9 Lessons Monopoly Teaches You About Personal Finance

by Guest Contributor · 14 comments


Children around the world grew up playing Monopoly, and many more adults still get together for some friendly – and sometimes not so friendly – competition. But is there more to it than that? Is Monopoly more than a way to pass a few hours, and are there lessons we can take from a monocle-wearing millionaire, for use in our own personal finances?

Of course there are, because the history of Monopoly is rooted in the state of the global economy, with the game first being played to raise morale during the Great Depression because in Monopoly anyone could become a property mogul and a financial genius. Therefore it is important we learn the lessons Monopoly has to teach, and apply them to our own personal finances so that one day we can all wear monocles. I’ve outlined nine.

1. Life is What You Make It

The first rule of Monopoly is that everyone starts out with the same amount of money – a healthy $1,500 – and we all start from the same place at the Go square. From there the game can be anyone’s and it is the person who takes the greatest advantage from their opportunities who can triumph over their opponents.

For example, the player who rolls first has an advantage over the other players and the player lucky enough to roll a double has the advantage of a free turn and if that player is not you, you simply need to acknowledge that life isn’t fair. Maybe your parents didn’t start a savings account for you when you were born, perhaps you have lost your job because of cutbacks at work, but it is how you deal with the roll of the dice which matters.

Plus, as Monopoly will prove, there are both good and bad surprises in life and you can just as easily end up in jail as you can win a beauty pageant, as long as you accept these surprises for what they are, and find a way to excel regardless by doing what works for you.

2. Seize Opportunities

In a game of chance like life you will eventually have an advantage turned your way and you need to make sure you seize that opportunity and make the most of it. If you do get the first roll of the dice you have the first chance to buy up as many properties as you can and you have a free run to avoid a lot of rent payments early on.

The fact is there are probably a lot of lucky breaks which come your way in life, but you’re not in a position to take advantage of them. That is why you need to always be looking for ways to expand your experience and knowledge base, so that you can recognize opportunities for what they are, and you have the confidence to act on them. While you don’t need to become an expert on everything, look at ways you can build on your skills within the sphere of your current experience so that if an opportunity does present itself, you can show you are prepared and turn that luck into skill.

3. Build a Strong Asset Base

Ultimately it is the player with the most properties who will gain a monopoly control of the board and this is an important lesson to apply to your personal finances because building a strong asset base will allow you to earn a passive income. Other players will pay you rent and with good assets you can make improvements and ask a higher rent.

In real life, if you have real assets, you will be able to live off of the passive income from them. Instead of relying solely on your wage, look closely at your assets and what they can do for you. You may be able to make improvements to what you already have, like upgrading a house to a hotel in Monopoly, so it’s not always trying to overextend yourself to buy more property.

4. You Need an Emergency Fund

Out there on the Monopoly board you never know what a chance card is going to throw your way – you could be required to pay for improvements on your hotels, pay taxes or school fees, or advance to the nearest railroad and pay twice the rent.

If you don’t have the cash then you’ll have to mortgage or sell your assets and in life there are a lot more emergencies than on the Monopoly board. Plus, you have just learnt the importance of your asset base, so rather than selling assets to pay for emergencies, make sure you leave some money tucked under the corner of the board for a rainy day.

David’s Note: Luckily, MoneyNing readers already know this. You did setup an emergency fund already right?

5. Take Time Out

In the real world we’re all doing our best to avoid going to jail, but in a game of Monopoly, a stink behind bars can come as a welcome reprieve from rental payments at every turn. Back in the real world remember that you need a reprieve too, whether just for a minute or one day or one week, it is important to step back from the grind and remember why you’re doing it all – and to see whether your efforts are having an impact.

Taking some time out gives you a chance to refocus on your goals, approach obstacles with new enthusiasm and look at savings or investment strategies which aren’t working, and find a way to fix them.

6. Shortcuts are Not the Answer to Success

The luck of rolling a double is rewarded with another turn, but if you try and take a shortcut through the game by rolling three doubles in a roll, you will land yourself in jail. Then you’ll find yourself stuck behind bars, unable to expand your property portfolio and in some versions even forfeit rental income.

Similarly, stop looking for shortcuts to financial stability and wealth and acknowledge that you have to work hard and you have to plan to be successful. You’ll need to make the most of opportunities which come your way and while a double roll will get you ahead, don’t be greedy because you might just land yourself in jail.

7. Budgeting

To be a successful Monopoly player, you will learn to budget and plan your purchases so you know how much money you have, and how much you’ll need to get around the board again. Monopoly budgeting can also teach vigilance in your personal finance because if you just depleted your cash reserves, you will be treading on thin water until you pass Go.

8. Small Steps Can Make a Difference

If you can’t afford to invest in a four bedroom home with a high rental income, that doesn’t mean you are not ready to enter the property investment market. If the lower income neighborhoods of the Monopoly board have taught you anything, you will know that even the cheapest property on the board with houses and then hotels on the land can still sting your opposition with $450 in rental payments just as they are passing Go.

