In the Game of Finance, Does Offense (Making Money) or Defense (Saving Money) Matter More?

Originally posted by Brad Lohnes with Bigger Pockets

“Offense sells tickets, but defense wins championships.” — Bear Bryant

I was stuck. The process of getting on a budget was tougher than I expected. We’d already tightened up the easy stuff, but there still wasn’t enough money being set aside for investing. It was hard to find something to eliminate that wouldn’t hurt. This was our life, after all. Several times I had set the budget aside in defeat. Maybe it would be more productive to focus on figuring out how to make more money.

I looked up at the game that was underway on TV. Sports broadcasters were always saying that “defense wins championships.” I wondered whether the analogy applied to managing finances.

Was it even true?

The Best Defense

The belief that “defense wins championships” is an almost universal law in the world of sports. Yet in a 2012 article on, authors Tobias J. Moskowitz and L. Jon Wertheim debunk this myth as it applies to the National Football League (NFL). In their analysis, the authors found no direct correlation between having a strong defense and winning NFL championships.

What they found instead was that winners tended to be either good at both offense and defense — or exceptional at one or the other.

It turns out that the same is true when it comes to managing your money.


The Game of Money

In the classic book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy,authors Thomas J. Stanley and William D. Danko draw the parallel between household finances and the two sides of a sports team.

Related: A Whopping 62% of Americans Have Less than $1,000 in Savings. Really?!

“Offense,” according to the authors, is defined as the ability to make money. High-income individuals and owners of profitable businesses would be examples of people achieving on offense.

“Defense” is all about how money is managed at home. This includes the use of a household budget, taking the time to plan investments and major purchases, the ability to live on less than the household income, fighting “hyperconsumption,” and the ability to set aside a portion of that household income for investment.

The book builds the case for the “defense wins” theory. Based on decades of research into the wealthy in America, the authors state that:

“…being a well-educated high-income earner does not automatically translate into financial independence. It takes planning and sacrificing.”

In the preface to the 2010 edition of the book, co-author Thomas J. Stanley goes on to say that:

“Most Americans have no idea about the true inner workings of a wealthy household. The advertising industry and Hollywood have done a wonderful job conditioning us to believe that wealth and hyperconsumption go hand in hand. Yet, as I have said many times, the large majority of the rich live well below their means.”

I can tell you from first-hand experience that it’s not just Americans who don’t understand this.

Read the full article here…

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