For those of you who have been readers of this blog for some time now, you’ve probably noticed something about me. I really like analogies. I am a very visual person, and I often find that analogies help me visualize things better.
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After a recent trip there last week, I am more convinced than ever that if you want to run your financial house well, you need look no further than Las Vegas to find a great guide.
The reason I think this is because casino owners in Las Vegas figured out the way to wealth a long time ago. Ever since the first casino (or “gaming establishment,” as they were called back in the day) opened in Vegas in 1931, casino owners have long known how to triumph in the game of money.
There is only one rule.
The house always wins.
As in, the house ALWAYS wins.
The reason that the house always wins is that casino owners set it up that way. All those fancy machines that make all the dings, beeps, and cute musical sounds? Yep, they are all set, or “rigged,” if you will, by the casino owners. They aren’t stupid, you know. If you come in and sit down at the same machine and proceed to take them to the cleaners every day, they know they’ll be out of business before you’re done signing the papers on your sweet new ride down at the jag dealership.
So what do they do to stay profitable, and to prevent people like you and me from coming along and cleaning them out every other day? They set the machines so that, over time and overall, the casino always wins.
It’s automated. The owners don’t have to do a thing to even think about it on a daily basis. They just set up their financial lives so that they always win. And then they sit back and reap the benefits. Every. Day.
How powerful is that? Never mind, how AWESOME is that?
How to Run Your Finances like a Las Vegas Casino
We can all learn a great lesson from Las Vegas casinos. The first rule is this:
Run your finances like a Las Vegas casino. Set it up so that the house always wins.
That’s it, really. I think of Las Vegas a lot as my hubby and I go through life and make money decisions. That’s one of the reasons why we ultimately had to turn down the job offer that we really wanted a few weeks ago. Because we set up our financial life so that the house ALWAYS wins. And, because we are still carrying some student loan debt and the salary offer was less than Mr. CMF is currently making, we didn’t think we could win if we were playing with those numbers.
I know that the term “win” is ambiguous here, especially when talking about personal finance, so I’ll tell you how we define it. Basically, we consider ourselves to be “winning” at the game of personal finance when our net worth rises in any given month or quarter (taking into consideration what the overall market is doing, of course). I’d like to say that we define it as any month when we bring in more than we spend, but we are in hardcore debt pay down mode right now, so every spare bit of extra cash is being thrown at student loans every month. Thus, our outflow roughly equals our inflow right now. But because we are decreasing our financial liabilities every month, our net worth is still going up, up, up. That’s a win in our book!
Basically, we consider it a financial win every time we make decisions like automating both our savings and our debt repayment, finding easy ways to make extra cash online, slashing fixed expenses, and working to increase our passive income. But the bottom line is that all of these things- and many more- together help us pull our financial picture into the “win” category on a routine basis. We just set these things up so that the house always wins.
Ok, so maybe the word “always” is not always perfectly correct. We’ve definitely had months here and there where our outflow exceeds our inflow (I’m thinking back to the month last year when we had to shell out big bucks in adoption-related expenses). But, just like the Las Vegas casinos, over time and overall, we set it up so that we always win.
And so can you.
It definitely takes some time to get into your financial groove, so if you are not yet in a position where you can confidently say that the house is always winning, don’t worry. It also takes a solid job and some ability to save money and still cover basic expenses. But, no matter where you are at in your financial journey, you can start taking steps now so that over time you’ll get there. Paying down debt, starting an emergency fund, and taking advantage of employer retirement matches are a few of the ways that you can start yourself on the path.
However, the biggest tip that I could possibly give you in this regard is to contain your cost of living; in other words, live well below your means. Living below your means is a key piece of achieving financial independence, and depending on how much you are able to save you could potentially retire years before your cohorts (see this excellent post from Mr. Money Mustache if you don’t believe me). For a free resource to help determine how you are doing on your retirement savings goals compared to certain benchmarks, you may want to consider signing up for a free service like Personal Capital (review here).
Living well below your means is the absolute best way to guarantee that the house always wins. Unless, of course, your house is a place called Caesar’s Palace and every day thousands of people flock to see it and drop loads of cash in your front lawn. If that’s you, well then… you’ve got other ways to ensure that the house always wins. 🙂
Have you got your financial house set up so that the house always wins? What’s been the biggest challenge you’ve faced in working toward your financial goals?
Suggested Reading: My very favorite personal finance book, The Millionaire Next Door, is one that I highly recommend because I think it does an excellent job of highlighting the importance of living below your means. If you want to hear more inspiring stories of how it’s possible to achieve wealth no matter your income, this is a truly excellent read.
P.S. If you liked this post, you might enjoy using our free Net Worth Calculation Template. Sign up now to receive each new post delivered to your inbox, and we will email you the template! Sign up here.
CMF’s favorite FREE money management tools!
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