Lessons on Personal Finance from Playing Monopoly

Not all toys and games are nonsense and only good for passing the time. Certain notable games designed for leisure are very educational. Take Monopoly, for instance. The board game has been around for ages and is still very popular today as it was when it was first released. Even in today’s digital age, the game is still selling like pancakes in both the real and virtual worlds.

It has given millions of families great quality bonding time with countless hours of playtime. It is quite an amusing and challenging game that teaches children of all ages important life and financial lessons. If you’ve played the game long enough, you would agree that it’s more than just playing pretend as a wealthy tycoon.

Of course, don’t rely solely on a game to help you with those financial decisions. You’d still want a professional advisor if you have a portfolio and a goal of long-term investing. And you should learn financial investment if you’re a beginner. In the meantime, you could pick up a few nuggets of “wisdom” from one of the more popular boardgames.

7 Important Money Lessons from Monopoly 

  1. Borrowing against a mortgage is super challenging
    Monopoly has certain aspects that are realistic, including property purchases. Buying a property is not an easy thing to accomplish. Although the game doesn’t tell you how to work with mortgage companies, it still reflects the reality that any credit you acquire should be paid back in full with interest. It also requires you to have a co-signer when purchasing a property, otherwise, you can’t get it.
  2. Debts create money traps so avoid them at all costs
    One thing kids need to understand is certain debts are necessary to build assets. However, too much debt can be the cause of their downfall, too. Every time you land on someone else’s property, you need to pay rent which means you might have to take out credit at a certain point in the game. Once you reach the debt tipping point, you’re left with no choice but to declare bankruptcy.
  3. Never put all of your eggs in one basket
    The concept of diversifying your investment portfolio can be seen in the board game. Here’s how: if you put money on a property and fill it up with several hotels, you’re putting everything you have on one property where the chances of other players landing on your property are slim. Compare that to someone who buys several properties on the board, their chances of collecting money from other players landing on their spots are much larger.

The lesson: never place all of your eggs in one basket. It is wise to have different sources for your funds and cashflow.

  1. Borrowing money affects relationships
    When you’re playing the game and you run out of cash, you will be forced to borrow money just to stay in the game. However, taking loans from family and friends could jeopardize your relationship with them, especially if you fail to hold up your end of the deal. Instead of risking ruining the relationship, it is better to find other sources of funding.
  2. Emergency funds can get you out of a jam.
    Monopoly is played with two decks of cards to draw from, the Community Chest and the Chance cards. Whereas the Community Chest stack often gives you money, the Chance deck gives you a dose of reality in the form of unexpected expenses. If you don’t have enough cash on hand or in a savings account or an emergency fund, you might be forced to sell off some of your properties, which doesn’t work with the game’s goals.
  3. The right money management system puts you in a great position financially
    One of the important things that Monopoly teaches is how important it is to have a sound money strategy. You need to carefully plan how you will make, spend, and save your money.

For instance, if your strategy in the game is to immediately buy each property you land on, you will end up cash poor. You need to study your prospects and see which ones are worth investing in so that you get a good return on your investment.

  1. Learn to live within your means.
    Lastly, Monopoly is a great teacher for living within your means. It teaches one to strategize how to earn money, how to use that money to cover expenses, to save up, and manage one’s cash flow. This helps them avoid depending on credit which potentially leads to living way beyond your means.

Again, seek professional advice where your investment portfolio is concerned. Learn about finances when you want to start making more than your salary. And the next time you pick a game for your family time, make sure it’ll add value to your life beyond the recreation.