It seems as though many in the personal finance blogging community enjoying playing disc golf, and I am no exception.  I am blessed to live in one of the greatest small cities in the country for disc golfers, with many beautiful, free, and challenging courses.  In fact, the disc golf courses here helped my wife to sell me on the idea of relocating.

As I was playing last week, it crossed my mind that many of the lessons I’ve learned playing disc golf are highly applicable to personal finance.  Here are some that come to mind:

Until It’s in the Basket, The Hole Isn’t Done

It’s easy to lose focus on short putts, because they seem so easy.  What happens as a result?  Some easy birdies become pars and some sure pars become bogies.

Finance Implications: You can’t half-heartedly track your finances and assume everything will be OK, stop managing your investment as retirement nears, or count your profits before you sell a stock.  Losing focus before any of these tasks is fully complete could allow things to quickly get out of control.  In that sense, as the end of an effort approaches, we should focus on it even more intensely.

When Conditions Change, So Too Must Your Approach

I’ve played the same hole a hundred different ways based on the time of year, wind, how I’m feeling that day, or simply due to the fact that my capabilities change as I age.  A hole in one is so hard to repeat because even if we do everything the same internally, external forces are at work.  Understanding those factors, and modifying your approach, is essential to finding continued success.

Finance Implications: Managing your money in a bubble doesn’t make sense either.  You may choose to increase your emergency fund as unemployment rates fluctuate , invest more when market conditions are favorable, prepay your mortgage when alternative investments are less favorable, or reallocate your portfolio as you age.  There may be times when you cut your budget to the bone and others when a little luxury spending will be allowed in.  Learning to see that conditions have changed, and adapting your strategy for the new reality, will help to keep your finances on track.

Don’t use a Hydra on water holes

The Hydra is one of the few discs with the apparently desirable ability to float.  This makes it the perfect disc for holes with large water hazards, right?  Wrong!  Using a disc that floats

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Everyone loves a good rule of thumb. Knowing that the number of cricket chirps in 15 seconds plus 37 is the approximate temperature _[1] is great . I usually do the old 100 plus my age comparison when I get my blood pressure checked as well. These ballpark estimates are easy to remember and give a close enough approximation for many things in life. Unfortunately, there are often way too many variables for a rule of thumb to be of any real value for personal finances.

There are some financial rules that are valuable, but they tend to be the ones that are math based. An example would be “Double your hourly rate and add three zeros to get approximate yearly salary.” Of course, even such a rule makes the assumption that you work 40 hours per week. These “rules of thumb” are what I generally file under Quick Calculations. They are more mathematical approximations

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The Rule of 72 is well known: Divide 72 by a rate of return to get the number of years for your money to double. Example: at 4.5% return it will take 72/4.5= 16 years to double your money

Here are a few more quick calculations:

Cost Before Taxes
Multiply an item’s cost by 1.4 to figure out what you need to earn before taxes to afford it
Example: A $250 Nintendo Wii will require 250*1.4= $350 in pre-tax earnings

Hourly Rate to Yearly Salary
Double your hourly rate and add three zeros to get approximate yearly salary
Example: at $20/hour, you make about 20*2 = 40 –> $40,000 per year

Yearly Salary to Hourly Rate
Opposite of above: Remove three zeros from your yearly salary and cut in half to get an approximate hourly rate
Example: at $60,000 per year you make about 60,000 –> 60/2 = $30/hour

Current Spending Versus Nest Egg Worth
Add a zero to the cost
Example: Using $2,000 for a new computer today would have been worth 2,000 –> $20,000 in a retirement account 30 years from now.

Calculations assume a 40 hour work week, 8% investment return, and 28% tax bracket.