My family played a lot of board games when I was growing up — we’d always make a night out of it. I would light up the fireplace, my mom would order pizza, my brother would make milkshakes, and we’d all argue with my dad whenever he tried to invent new rules.
One of my favourite board games growing up was Monopoly — not because it was the most fun but because I was always the banker. As a 10-year-old kid, being the Monopoly banker represented an opportunity to hold the entire family accountable. It was a prestigious responsibility bestowed on me.
Inspired by the government’s stay-at-home order, the board games made a return. But instead of playing with family, I played with friends. And instead of drinking milkshakes, we drank wine. Pizza obviously remained a necessity.
Monopoly as an adult was a surprisingly interesting experience. I love recreating childhood memories but with the added perspective of adulthood. I find it’s interesting to reflect on my memories as a child and imagine how those experiences moulded my ideas and opinions or even my decision-making frameworks. Those recreated childhood memories might be an animated movie. Or a book. Or, in this case, a board game.
With the benefit of a decade’s worth of maturity and having taken MBA-level finance courses, I realized how many real-world financial decisions correlate to a winning strategy in Monopoly. The game is an exemplary case study for smart financial and investing decisions.
So, here are three money lessons that will not only help you win Monopoly the next time you play. They’ll also help you develop a better understanding of essential money principles.
1. The importance of a reliable income.
As a Gen Z baby, I’ve noticed a sense of contempt for regular 9–5 jobs among my peers. My generation’s narrative deems employment a sin — akin to selling your soul to the devil.
If you peruse any financial/career-related content on social media, you will find motivational posts preaching the importance of working for yourself instead of for other people. You will hear inspirational stories about the person who quit their job after starting an eCommerce business. You’ll read about the person who changed their life after learning how to day trade. You’ll find countless calls to action to follow in the steps of the entrepreneur who built multiple 7-, 8-, and even 9-figure businesses.
They’ll convince you that the only way to succeed is to leave the rat race behind and make it on your own. You don’t need a job. Screw the 9–5; you want financial freedom, you want to live on your terms, you want to travel wherever you want whenever you want (post-Covid, of course). Anything short of complete self-reliance is a failure.
This narrative is destructive because it devalues the importance of a reliable income and deems the privilege of employment as a threat, not an opportunity.
If we think in Monopoly terms, we can easily understand the importance of having a reliable income, especially at the start of the game.
You start the game with money — or seed capital. During the first few trips around the board, you spend your seed capital buying properties — or assets. The assets help you win the game later because you collect rent from your opponents every time they land on your property, thereby, redistributing their money to you — eventually, all your opponents go bankrupt and you win the game.
However, your assets won’t generate significant cash flows at the beginning. You must build and develop your assets through investments — i.e. building houses and hotels on your property. Investing in your assets will increase the rental income. But the process of building a significant cash flow from rental income takes time, and you need to invest lots of money. Therefore, you rely on collecting $200 each time you pass GO to support new property purchases or investment activities.
Ultimately, the purpose of the game is to invest in your assets to collect higher rents so that your opponents pay you more money. But you can’t disparage the importance of a reliable income to support the first actions in the game that will eventually help you achieve this outcome.
There is an obvious parallel between Monopoly and real-life financial decisions. I believe everyone should invest in developing their own assets. We realize financial freedom through investments into those assets. And at some point, we reach an inflection and money becomes a tool instead of a limitation — just like Monopoly.
However, the popular narrative focuses too much on the end product — it focuses solely on refined assets that generate significant cash flows. But in doing so, we forget to acknowledge the time and investment it takes to build cash flows from those assets. We preach self-employment, creating and selling products, entrepreneurship. But we forget about the journey.
Just like Monopoly, our assets don’t become significant sources of cash flow immediately. There is nothing wrong with working a 9–5 retail job, collecting a reliable paycheck, and using that money to invest for the future. You’re not a failure if you don’t have other assets generating significant cash flows yet. The process takes time, and you’ll need money to invest. Therefore, we can’t discount the importance of a reliable income.
A winning strategy requires a reliable income.
2. The balance of buying and investing.
In Monopoly, you buy properties. Once you own the property, you collect rent whenever another player lands on your property. So it makes sense to own lots of property. But you can also invest in your properties and build houses. With each new home built, the rent increases. Therefore, with a limited amount of financial resources, the player must balance buying new properties and investing in existing properties.
When I was a kid, my strategy was to buy a few properties and invest heavily in building houses. Therefore, I rarely collected rent. But when someone landed on my properties, I had a nice payday. In hindsight, this wasn’t a great strategy. But at the other extreme, buying every property possible isn’t a great strategy either. You’ll collect rent often but in small amounts.
