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8 Personal Finance Lessons I Learned From Monopoly

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Monopoly 70th Anniversary EditionAs checkered a history as the board game Monopoly has had (Monopoly: The World’s Most Famous Game–and How It Got That Way is a great book about its history), it’s amazing how much can be gleaned from it and how applicable those lessons are in so many facets of our lives. I think there are at least a half dozen million “business lessons learned from Monopoly” books but I haven’t seen any personal finance lessons, until now. :)

Lesson #1: Passive Income Is The Key to Wealth

This the world of Monopoly, passive income comes in the form of rent when opposing plays land on your properties. In reality, passive income can come from any source but the path to wealth comes from building up your assets so they can generate passive income. Why do you save for retirement? So you can live off your investments passively and you can stop relying on that $200 every time around the board as a means of survival. In Monopoly, you win by acquiring more land, building up hotels, and bankrupting your opponents. You can’t win by just running around the board.

Lesson #2: Luck Is Part of Life, Take Advantage of It

So you hit a few doubles and fly around the board, take advantage of it by snatching up as many properties as you can. In life, you’ll often catch lucky breaks, be sure you’re in a position to capitalize on those lucky breaks. Sometimes you’ll have an opportunity that requires a particular skill, try expanding your horizons beforehand and polishing up on those skills that are related to your current job but not necessarily applicable at the moment. You don’t need to become an expert but when the opportunity presents itself you can at least claim brief experience so that it can get you in the discussion.

Lesson #3: An Emergency Fund Is Essential

When you have only $54, a monopoly with three hotels, and a few random deeds like B&O Railroad. You hit community chest… and you get the housing renovation card. Now you have to find a way to scratch up a hundred dollars or so per hotel and you’re plum out of luck. You flip over B&O and shutter a hotel just to make the payment. Emergency funds are as important in Monopoly as they are in real life. The only difference is that in real life there are a lot more emergencies than in Monopoly.

Lesson #4: Improve What You Have

Don’t overlook the things in your life that you already have and think of ways to make them better. In Monopoly, it’s putting houses and hotels on the properties you already own, not trying to find more property. In real life, it’s about working hard at the job you already have, getting promoted, getting good raises, and setting yourself up for a financially prosperous retirement. It’s very tempting to look at what others have, especially material possessions, and think that your life would be better if you add those things… don’t.

Lesson #5: Use Jail to Reflect, Refresh, and Come Back Stronger

I’m not saying you should go to jail to get a breather, as one sometimes tries to do in the end of Monopoly, but sometimes you have to give yourself a time-out to rest and relax. Whether it’s pressures from your work or pressures from your friends or pressures from your family, it always pays huge dividends to take a step back so that you can collect your thoughts. It could be for a minute, an hour, or a week, but taking a little “me” time will always give you more energy to tackle life’s challenges with a renewed spirit.

Lesson #6: Life Isn’t Fair, It’s What You Make Of It

Everyone starts off with $1,500 and their butts on GO, so everyone starts off as equals right? Wrong. The player with the first move has an advantage over everyone else. The player with the second move has an advantage over everyone after him or her. The player that hits doubles has an advantage of the player that doesn’t. Life isn’t fair but that’s okay, the decisions you make after the dice have been thrown are more important than how many spaces you move. Look at all the professional athletes with million dollar contracts flushed down the toilet because of bad decisions? You could say they got lucky but they messed things up for themselves.

Lesson #7: Life Is About Relationships

In Monopoly, part of the game is negotiating with the other players to strike up a deal. It’s really a proxy for building relationships with people so that you can leverage those relationships for your own benefit. Small business owners build up networks of other professionals, such as attorneys, tax accountants, and bankers; because they know they will need to draw on them in the future. Regular folks like us build up our networks because it may be the contact that gets us our next job. Life is about relationships and building up a network of trusted individuals you can turn to in a jam.

Lesson #8: There Is Only One Winner

In Monopoly, there is only one winner. Okay, this last one is more a little peek at the next post about Monopoly I’ll write – Lessons I Had To Unlearn From Monopoly.

