Financial Management: Tactics, Strategy, and Money

I love playing tabletop games – board games, card games, role playing games, pretty much anything like that. Ever since I was a little kid playing Acquire at my aunt’s house, I’ve loved sitting down at the table with other people and playing a game together. You’ll find me playing games with friends many weeknights and weekend afternoons.

One of the first real lessons that playing games taught me was the difference between tactics and strategy. Let’s look at the definitions of each, pulled from Wikitionary:

Strategy: A plan of action intended to accomplish a specific goal.

Tactics: The military science that deals with achieving the objectives set by strategy.

Here’s an example of the difference using the boardgame chess, as chess is likely a game most of you are familiar with.

In chess, your goal is to win the game. How are you going to do that? One of the best ways to win at chess is by achieving positional advantage – in simple terms, that means your pieces are in control of more spaces of the board than your opponent, particularly the middle spaces of the board. The more spaces you control, the harder it is for your opponent to move and the fewer options he or she has. Positional advantage is a chess strategy – it’s a general plan for winning the game.

But how do you make that happen? You do that by making individual moves that slowly allow you to control more and more of the board. Each move you make should either take a more valuable piece from your opponent without giving up any positional advantage, gains you some positional advantage, or puts pieces in place to gain a lot of positional advantage in the next few turns. That’s tactics – you’re choosing individual moves to put your strategy into place.

This philosophy actually applies to almost every game you play. The game has a goal – usually, victory. You’ll figure out a way to make that goal happen – your strategy – then each move (or handful of moves) is geared toward achieving that strategy – those are your tactics.

So, how does all of this apply to money?


If you’re reading The Simple Dollar, it’s likely that you have a financial goal in mind. My goal is financial independence, by which I mean that neither Sarah nor I have to work with income as a goal.

You might not necessarily share this goal, but you probably have some other goal set up for yourself. Maybe it’s simply debt freedom. Perhaps it’s a career-oriented goal, such as switching to your dream career path.

Whatever that goal is, you want to achieve it. Success, in your mind, is making that goal a reality.

Financial Strategy

So, how do you get to that goal?

My main strategy is oriented around simply spending less than I earn. This means two things at once: earning as much as I can in the short term while keeping our spending as low as possible.

This strategy achieves my overall goal by quickly putting enough money into savings and investing so that I don’t have to work for income ever again.

Different goals require different strategies. Maybe you have a debt repayment plan for your goal of debt elimination. Perhaps you have a plan mapped out for achieving your career goals.

Financial Tactics

This strategy of spending less than I earn doesn’t actually relate to day-to-day actions, though. It’s a general guidance that explains what I should be doing overall, but it doesn’t really directly relate to all of the day-to-day decisions I’m making.

That’s where tactics come into play. Tactics are the specific things I do each day (or each week) to make sure that my “spend less than I earn” strategy happens. Examples of tactics for this strategy include finding free fun activities for my family or having a “money-free weekend” or building a side business.

Those actions are things that I can understand and execute each day and the outcome of those actions directly leads to my overall strategy. If I make a choice that involves spending less than I was before, then I’m using a tactic that helps me execute my overall strategy. If I spend my free time finding new ways to build income, then I’m using a tactic that helps my strategy.

You Need Both to Win the Money Game

In simplest terms, a strategy is a long-term plan, while tactics are short-term actions that move you toward success in that long-term plan.

Financial independence is my goal, spending less than I earn is my strategy for making that goal a reality, and being smart about my extra food is a tactic that helps me execute that strategy.

You need both strategy and tactics in order to succeed at personal finance. Without strategy, you have no aim – you’re just wandering around hoping that your goal miraculously occurs. Without tactics, you aren’t executing that strategy on a daily basis. Without tactics, strategy is just pretty words.

Defining Your Own Strategies

As I said earlier, I assume you already have a goal in mind. You have some sort of financial achievement that you really want because it will change your life in some positive fashion.

The next step is figuring out your strategy for making that happen. How do you get from here to there?

Spending less than you earn is a good strategy for almost every financial goal, but you may have other strategies that you’re also going to carry out. Maybe you’ll have a debt repayment plan to pay off debt. Perhaps you’ll have an investment strategy, such as investing in an equal mix of international stock, domestic stock, and bond index funds.

No matter what, executing your strategy (or strategies) over the long haul should lead to your goal becoming a reality. If you create and follow a debt repayment plan, you will pay off your debts. If you spend less than you earn and invest the rest, you will eventually build up a nice investment portfolio. It will happen.

Think of your own goal. What one or two or three strategies might you use to make that a reality? Spending less than you earn is a good one, but what else do you need to do to make that goal come true? That’s your strategy, right there.

Finding Appropriate Tactics

Once you have your strategy in place, a constant question asserts itself: what are you going to do today to move that strategy forward?

Every single day offers an abundance of opportunities to move forward with any personal finance goal. A day is loaded with actions that have financial consequences, from flipping a light switch to heading to the grocery store, from looking at investments online to parsing through a credit card statement.

Tactics are all about those daily choices (and other short term choices, like weekly or monthly ones). They’re on a time frame you can really grasp and actually do something about.

It’s all about finding appropriate tactics and using them. Not all tactics are appropriate ones for you, but most money-saving tactics make sense for someone. Different chess players choose different moves in different board positions, after all.

The key is digging through lots of tactics, either by finding them online or in books or magazines, and using the ones that work well in your own life. You want to choose ones that clearly work toward your strategy, such as household tasks that decrease your energy bill or shopping tactics that cut your food bill or professional choices that enhance your career.

Executing the Tactics Brings Success

Once you know what you need to do on a daily basis to make your strategy work, the final step is to actually do it. You have to actually follow through on those tactics to make all of this work.

You’ll often hear things like “the journey of a thousand miles begins with a single step” or “all that matters is this moment.” Those kinds of statements are actually talking about strategy and tactics.

Right now, in this moment, you have a choice. You can either take care of a tactic that helps you execute your strategy and brings you closer to your goal… or you can shrug it off and do something else. If you take care of business, the things you want move closer to you. If you shrug it off, they likely move further away from you.

Every single day brings those choices to your doorstep. What are you going to choose?

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