Financial Lessons From Monopoly
I used to play Monopoly when I was younger (and sometimes
later in life as well). The financial lessons were there if you
paid attention, but it was also a good way to get the right mental
habits developed for success in investing. So I was intrigued
when a visitor to this website sent me the following article...
Master of the Board: A Look at Financial Lessons Learned
from Playing Monopoly
By Cody Thrower
I have been a Monopoly aficionado for years. For more than
a decade I have excelled at this game – sending anyone who
dared challenge my mastery of the board bankrupt along the way.
In the process of acquiring all of those houses, hotels, utilities,
and railroads I have come to realize that Monopoly can teach
us a great deal of practical financial lessons that we can all
apply to real life.
Mortgages Cost Double
This is one lesson I have learned from playing Monopoly over
the years – and am quite happy that I was able to learn
on a Monopoly board rather than in real life! Allow me to demonstrate:
some people are so consumed with the urge to acquire new properties
in Monopoly that they will mortgage properties they already have
– rather than putting that money to better use such as building
houses and hotels on the properties they already own. The lesson
to be learned here is to stay away from mortgages and use your
money in the most efficient way possible.
If You Must Take a Mortgage – Do So Strategically
The only time it is ever appropriate to mortgage anything
is when you want to take some of the value that you used to have
in one asset and divert it to a more lucrative asset. This principle
holds true in both Monopoly and real life. Mortgaging one property
to build a house or hotel on another property is the perfect
example of how this would work in Monopoly. In real life, mortgaging
your house to raise the money to buy a piece of empty land that
you know you can sell easily and at a decent profit is a great
example.
Trading is More Efficient Than Working
Money is treated as an independent commodity in Monopoly.
Those who take this view in real life tend to perform much better
financially. It doesn't take a lot of brain power to know that
becoming a successful day trader, land speculator, or real estate
investor beats doing eight hours of grueling manual labor anytime.
Play the Greed of Others Against Them
In Monopoly, offer to sell an opponent a few properties at
such a great price that they will have to tear down some houses
or hotels – and perhaps mortgage a few of their properties
as well. This concept could play out a variety of ways in real
life – especially if you are an entrepreneur!
It Pays to Be Nosy
Being nosy can be of value both in Monopoly and in real life.
In Monopoly, you cannot afford to take your eyes off your competitors.
Doing so will ensure that you miss out on great opportunities.
Information is the most valuable currency in both Monopoly and
real life. Getting good information often entails being a bit
nosy.
Be Able to Turn Negatives into Positives
Going to jail seems like it would be a bad thing in any scenario
– but in Monopoly it can be to one's advantage! Staying
in jail can help you avoid landing on a property that has a house
or hotel on it. A true business person must have the ability
to turn negatives into positives. The pros are never promised,
but the cons can always be counted on. That is why having this
ability is so important.
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