The best way to learn something is by experiencing it first hand. But since you never want to experience what it’s like to go broke, i’ll just show you an example of the negative effects of not using money management in poker.
On June 24th, thenut21 placed 2nd in the PokerStars Sunday Million event for $158,000. Before the win he was primarily playing $200 and lower sit&go’s as a break even player (according to sharkscope). However, after his win he decided to start playing $5,500 heads up sit&go’s.
This is where a lot of players go wrong. When they suddenly win a lot of money, they think they’re much better poker players and can play higher stakes.
Thenut21 proceeded to lose $80,000 over the next two days playing heads up sit&go’s. Maybe even more with cash games. He hasn’t played on pokerstars since.
So just because you have the money to play a certain limit doesn’t mean you can. Without the experience, you’ll be out of your league. The only thing a big bankroll will do is cause you to go broke at a slower pace.
I’ve written a complete guide to poker bankroll management that every player should read. It covers beginner to advanced poker money management concepts and will help you develop your own money management strategy.