6 Money Management Mistakes You Have No Idea You are Making
If you have read our guide to managing your bankroll in sports betting, you should have a pretty good idea of what you need to do in order to intelligently manage your money. This is just as essential an ingredient to sports betting success as going in with a working, tested strategy and the right mindset.
Even so, that does not mean you are not making common money management mistakes, especially if you are a newbie. Let us take a look at a few money management missteps to avoid!
Not shopping the odds.
Over-using or misusing accumulator bets.
Making hedging errors or inadvertently doubling up (especially while betting live).
Using money management methods which do not work.
Do you shop the odds to find the best values before you place a wager, or do you just go with the first odds you see?
Failing to shop the odds is an error which is easy to overlook, because you may not think of it as part of your money management plan to begin with (since it has nothing to do with stake sizes). A lot of newbies join just one sports betting site. This means they are not shopping the odds at all, and may be missing out on great value elsewhere.
Join at least several sports betting sites so that you can pick the one which offers you the best odds. This can have a huge impact on your bottom line over time!
An accumulator bet is any type of combined wager where you have several different selections and all must win for your bet to win.
People tend to take extreme stances when it comes to accumulators. There are some people who love them and relentlessly pursue them, because they know that a win could be life-changing. Of course, such a win is incredibly unlikely, which is why other punters will tell you never to use accumulators.
I urge great caution with accumulator bets, but do not necessarily recommend you never, ever place them. If you wager small amounts on them, they can still pay off well if they do win. If you want to bet on a bunch of favorites, you might also get better odds doing it this way.
But if you are betting a lot of money regularly on accumulator bets, you are overdoing it. You are just going to drain your account doing this. Try to stick with simpler bets which have a better shot at winning the majority of the time.
A mistake that is easy to make even if you are not a newbie is considering all of your bets in isolation without considering how they might be related to one another.
You could have multiple bets which all might win if a single event takes place, but which all will lose if that event does not take place.
If you stake 3% of your account on each bet, and there are three in all, you actually have bet 9% on one contingency. You have broken your own rules without even noticing.
Sometimes your bets may cancel each other out too. You may want that if your purpose is to hedge, but if it is not, you are just wiping out your own profits inadvertently.
Pay attention to these relationships so that you do not cancel out winnings on mistake—or stack up losses much faster than you expect.
I have detailed some money management methods which you should avoid in the article on managing your bankroll properly. I will just list them here quickly:
- Progressive betting systems like Fibonacci or Martingale
- Betting everything in your account
- Betting more money when you feel more confident and less money when you feel less so
In the article linked above, I give a full analysis of why these methods are mistakes. I recommend the following methods instead:
- Betting fixed dollar amounts
- Betting fixed proportional amounts (a percentage of your account)
The best recommendation is the latter. It keeps your risk proportionally fixed at all times as your account balance rises and falls.
Betting more than you can afford.
Another common newbie mistake is to bet a large percentage instead of a small one—and worse, to think it is a small one.
This is something I touch upon regularly. If you read the other article I linked, you already know what I am going to say.
But in case you have not, here is how much you should be staking on any one bet: 3%.
It does not have to be exactly 3%. 2% is fine. Even 1% is also just fine. 4% or 5% is okay, but pushing it.
Most new punters are totally unprepared for this small percentage, especially if they have small bankrolls to begin with. They are dreaming of riches, and the thought of having to deal with tiny gains drives them crazy with impatience. Because they cannot handle that slow growth curve, they would rather risk huge losses. Of course, huge losses do nothing to grow an account.
I knew a guy who had a lot of money, and rationally wagered 3% on his bets. Yet I then heard him advise a newbie with a small account to risk 10%.
What was his logic? It was something like this:
“Well, you just need to bet 10% in the beginning to build up your bankroll. You have a pretty good win percentage, so this should not be a problem. You can then drop down to 3%.”
This is possibly the most irrational advice I have ever heard from anyone when it comes to money management. By his logic, with his own strong win percentage, he should have been wagering 10% himself.
Because this guy had a lot of money (as in a lot), he had no sense of urgency growing his own account—he could do so at his leisure. But because he had never had a small account in his life, he could not imagine what it is like to bet with one. He correctly guessed that it can make a person impatient, but his blithe attitude toward money allowed him to blow off the possibility of failure. After all, if he ever did blow his own account, he would have a huge pile of cash in the bank to fall back on.
Betting 10% is inherently unsafe, whether you have a little money or a lot. This would be true even if you had a stupendously high win percentage like 70% or 80%. But in sports betting, 55% is pretty great. Losing streaks are common. It would not take much of one to completely wipe you out if you are wagering a tenth of your account on every bet!
So keep your bets small, around 3%. Bet patient, make smart bets, and eventually you will have plenty of money.
Ignoring how your sports betting bankroll fits in with your broader life finances.
One more mistake which you might overlook is neglecting to consider your sports betting bankroll in a broader context.
Your betting is not happening in a vacuum. It is part of your overall finances. If you are a newbie, you should be logging it and treating it as an entertainment expense, even if your ambition is to eventually turn it into income.
We have talked about how you establish stake sizes for your bets as a percentage of your bankroll, but how do you establish your bankroll size relative to your overall financial worth?
You need to use good financial sense when you are making your deposits into your sports betting account. That means that you need to account for all of the following before you decide what you can afford to bet:
- Monthly bills, taxes, and expenses
- Emergency fund (for unexpected health bills, repair expenses and so on)
- Cash on hand for regular occasional expenses (routine maintenance costs and the like)
- Savings in a basic savings account (a safety net for your future which is risk-free)
- Low-risk retirement investments (IRA, etc.)
Anything you have available after all of the above are accounted for can be used for entertainment or entrepreneurial purposes—including sports betting. So you can see that it in terms of a broader financial context, it does not really matter if you are betting seriously for a living or betting just for fun. Either way, sports betting is a ways down your ladder of priorities. You need to stay in the game of life in order to stay in the sports betting game.
Conclusion: There Are a Lot of Potential Pitfalls With Money Management, But You Can Avoid Them With Smart Practices
It is easy to fall into common money management traps, but now that you are familiar with some of the most insidious mistakes, you are less likely to make them. That being said, you may still make other errors as you deposit funds into your account, plan your bets, or set your stake sizes. Keep a betting journal, and write down the lessons you learn the hard way as you go. As you get better and better at managing your money, you will make fewer and fewer mistakes. The fewer mistakes you make, the more money you will have to wager with—and win.
Get started trying to manage your bankroll at Bovada, one of our top trusted sportsbooks!
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