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25 Responses to “8 Personal Finance Lessons I Learned From Monopoly”

  1. Minimum Wage says:

    I earn minimum wage, I think life would be better if I added a few of the things others have. Seems like a no-brainer to me.

    Since I am always broke and have money pressures, I can’t afford to take a time-out.

  2. Blaine Moore says:

    Great list!

    @Minimum Wage, I’m sorry to hear that. I recommend reading “Richest Man in Babylon” and thinking about what you read, and I hope that you manage to improve your situation.

    • Anonymous says:

      At Blaine Moore, I agree the Richest Man in Babylon is a great book and will help anybody with their finance problems over time. It has helped me live on my own and go through college making slightly above minimum wage.

  3. Great post. As a child, that was my favorite board game also. Come to think of it, it probably still is my favorite board game. To me, Monopoly taught me to take advantage of opportunities as they come. Perhaps that game is the reason why I like real estate so much. :)

  4. KK says:

    Mininum wage,

    YEs, Richest man in Babylon is a great book. I haven’t played monoply in a while. I don’t make that much also but I have noticed that I have more saved than most of my “well off friends”. For them, the more they make, the more they spend. For me, I want more, so I spend less because I don’t have a choice.
    About two weeks ago, this 60 something year old guy, that only makes $20,000 a year, somehow made $500,000 in stocks…
    So, you can do it…you just have to desire it…and think positive and smile because this is your life…

  5. Anonymous says:

    The giant sucking sound you’re hearing is almost $300 sucked out of my pocket every month for student loans and another creditor. That’s why I can’t pay myself first.

  6. Mason says:

    @ minimum wage…

    I completely understand where you are coming from, and I know it’s hard to save money when you don’t have much of it, but think about the things you have that don’t need…

    Do you really need a cell phone when you have a house phone and an answering machine? That alone can save you anywhere from $40 a month for the cheapie plan or in upwards of a couple hundred dollars. It doesn’t seem like much, but $40 over 12 months with interest is over $500.

    Do you really need to drive down to the corner store to pick up eggs? The gas you’d save not starting your car twice and walking instead can be a hefty sum.

    Do you really need cable internet for $40 a month when dsl for $20 will do?

    How about movie channels in your cable package when basic cable will work?

    Instead of going to see a movie, rent one, or better yet, subscribe to netflix for unlimited movies every month for the price of one at the theater.

    I don’t make much, I’m in the military with a low rank. I’ve been looking at the money I make, deciding on what I absolutely need and deciding how much I can put into savings or a money market account or even the stock market and still have a few dollars to go out once or twice a month.

    Sure, it’s difficult to find things to keep yourself busy at first, but once you get used to it, I think you’ll find yourself more calm and stress free.

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  8. Minimum Wage says:

    Um, I don’t have a cell phone, I don’t have a car, I don’t have cable/satellite television, I don’t have high-speed internet, the last movie I paid to see was 20 years ago.

  9. Too Bad Too Sad says:

    @Minimum Wage “the last movie I paid to see was 20 years ago.”

    If you’re earning minimum wage at that point in your life, you only have yourself to blame for where you are and for not bettering yourself.

  10. Anonymous says:

    Okay, I’d love to better myself. Where do I sign up?

  11. Minimum Wage says:

    Ever heard of “dead-end” jobs?

  12. Nick says:

    Minimum Wage, perhaps problem #1 in your money woes is that you’re home at 11:00 AM on a workday complaining on the internet about how little money you make. Take a class. Get a 2nd job. Be productive.

  13. Minimum Wage says:

    My MWF mornings are fully occupied with medical appointments (yes, on an ongoing basis). I usually work 11-hour shifts the other days. I don’t have a car, so my employability is limited to those places I can get to on foot or by transit, and of course the hours cannot conflict with either my present job or my medical appointments. I have a few hours here and there, but it’s hard to fit them into a job schedule.

