Does Monopoly Teach Your Kids Good Financial Values?
The mere mention of the word Monopoly brings to mind cosy winter evenings in my living room trying to finally outsmart my older sisters. We had a battered old set which would get pulled out from under our parent’s bed on those nights in which no comedic treat like Cannon and Ball or The Two Ronnies was on. Ah, what a simple life it was back then.
I was rubbish at Monopoly as a kid and I probably still would be if I played it today. However, I wonder whether this game teaches us good or bad financial advice.
Good – Diversify and Win
My oldest sister was a demon at Monopoly. By the time we had been around the board a few times and I had barely enough to buy Old Kent Road her Scottie Dog had snapped up Pall Mall, the Water Works and blooming Fenchurch Station. It is only when looking back now that I realise that she tended to adopt a very clever diversification system. Instead of trying to dominate just one colour – like I always did with those stupid cheap brown streets – she would place her properties around the board. You should do the same in real life and diversify as much as you can, with property, pension plans, stock and anything else you feel comfortable putting your money into.
Bad – Mortgages Aren’t Really Like This
If you learned about the UK property market and mortgage system solely through this board game you would be pretty confused. For a start, each property has a fixed price which never fluctuates over time or through supply and demand. Another point is that you can’t buy with a mortgage; you can only use cold, hard cash. The mortgage system only comes into play when you run out of money and decide to mortgage one of your prized properties. In this case, you get the amount on the card (half the actual value if memory services). Weirdly, you can’t collect rent while a property is mortgaged. If this were the case in real life there would be no buy to let mortgage option around.
Good – The Most Expensive Option Isn’t Always the Best
I spent months if not years hankering after Park Lane and Mayfair. When I finally broke the bank to buy them and build swish hotels no one landed on them for the rest of the game. Meanwhile, my sisters cleaned me out with humble properties elsewhere on the board. It is easy to be tempted into splashing the cash on a vanity investment like this but it doesn’t always work out. You need to ask yourself whether the property is already at its maximum possible value and isn’t going to increase anymore no matter what you do to it. Sometimes going for a cheaper and better value investment is a far better idea.
Editors note: I always have to have the orange set, though it does frustrate when you have hotels on them and someone lands on free parking!
Bad – Too Much Luck
After a particularly brutal defeat at the hands of the capitalist pigs I call sisters I would often wish that Monopoly was more of a skill based game. I was sure that I could out-smart them but I couldn’t out-luck them. The biggest difference between this game and real life is that the roll of the dice influences so much. Will you pass go and collect a couple of hundred quid or will you go straight to jail without passing go? Luck does have its part to play in real life investing but not as much as in this game. You can even collect money from a bank error in Monopoly. When is that ever likely to happen in real life?
What other financial lessons can we learn from Monopoly?