Today’s post is a cool guest post from Jacob relating to 5 financial lessons learned over a board game. If you’re like me, you can relate to some of these experiences! Personally, I learned plenty of lessons over board games with friends (even still to do this day).
After spending six years in the accounting, retirement, and financial realm, Jacob turned his attention to teaching others about important life skills. He works with clients one on one, in addition to teaching others through his website PowerOverLife. Jacob currently lives in Gilbert, AZ with his wife and 1-year-old daughter. You can also follow him on Twitter @PowerOverLife.
5 Financial Lessons Learned From Dad While Playing Monopoly
Growing up, on Sunday afternoons, my dad would invite the family to the kitchen table to play a board game with him. Many of the older, iconic games were played including Risk, Monopoly, Stratego, the Farming Game, chess etc. Whenever we played Monopoly, my dad always took it upon himself to teach us a financial lesson or two. It wasn’t until I became an adult, college graduate, husband, and now father that I have really grown to appreciate those well thought out teaching moments from my dad.
I want to share five of those lessons that I learned from my dad while playing monopoly. I believe that these five lessons have helped me financially survive in the world today.
Lesson #1 – Diversification is the Key to Investing.
When you start playing Monopoly, you start collecting properties on the board. You can’t win monopoly by owning only one property on the board; rather, you have to diversify and branch out to other properties.
Likewise, when investing, you can’t really ever “win” by investing in one type of investment. Sure, you might have some good luck here and there, but it is always sound advice to branch out to other types of investments. Having multiple investments in your portfolio is the key to good investing for the long term.
Lesson #2 – Banks Are Never Generous.
I don’t know about you, but when I played Monopoly as a kid, my dad was always the banker…and I hated it! I think he had too much fun acting as a collector, which in reality is what the banker in the game does. The banker collects taxes, fines, loans, and interest, much to the other players’ dismay.
My dad always taught us that in real life banks are never generous. They are useful, and have a purpose; however, they truly have no mercy in the end. Sure, they might give you a pass from time to time, but they always want their money and will do everything they can to collect from you when the finally collection day comes.
My dad always recommended that we use banks as little as possible (I believe he would also add credit card companies). If you ever fall behind on a fine, loan, or interest (or credit card balance), then that company is going to come for their money.
Keep the attitude that banks are never generous in the end. Use them as little as
Lesson #3 – You Can Grow Wealth Through Work and Patience
The object of the game of Monopoly is to grow your wealth and become the richest player. The way that you do that is through the process of buying, renting, and selling properties. It takes work and patience to play the game properly… when to buy, when to sell, etc.
My dad always taught us that growing personal wealth also took work and applying the true value of patience. This specifically was a great piece of advice for me, since I am not very patient with growing my money.
Lesson #4 – Real Estate is a Good Long Term Investment
You don’t need to be a smart person to know that the player who wins Monopoly is the one who has capitalized on earning money from real estate the best.
In our financial world today, real estate can truly be a good long term investment. When you rent property, often times your renters provide a constant cash flow, paying down the mortgage and providing some extra money on top of that. You also can write off certain expenses against your taxes. In addition, when it comes time to sell that property, you will hopefully have gained some extra equity through the value of the home increasing over the years you held onto it.
My dad has three homes and does really well. I am not to the point that I can invest in real estate yet, but I most definitely will when I am able to.
Lesson #5 – If You Aren’t Careful, You Can Go Bankrupt
In the game, if you aren’t careful and you spend more than you are making, then eventually you will go bankrupt.
Everyone has a neighbor, family member, or possibly themselves that have gone bankrupt. It is not a pleasant experience. While going bankrupt in Monopoly just costs you the game, going bankrupt in life will… well let’s just say that it is a lot worse than just losing in a game!
Be careful with how much you spend. Keep some cash on hand. Learn to budget and save a little each month. Be smart with your money and don’t spend more than you make and you’ll greatly lower the chances of ever going bankrupt.
So parents, next time you need a family night, grab Monopoly and make it a night to remember for your kids. Teach your kids these five practical money lessons. They will thank you (probably not right away, but one day) for preparing them to face the world and helping them learn how to become financially savvy.