Monopoly may be a popular game, but besides being a great activity for a rainy day it is a fantastic tool for learning about life's lessons in finances. Not only does this beloved board game provide hours of entertainment for children, but it also teaches valuable lessons in risk assessment, diversification and timing which are the tools for investing in today's real world.
Philip Orbanes, author
of the book Monopoly, Money and You: How to Profit from the Game's Secret of
Success, has been a judge for over 30 years of both the World Monopoly
Championships and the United States. As a judge, he certainly knows how
Monopoly is played and is an expert on its many intricacies that can be learned
in just a few hours of play. Orbanes claims that by applying what consumers
learned as children in Monopoly they are able to avoid bad investments as
adults.
Investment Skills Learned by Playing Monopoly
1. Art of Negotiating:
Making deals
and negotiating skills are absolutely vital to this game. You must be
aware of the fact that by being too soft you will be taken advantage of and
being too harsh will discourage others from making deals with you.
In real life, we continually negotiate. We
negotiate with our parents, business partners, parents, kids, banks and many
others. To be successful, you have to know how to be efficient at
negotiating.
Monopoly provides children the opportunity to safely
learn how to negotiate financial dealings. After all, it isn't real money
you lose so making a mistake is no big deal.
2. Diversification
When playing Monopoly, the key to
success is diversification. The idea is to have a mixture of properties
and not to put all your eggs in one basket. By developing one color
group, you may think you’re headed toward success, but that isn't enough
to win. In order to be in good shape, you must also have railroads and
utilities to earn cash. In real life, you shouldn't invest all your money
in just one stock. If that stock tanks, you lose all. By diversifying,
you avoid losing all when one stock crashes.
3. Seize Opportunities
Luck is not only part of the game,
it is also part of real life. You simply can't control everything in life
as well as in the game. The important thing is that when luck offers you
opportunities you take advantage of them and make the most of them. For instance, if you are lucky enough to get
the first dice roll, you also have the first opportunity to buy as
many properties as possible and avoid rent payments as well. Therefore, by buying properties, you will be
taking advantage of the opportunity and more likely to be successful.
4. Have Emergency Funds
When playing Monopoly, you never
know when a chance card is going to require you to pay taxes, school fees,
finance hotel improvements, or pay double rent on the nearest railroad.
Not having sufficient cash to cover the costs will mean it will be necessary
for you to mortgage or sell your assets. In real life, you must also have
funds or assets available for emergencies.
5. Budget Your Cash
In order to stay in the game, you
must know how to budget and plan for your expenses. You must not only
know how much money you have but also how much you will need to complete a
round on the board again. Monopoly also teaches you to be vigilant with
your finances. You don't want to deplete your cash before you pass Go.