Therefore, don’t be discouraged from investing or saving just because you have to start out small. Even small investments can see big capital growth over time.

9. Work On Your Relationships but Don’t Rely On Those Relationships

As you make your way around the board you will soon realize your chances of landing on three properties in a series are quite slim. This is where you need to be able to cultivate the relationships with your fellow players to negotiate, sell or swap to secure a set and move onto the construction of your houses.

In the real world you also need strong relationships with trusted professionals and advisers – an accountant, a lawyer, a financial planner – as these people can help a small business grow or be the answer to your next employment opportunity.

However, don’t forget the lessons you learned from a big brother who aimed to send you bankrupt every time you played. While relationships are important, you can’t always rely on them. Ultimately the success of your personal finances comes down to you, so build a diverse asset base and a healthy emergency fund. While you can utilize the services of other if you want to, there is no better alternative than being self sufficient.

This is a guest post from Alban, who helps run Home Loan Finder, a home loan comparison website.

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{ 14 comments… read them below or add one }

Pete December 24, 2010 at 8:07 am

To go along with #8, don’t spend your money on what everyone expects you to want, just because of the snob appeal. Boardwalk and Park Place are what everyone aspires to, but hotels on Mediterranean Avenue and those places actually earn more per dollar invested, if getting rich is more important than looking rich.

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LJR December 24, 2010 at 11:02 am

My high school economics teacher had us play Monopoly regularly during class as a teaching tool.

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The Penny Hoarder December 24, 2010 at 7:13 pm

Agh. My monopoly strategy as a kid was to always buy everything I landed on. Not good… :)

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FrugalLivingAdvice.com December 25, 2010 at 9:20 am

I was great in Monopoly when I was younger. I rarely lost. In life though I don’t have a dollar to my name, so I don’t think it taught me anything. Either that or I am an idiot.
My wife would go for the latter one.

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Leah McClellan December 25, 2010 at 10:35 am

Thank you for a sudden flash of insight. Now I know why I was always bored with Monopoly–friends would almost make me play, and I’d be so bored and never finished a game, if I started anyway. That has to be because I’ve never been very interested in money or possessions.

That’s not to say I don’t value good decision-making concerning finances and budgeting and planning and so on; I do. But for me it’s one of those dreary parts of life that are necessary and must be done but aren’t much fun. Kind of like going along with friends so they can have a game of Monopoly :)

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MortgagesByMark December 27, 2010 at 9:14 am

I think the best lesson Monopoly teaches is the value of having assets. Not the kind of assets people generally think of, such as cars, a home, boats, etc. Those really aren’t assets because they take money out of your pocket. The kind of assets you want to accumulate are the ones that put money IN your pocket, such as cash flowing real estate. If one lives frugally, you can accumulate profitable assets over time even on a meager salary. Rich Dad’s Cashflow game shows how this can happen. Monopoly is fun, but Cashflow is more true to life, in my opinion.

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Dan W. December 31, 2010 at 1:54 am

Can’t help but agree with this. Rich Dad’s Cashflow is more practical. Talk about Doodads (unexpected costs things like restaurant meals and flatscreen TVs) that pop up from time to time.

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Joe December 27, 2010 at 5:56 pm

I can’t even remember the last time I played Monopoly. It’s usually such a long game that nobody ever wants to sit down and start.

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marci December 30, 2010 at 10:16 am

Suggest you don’t try the NEW game…. First everything is in Millions… Hard for kids to do the math… And now they have come out with an electronic banker…I will NOT play with that again. It uses plastic cards – and I think that is a bad lesson for kids to learn. It’s hard to keep track of how much money you actually have.

I like the older game, when you could do the math in your head, and kids had to deal with the paper money – helped their math skills. The electronic bank is slower and doesn’t help their math skills at all.

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Kate January 23, 2014 at 7:47 am

Canadian cash comes in different colours and is commonly referred to by Americans as “Monopoly Money” both for that reason and because for a long time its value was just about the same….

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Born Again January 12, 2011 at 7:28 am

Does anyone know of a free financial news service that is relatively fast that I can use to trade with?

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Bal January 19, 2011 at 4:07 am

The fastest news services are paid wires. However I did find a free audio service that is pretty good. It is called NewsStrike

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CreditShout January 15, 2011 at 10:16 pm

I love Monopoly, but since I’ve started playing with my boyfriend, I don’t like to play as much. His philosophy is to buy everything he lands on, which wouldn’t be smart to do in real life. But, he wins EVERY time. It drives me crazy. I don’t know if Monopoly is the best example when explaining to children how money and investing works…still a fun game though.

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Kate February 28, 2013 at 4:20 pm

I am no good at Monopoly, because I’m more interested in making up stories about the neighbourhoods than piling up cash. And I have found a lot of people make up their own rules about things like getting loans from the Bank and swapping Get Out of Jail Free cards for houses, property or cash. I’d rather play Stadium Checkers or Mille Bournes.

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