Guest post by Amy Nickson, writer at Working Moms Word
Monopoly—the classic board game, which is quite popular among children and adults for over 100 years, is way more than just entertainment for family fun night. While you can enjoy the fun of becoming a real estate tycoon playing this game, there are also many educational lessons to be learned as well. The game offers the opportunity for players to make budgeting, investing, and financial decisions, which can help in remaining financially prudent. Following are 8 money lessons which you can learn from the monopoly board game and can apply when managing your own personal finances.
Value of budgeting
A successful monopoly player is a good at budgeting. Because the concept is similar, you can apply the same formula while playing the game or creating your monthly budget as well. The board game can teach you to make a realistic budget based on your income and expenses. The winner of this game can easily meet his/her each expenses and save money.
Giving priority to an emergency fund
A monopoly player knows well how unpredictable the game is. The player should prepare beforehand to manage any situation. Just like unforeseen circumstances arise in a Monopoly board game, it can happen in your real-life financial situation as well. You never know when you will face an emergency—such as being laid off of a job or an accident—which can use up a savings account that you’ve taken years to build. You should have an emergency fund so that you can face the financial need with solid backup. Having such an emergency fund can minimize your chances of having to sell your assets or take out loans to meet your current obligations.
Being a responsible decision maker
The Monopoly game helps people learn to make a proper decisions through critical thinking strategies. For instance, all players should start with the same amount of money to play the game, but, the important thing is how well you can manage your money. While “luck” can be attributed to success in the game and in real life, you still have control over the purchases that you make and assess the risk/reward of each investment. You must learn to overcome whatever comes your way and still manage your finances properly.
Importance of negotiation
One of the most important tricks to win the monopoly game is proper negotiation. In real life you should have the skill to negotiate with many people such as creditors, utility suppliers, sellers etc. This will help you to get best finance deals and save your hard earned money as well.
Investing money wisely
To ultimately be successful, there are no alternatives to making wise investment decisions. You should invest your money to make it grow with time. You’ll have to take chances and invest your money instead of simply leaving it in the bank. But for this, you need to be updated on the financial market and know all strategies well. Think about your time horizon, risk tolerance, and diversification. For more information about investing read these articles:
Investing: How to choose which investment products are right for you
No Excuses
You probably didn’t realize that playing Monopoly could teach players lessons about personal responsibility. You shouldn’t make any excuses about losing the game. Likewise, you should not skip any chance to win while you’re playing the game either. Just like in the game, your real-life financial decisions have consequences. Unlike the game, though, the real-life decisions can have long-lasting effects. Making the unwise financial decision to overspend on credit cards, for instance, can take you years—maybe decades—to pay off.
Significance of building a strong asset base
Remember, building a strong asset base will help you to get passive income—income which you are not actively involved with earning. You can easily live off the passive money and can save your active income—salary from your job or business income. In the monopoly board game, the number of properties gets the advantage and control over the board, but one must also consider the value of the assets. For example, it is much better to own Park Place and Boardwalk (higher value assets that yield higher returns), rather than Mediterranean, Baltic, Oriental, Vermont, and Connecticut Avenues combined (lower valued assets, which yield lower returns).
Taking care of assets
In order to win the game, it’s very important to make improvement on the properties you’ve bought. You should reinvest in your properties by building houses and hotels to improve your income and financial position. In your real life, it should be your constant effort to boost your assets and minimize your financial obligations. Thus, you can achieve financial freedom in the long run. The bottom line is, don’t rely on financial shortcuts because they can ruin your financial stability.
Great analogy! I have always thought that Monopoly was one of the better games when it comes to reality!