Monopoly has been a favorite board game among kids for over 80 years. Most kids like the game because they get to make money, but what they do not realize is they are also learning valuable personal finance lessons that can help them in the future. Here are the top six personal finance lessons that can be learned from playing Monopoly.
- Start Investing Early
In Monopoly, the player with the most money at the end of the game wins. In order to get money, players need to purchase properties so they can collect rent. If a player chooses not to buy any properties, then they will only spend money on paying rent without receiving any, and they will quickly run out of money. To make money in the game, one must spend money on properties early on so they can collect rent throughout the game.
It is important to start investing money early in real life as well. The earlier you start investing, the larger the money will grow over the years because of compound interest. Here is an example to show the benefits of investing early. If you decide to start investing $250 per month when you are 25 at a 10% growth rate, you could accumulate roughly $1,460,550 by the time you are 65. If you wait until you are 35 to do this, you could accumulate roughly $542,830. If you wait until age 45, you would only accumulate about $189,000. As you can see, there is a huge advantage to start investing earlier rather than later.
- Don’t Put All Your Eggs in One Basket
You can’t win Monopoly if you only purchase one property. Players need to invest in multiple properties so that they can collect more rent across the board. If you own properties all around the board, then the chances of another player landing on your property and paying you rent are much higher than if you own only one property or property group.
Similarly, when you invest money, it is wise to diversify your portfolio. If you invest all your money in only one or two stocks, then you can lose all that money if something goes wrong. Putting your money in multiple different investments increases the potential for gains and reduces the risk of loss.
- Always Have an Emergency Fund
When playing Monopoly, you never know when you are going to land on another player’s property and have to pay high rent, or when you will get a “chance” card that makes you pay a large sum of money. For these reasons, the best players make sure they keep enough cash on hand so they can afford these expenses when they arise. It is smart to set some money aside at the beginning of the game so that you do not spend it all.
In life there are a lot more emergencies that can arise, so it is very important to keep money set aside in an emergency fund to deal with them. Make sure the money is in a separate account that you will not touch unless you need to. Having an emergency fund will keep you from having to go into debt any time an unplanned, but necessary, expense comes up.
- Spend Money Wisely
While it is important to buy properties to collect rent, the best players know not to buy every single property they land on. If they do, they will quickly run out of money and be unable to pay rent when they land on another player’s property. Players must be strategic about which properties they choose to purchase so that they can receive returns on their investments without wasting all their money. If you spend all your money in Monopoly, you lose.
In much the same way, spending money wisely is crucial in real life. If you frivolously spend all your money, you will not have any left over for necessary expenses or emergencies that come up. It is important to have the discipline to say no to some purchases so that you can have money for others. Not having enough money to cover expenses will cause you to go into debt and set you back financially.
In Monopoly, it is often necessary to trade properties to gain a monopoly or even just to stay in the game. This requires negotiating with other players to figure out a deal you can both agree on. Different players need different offers to benefit from the deal. The best players know how to negotiate to get what they want.
The negotiation skills developed by playing Monopoly are beneficial in the workforce. Some employers want new hires to negotiate their salary, and negotiation skills are necessary when seeking a raise from your current company. When negotiating a salary or raise, you need to be strategic. Just like in Monopoly, you shouldn’t only consider what you want from the employer, but you must also think about how much you are worth. You can use these figures to find a number both parties can agree on.
- Be Patient
Monopoly is never won in the first round. Because one game of Monopoly can last for hours, players need to be strategic to make their money last. They must also realize that it can take time to earn money to make their property purchases worthwhile. You can’t rush a game of Monopoly; if you try to speed through the game by rolling doubles to get around the board, you can easily land yourself in jail.
Much like Monopoly, meeting financial goals is a marathon, not a sprint. You need to be patient and strategic and remember that it can take time to see a return on your investment and earn as much as you were hoping for. Most people do not become millionaires overnight, but if you put in the work and remain patient, you can achieve your financial goals. Just remember, shortcuts are not the answer to success.
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