Balancing your Poker Bankroll and Living Expenses

While it might seem like only a small percentage of poker players ever become professionals, there are plenty of players who are good enough to be pros.  They just aren’t able to properly manage their poker bankroll and living expenses.  So if you’re thinking of turning pro one day and want to avoid going bust away from the table, you should take a look at the following advice for balancing both worlds.

Hourly Rate

Before you ever start worrying about whether or not you can afford satellite TV on an average pro poker player’s salary, you need to know how much you are making per hour.  And to find this out, you’ll need to know your hourly rate.

Cash game players have an easier time figuring their hourly rate since they can just use poker tracking software or manually record sessions.  After logging 500 to 1,000 hours, you’ll be able to tell what your hourly win rate is; any poker player who wants to make a living with poker and eventually increase limits should earn a minimum of $15 an hour.

As a tournament player, you need to play around 1,000 tournaments to get an accurate measure of your success.  Since tournaments don’t provide a nice, neat hourly rate, you’ll have to look at your return on investment (ROI) to get a clear picture on how much you’re making.  To calculate this number, your formula would look like this: (tournaments profits – tournament buy-ins)/tournaments buy-ins.

So if your total tournament profits over the course of 1,000 tourneys is $40,000, and your total buy-ins equal $33,000, your ROI would be about 21% on every dollar (40,000 – 33,000)/33,000.  To find an hourly rate with this, let’s use $30 + $3 as your average tournament buy-in and assume that you play 4 tournaments an hour; this would equal an average of $132 paid in buy-in fees an hour.  The last step is to multiply your 21% ROI by $132, which would give you an hourly profit rate of $27.72.

Saving Living Expenses

Just because you’re earning $28 an hour as a tournament player doesn’t mean you should quit your day job because poker is full of wild variance swings.  Making $4,000 in two weeks can easily be wiped out by a horrid week where you lose $750.  Multi-table tournament players can especially go for long stretches where they don’t reap any profits.

For this reason, you should never spend money made from a big win right away – i.e. winning $5,000 in a tournament doesn’t mean you can spend $3,000 of it in one week.  It’s highly recommended that you save a minimum of 6 months worth of living expenses.  And these living expenses have nothing to do with your poker bankroll; they are completely separate.

Of course, everybody’s living expenses will differ so it’s up to you to decide how much should be kicked back.  A college student who stays in a dorm and lives off of $300 a month won’t even need $2,000 for living expenses (it’s no wonder so many college students are becoming professional grinders).  On the other hand, a parent with two kids and a mortgage might need $15,000 set aside for living expenses….and this doesn’t even include bankroll!

Keeping Expenses and Bankroll Separate

Making $50,000 a year as a professional poker player doesn’t mean you’ll be able to spend this much a year.  You need to pay bills with most of the money while using the rest of the cash to fund your bankroll.

For obvious reasons, you should never cut into money set aside for the bills just to increase your bankroll.  You also need money for food and entertainment purposes as well.  After adding up all of your bills, money for food, and entertainment expenses, you may find that $35,000 is enough to live off of.  This leaves an extra $15,000 for funding your poker bankroll, which is more than enough to move up in limits and increase your earnings.  Unfortunately, things aren’t always so cut and dried…

Balancing Act

No matter how detailed of a budget plan you create for your living expenses and poker bankroll, there is still the potential for future problems.  Poker is an imperfect game full of downswings and upswings where it could be weeks before your next payout.  Plus human nature makes it difficult for us to plan ahead for the rough times so there’s always the temptation to live too large and put both our bankroll and living money in jeopardy.  The key is to stick close to your budget while resisting the urge to blow money when you’re on a high streak.  The better you can do this, the higher the chance that you’ll stay among the professional ranks.

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