My favorite thing to do is take something that has little to do with money and use it to explain elements of economics and finance. And of course the best way to get your attention is to relate it something that’s on a lot of people’s minds. Inspired by the World Cup, I’ve decided to turn an amazing international tournament into a monetary lesson. Without further ado, I give you six lessons the World Cup can teach us about money.

The United States only matters to Americans
If this video is any indication, the United States is mighty proud these days. We’ve got the same kind of national pride we show during the Olympics. It’s a level of ignorance that is best described by the fact no one knew Ghana stood a chance of beating us on Saturday. We thought we stood a chance to go far. The fact is there are a dozen better teams than the US.

Just like their teams, these countries don’t look at the US the same way they might in a basketball tournament. We are simply not a big deal anymore. Our international clout is dying, our ability to influence is diminished, and we’re simply just another economy these days. There used to only be one superpower, us. Now our position in the world is much more like our position in the World Cup.

What you have today is gone tomorrow
Despite their loss on Saturday, US soccer is riding high. Before this World Cup you’d never heard of Landon Donovan, arguably the Michael Jordan of soccer (in the states). His celebrity, as well as his teamates’, will be enjoyed throughout the rest of the summer but by the time football season starts we’ll all forget about him again; despite what this guy thinks.

When you’ve got something good, enjoy it. If you can extend it and make it last longer then great. Maybe Donovan can launch a successful career, but probably not here in the states. But if you and I ever start riding high thinking our financial situation has improved, someone will pull the rug out. Make the most of the good times, but they can’t last.

Past performance is not a predictor of the future
Do you know what the Gold Cup is? Did you know it was hosted in the US last year? Of course not. It’s a biannual tournament of the national teams from North and South America. The US dominated and even though they got killed in the final, THEY MADE IT TO THE FINAL. People thought this may be a sign of good things to come at the World Cup.

In the fine print of any mutual fund prospectus, you’ll see a disclaimer that past performance is no guarantee for the future. Yet we rely so much on it; this is because we don’t have anything else to go by. We have to anchor our thoughts to something, so we hang on the past. In finance that usually means chasing old winners instead of trying to find new ones.

PIIGS countries are really struggling
The PIIGS are 5 European nations deemed to be the most at risk of a financial crisis. They are Portugal, Italy, Ireland, Greece and Spain. Ireland wasn’t in the World Cup, and Italy and Greece have been dropped, despite Italy being a favorite. That leaves Spain and Portugal, which will be forced to play each other on Tuesday. This leaves just one left.

I hope that isn’t what happens to the EU. Perhaps the people of these countries were too distracted by economic duress to focus on their teams. Greece has a long way to go, but they dropped early in the World Cup so if their economy crumbles, the chances for the rest to fall increase all the more.

Old habits dies hard
The World Cup is one of the sports gatherings that refuses to embrace replay technology. Anyone that’s watched a football game on TV knows something about the review process for challenging referee calls. Both the US and England have been robbed of goals. England was robbed of a tying goal that could have given them the momentum to win. Had they reviewed the call it would have clearly been a goal. World Cup soccer has so far refused to introduce a review system. Whether it be stubbornness or just an inability to get with the times, old habits die hard.

If you develop bad habits in your finances, it’s damned hard to break them too. You can pay off your credit cards but it’s easy to get back in that problem if you lose your job or simply have a bad day. Perhaps seeing how your bad habits damages others will help you fix your problem. Perhaps it will help World Cup officials too.

Africa is the future
When I first learned the World Cup would be held in South Africa, I was really excited.  This will do the same thing for this continent as the Beijing Olympics did for China.  It’s a coming out party.  The sad thing is, Europe is going to realize this first since they really care about soccer.  The US, which has lost interest in the World Cup by the time this is published, will miss out.

Thanks to civil wars, foreign meddling, and overpopulation, Africa has remained stuck in the 20th century. Much of the country is even in the 19th, with only a few parts joining us in the 21st. But that is changing, and quickly. The emergence of wireless technologies will allows over a billion people to connect to the internet, which can help fix the biggest problem in Africa, education. China knows Africa has a lot of untapped natural resources, and devotes a lot of time towards economic development there. We would be wise to do the same. Africa has a LONG way to go, but they’re ready to join the global economy in more ways than dumping oil and diamonds in our laps.

By The Weakonomist

The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice.

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