Money lessons from Monopoly
It’s always a promising start to a weekend when we decide to spend an afternoon playing Monopoly; our two ten-year-old boys, my husband and I. The boys were introduced to this nearly 100-year-old game three years ago. By now, they are smooth players with a clear idea of the path they will pick to try and win the game.
Like any other board game, Monopoly’s objective is for one player to beat the others and win. It’s a game about creating wealth through buying property. On the original version of the square board there are ten sections marked out on each border. Of the ten, seven are treet addresses from around London, UK, interspersed with other sections which may have train stations or utility companies or tax liability or a surprise chance in them. The objective of the game is to buy street properties as you land on them. The properties are available in sets or two or three, you can buy them one at a time. Once you have bought a property, any other player who lands on it will have to pay you a rent. If you manage to buy all the properties in a colour set, your fortunes can improve drastically. You can now start building houses, with four houses built you may build hotels on any one or all of the properties in a set. Houses and hotels bring in exponentially more rental income.
At the start of the game every player is given some money by the bank to begin their journey through the cardboard sectioned streets of London. When we initially started playing with the boys, they were overjoyed to simply be given fake money from the bank. Buying property was not on their radar, holding on to the cash seemed to bring immense satisfaction. There are some provisions in the game which allow you to earn money without owning properties and that’s what they looked forward to the most, unwilling to part with the cash. Slowly, watching the adults playing and lapping up properties, they realized that perhaps they are missing out.
One can keep playing for hours, but the game in a sense is never ending as you can go on building on your properties even after all the properties have been bought. We tend to stop playing when we are all tired, at which point the money and property values are added up for each player to see whose net worth is greater. This was perhaps the first lesson for the boys; they realized that one’s net worth with property tends to be higher as you earn rent and retain the capital value you paid for the property. You could choose to sell a particular property card to another player and monetise that value. They could now see that creating an asset meant increasing your wealth.
Another aspect of the game is that it requires long hours of play before the riches start to flow in. Once all the property cards are bought out, players then sell desired missing property cards of a set to other players at a mutually negotiated cost, the objective being to own an entire set. Owning an entire set means you can build on the street and charge a higher rent. All this requires a lot of time. Initially, the boys used to be in a hurry to get rich and eventually they realized that there are not short cuts, you have to do the work to get the wealth and you have to give it time. Amazingly, this is true for the real world too.
Investing to create wealth, be it through physical assets like property or financial assets like equities and bonds, has no one particular path. Every individual’s path will be different. I preferred buying cheaper property cards in Monopoly, as they were often neglected by others and it was easier to own a set. Then I could get on with building houses and hotels; the real long-term game. However, my boys rather own the more expensive property cards so that the rental income is maximized early on in the game. Hence, they save up, passing all the other properties they land on, in the hope that they will land on premium streets before the others. The strategy they use needs a lot of luck too. In our real money lives too, luck has a role to play alongside the planning and discipline.
I have played Monopoly now for over 25 years and I am still learning how to maximise my net worth using all kinds of strategies in this game of wealth. Patience, discipline, value of money, making objective rather than emotional choices about investments are just some of the learnings from this exemplary game.
Author-Lisa Pallavi Barbora
(As published in IPRU Insights)