In the real world, we face the same dilemma. Do we buy more assets? Or invest more? How can we strike a balance?
Here’s a personal example. I became interested in making money through side hustles a few years ago. I tried everything under the sun — dropshipping, writing eBooks, blogging, email marketing, Fiverr, YouTube, day trading stocks, day trading crypto, and so forth. I made a little money here and there, but my range of activities was so wide that I never made a significant amount from any single one. To draw the parallel to Monopoly, I was buying every property but never investing in any.
There’s a statistic floating around the Internet. It states the average millionaire has seven income streams — based on this research paper by the IRS. Oddly enough, psychology experiments have also shown that our short-term memory can only hold, on average, seven different items. I don’t know whether there is a correlation or if it’s merely coincidence, but seven seems to be the magic number per the IRS and psychology. Ultimately, the crux of the anecdote — you must have multiple sources of income, but you can’t have too many.
If you want to be financially successful, you need to balance buying and investing in assets. Buying too much, and you never capitalize on any. Investing too heavily, and you miss opportunities.
The same applies to Monopoly. You need to buy properties to collect rent. But you can’t buy so many such that you don’t have enough money to invest in developing your assets.
A winning strategy requires a balance of buying and investing.
3. The role of chance.
Monopoly has two wildcards, COMMUNITY CHEST and CHANCE cards. Some cards are good — you receive money. Others are bad, forcing you to pay money. Irrespective of the outcome, the wildcards add an element of randomness to the game. With a roll of the dice, you could be collecting $100 from an inheritance or paying $150 to a school tax.
The key to dealing with random events is to prepare strategies beforehand.
When playing Monopoly, it’s essential to have a strategy to deal with chance, like having an emergency fund in case you pick up a wildcard that makes you pay a tax. If you don’t have an emergency fund to handle these chance events, you liquidate assets — which means selling houses or hotels back to the bank or mortgaging properties for half their value. It’s financially prudent to have an emergency fund to avoid liquidating assets and losing half the value of your investment. The real-world parallel is clear. It’s necessary to have a strategy to deal with chance — in this case, an emergency fund.
However, I think it’s equally important to have a proactive strategy for positive random events. Too often, we see people squander money acquired by chance, like lottery winnings. There’s a statistic — albeit false — attributed to the National Endowment for Financial Education (NEFE). It states that 70 percent of lottery winners end up bankrupt within just a few years of receiving their large winnings. While the NEFE publicly admitted that their research did not support the statistic and the conclusion is based on sketchy evidence, the statistic observes real dangers of acquiring unexpected money in absence of a strategy. Without a strategy, there’s a risk of not leveraging your luck to your benefit.
The lesson is not to prepare a plan to spend potential lottery winnings intelligently. The lesson is to proactively decide how you will allocate extra income that isn’t part of an expected budget. For example, when I started writing on Medium, I never expected to make money. And I didn’t. But surprisingly, I received a $1000 paycheck four months into writing.
Without a proactive plan dictating how to spend random money, I probably would have splurged — I remember wanting the new iPhone. But if I went on a shopping spree, I wouldn’t have been any better off financially. I would have squandered a lucky event. I would have received a gift and not leveraged its benefits in any meaningful way. I would have merely traded my COMMUNITY CHEST card for something I didn't genuinely need.
My plan is as follows. Whenever I receive wildcard money, I invest 60 percent. That 60 percent goes straight into my trading account. I put 20 percent into my ‘new toy’ fund — for example, buying a new iPhone. And the remaining 20 percent, I spend on day-to-day treats, like dinner at a nice restaurant.
Ultimately, we cannot make financial decisions independent of uncertainty and randomness. Things happen — for better or for worse. It is unavoidable. Our only option is to prepare for chance events, such that we can respond logically and rationally when they happen.
A winning strategy accounts for the role of chance.
I love reflecting on old memories with the benefit of a few extra years of maturity. I imagine myself as a kid, and I imagine how my childhood experiences informed my mental models of the present — my favourite animated movie, the book I read under the covers after my bedtime or the board game that I played with my family. What lessons did I learn? What fundamental principles did I internalize? What ideas burrowed their way into my brain?
Monopoly introduced me to finance. It taught me the importance of developing financial knowledge — knowledge that I still use today.
- I learned the value of a reliable income, akin to having a job.
- I learned that I needed to balance my buying and investing activities since I have limited financial resources.
- And lastly, I learned to proactively strategize for chance events that influence my financial situation.
These are financial principles I learned from Monopoly as a kid. And the principles that I still use today with real money.