  14. Minimum Wage says:

    p.s. can’t take a class, they always insist on money up front and i don’t have any. (remember that giant sucking sound of $300/mo out of my pocket)

  15. Brilliant post. I particularly like number 6 – being the first to make a move. And that is so true.

    It kind of makes me think of all those people who rushed to build pixel sites after the million dollar one.

  16. Great article. As Kiyosaki put it – the formula to success is 4 green houses = 1 big red hotel. I love the point about first mover advantage – I move quickly, but meticulously in business, and it’s paid off in spades.

    For those of you who are looking for a way to earn passive income as per item #1, and you’re stuck in a minimum wage job, and have no spare time – there are ways to do it.

    My story? – I came from being mired in student loans and credit cards – 80k+ in the red, to retired 4 years later at the ripe old age of 27. To boot, I’m lazy, not the brightest bulb in the bunch, and had no experience in investing when I started. Yeah, I know it’s one of those “if I can do it, anyone can” spiels – but meh, it’s what happened to me.

  17. Minimum Wage says:

    Okay, now I’m really intrigued…I have short bits and pieces of spare time, which is better than having no time, but I don’t know how to “move quickly” when I have no money and no available credit. Could you tell us a little about how you went from -$80k to retired in four years?

  18. Meg says:

    I love this post!!!! Playing Monopoly is a treasured family tradition in my family, and I have always LOVED the game. I too learned a lot of financial lessons from playing, and I think this is a fabulous summary of some of the most important wealth lessons a person can/should learn from the game. I think this game is literally the foundation of my interest in real estate as my primarly wealth strategy.

  19. MoneyNing says:

    Monopoly is the greatest game ever invented.

  20. Louise says:

    I used to love monopoly but I have never thought of it like this before. I wonder what the old ‘get out of jail free’ card is designed to teach us?

    We also used to play a game based on the sharemarket which toucht youthe basics of buying and selling shares as well as a great Aussie game called Squatter. You learned the principles of making money by buying and selling sheep! Great post, it made me think.

  21. Daniel says:

    The best way to save money is to pay off all your debts as quickly as possible even if it means living on Macaroni & Cheese dinners for a few months and drinking water every day instead of beer. The sooner you’re out of debt, the sooner you’ll be able to save money and spend it on useful things like education and finding a better job.

  22. renee says:

    Never put all your eggs in one basket (houses, hotels). and always save enough eggs to get you thru a pinch. Whats important ,here and now or life for the long haul. Trim the fat and you will get much more in life. We are so spoiled!! Remember pennies make dollars. Life like monopoly, if all of your money is tied up in property, then you may loose what you have just to get by.

  23. Jhamus says:

    If may be difficult, but it is not complicated. If you would like to have an incredibly fufilling retirement, have a better marriage, and live like no one else- go to daveramsey.com. You will learn how to get out of debt, build wealth, and give to others. Good luck to all of you!

  24. Jason Daily says:

    OK, I was 36, w/wife and 3-kids working as a computer consultant for $55K-YR net. My boss and I were having a conversation regarding a former emp. who gave an ultimatum, a raise or he quits! Boss said there’s the door; don’t ever give him an ultimatum like that. Yet I found myself in the same situation, I asked for a management program after my MBA and he said no and there’s the door, if I don’t like it. I got up shook both VP, and my Boss’s hands and walkout penny less 12/28/2007 (Friday). I got drunk with a friend, and discussed possibilities; Resulting in Leverage – By Monday morning clients were calling my personal cell phone trying to find out who my new employer was, I told them ME. I obtained a General Business Lic. and Tax Use #, bought a copy of QuickBooks and I was in consulting business 1/2/2008. First year out was $122K gross, year two was $118K, not recession proof but still profitable. My point; I have $56K in student loans, $360K upside-down house payment, 2-car payments and a MBA that I didn’t need in order to start a business; it helps but turning a $25-hr job working for the man in to a $100/$125-hr self-emp is priceless. I was working minimum wage since I was 13, never really getting it until I grew a pair and took a risk, remember no pain no gain…


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