that you will never run bad. Sadly, I have seen that poker is unlike any other profession and there are many factors that play into future expectation (motivation, games getting harder, variance, and more). While I never went life busto, I did spend my money carelessly. Looking back, I wish I would have saved a bit more and invested my money instead. Now that I am older and more mature, I have learned how to save my money and manage my finances. I hope this article can help you learn from some of the mistakes that I (and many others) have made.
Live Within Your Means (Cheaper is better)
It is easy to win an MTT for $200,000 and assume that your annual salary is going to be well beyond that. Variance and actual hourly are two things that are very significant when determining your projected annual salary (more on this later). The bottom line is that you should live within your means and not spend frivolously. Here are some tips and advantages on saving money:
1) Make a budget and set aside how much you spend for each item (food, rent, recreational activities, vacation, savings, investments, etc).
2) Do not make large changes to your overall spending habits unless you have a very successful year with a large enough sample to verify that you are improving at poker, not simply running well.
3) Live cheaply, as much as you can. If you can get away with spending less in certain situations, do so (to a degree). Don’t give up your quality of life, but also do not live so extravagantly that you are worried about your bank account balance.
4) Poker is likely not going to last forever, both in terms of it being a feasible career and also a career option for YOU (meaning that you will likely eventually get sick of it). Make sure you understand this when you are making financial decisions.
5) Cut down on impulse buys. If you bink a big MTT tournament, don’t go out and spend 60% of that win on a new car if you do not need one. Be careful with your money on things that you do not need.
6) Having money is very useful and powerful in situations where you are looking to invest or take advantage of profitable situations. Just like poker was a good opportunity for you to do as a professional, there will also be other times in your life where you can invest in different circumstances.
Variance, Winrate, and Sustainability
When you are thinking about your poker expenses and how much to spend, be sure to use a winrate calculator and other tools to have an idea of how much you should expect to make. Obviously if you are a long time pro, you should have a baseline ball park idea of how much you are averaging each month. When making your projections, be sure to work on the conservative side- oftentimes, players do not play as much as they expect to, or their winrates are not quite as high as they estimate, or they do not run as lucky as they have in the past.
When you are a new poker professional, your overall projected earnings may be a bit more unknown to you (maybe because you do not know how the increase in hours will affect you, or playing more games). That being said, you should still have some idea of how much you can make with your past results and a larger sample. Read this article: http://orangepokerblog.com/2017/11/08/considerations-before-you-become-a-professional-poker-player/. Being conservative with your estimates is even MORE important as a new professional, and if you run hot right out of the gate, do not necessarily go out and spend all of your earnings.
As an MTT, your salary and expected income is much more variable. The variance is so high in MTTs that you can win 6 figures one year and lose 6 years the next, all with the same winrate and the same games played. Be sure to save as much money as you can when you are running well to account for when you go months without binking a big score. Here is an interesting article (a bit dated) on the life of an MTT pro: https://deadspin.com/why-its-hard-for-poker-pros-to-make-a-living-playing-l-1526098295.
While it might not all be necessarily accurate, that article gives good food for thought. Impulse buying is the biggest problem for MTT players and, while a nice dinner or trip for yourself can be justified, huge expenses are generally not.
Sustainability is a big factor for poker players. Like many games, poker can get tiring and old. Many professionals get sick of the game and do not enjoy it as much as they once did. Just because you are studying and winning a large amount of winnings this year does not mean that you will achieve the same three years from now. If you do find yourself getting tired of poker,
Poker variance calculators: http://pokerdope.com/poker-variance-calculator/
Above all, just remember that variance is a huge consideration in poker and never lose sight of this.
Prepare For The Worst and Save 6 Months
In any profession, it is very important to save at least 3 months worth of living expenses for emergencies. For jobs like poker, trading, or sales, having at least 6 months worth of living expenses is the minimum that you should have. As a professional poker player, you do not have a fixed salary from an employer and a sporadic income, which means that you need to account for months without pay- which will happen. Try your absolute hardest to maintain at least 6 months of living expenses for yourself and savings. If you start to dip into this savings account heavily, consider getting a part time job.
If you are in a downswing and find yourself with less than 6 months of savings, make sure that you are doing everything you can to stop the downswing- studying more, playing more, etc. Doing the same thing over and over and expecting different results is the definition of insanity, so be sure that you are proactive when in a downswing. Read: How to fight downswings. I have seen players go months without earning any money and it is essential to have savings during these times.
In poker, you have probably heard that you will run worse than you ever could have imagined. Some of you have already experienced this potential career ending downswing and played through it. If you are a new professional, you will likely not know what this downswing looks like until you have experienced it yourself- you will go months without winning, you will have dozens of lost buy ins under expectation, and you will probably have many mental breakdowns during it. Because this inevitable downswing is going to happen to you, be sure to prepare for it as best you can (in a financial sense).
There are many more bits of financial knowledge that is necessary for full time poker players and I hope that you continue to seek it out and educate yourself. The biggest take away from this article is that you should live conservatively and live within your means.