As a child, one of my favorite table games was Monopoly. I couldn't get enough of the game. I would bother family, friends and neighbors to play a game of old-fashioned American capitalism with me. And of course, winning was everything to me. Being of equal competitive spirit My brother would dominate purchasing every single mix match piece of land and negotiate later with other land owners. Was he just lucky? I'd ask myself, Not until then did I understand the value of his indirect lesson. I immediately applied that to everything in my life.
Yes just as in life, There's a certain amount of luck in the game. Your financial well-being depends on where you land on the board. If you have limited sources of income, a small amount of bad luck will lose you the game. But if you have multiple sources of income, you can withstand a long streak of financial misfortune. Your future and your family's future are less at risk.
Now that I'm an adult, I look back and realize that I learned several valuable lessons about my future business life from all those games of Monopoly. Anyone interested in financial independence can learn lessons from Monopoly. I've listed some of them below:
1. Become an Investor
To become financially independent, you have to become an investor.
In the latter stages of Monopoly, you lose money when it's your turn. You make money when it's the other player's turn. That's how it works in the business world, too.
You invest in a property and a few hotels. It's your opponent's turn. They land on your property and suddenly owe you money. That's the way you have to make it work in the real world.
Do you want to work for a paycheck, or do you want to depend on property and capital to work for you?
But if you invest in something worthwhile, you're making money even when you don't do anything at all. The capital works for you. Even when you are asleep in bed, you are making money. When you are eating dinner out on the town, you are making money. When you are shopping for that new car or boat, you are making money. Life is working for you. People are handing you their money.
Investing is simply a much more efficient way than working to make money.
2. Invest as Much as You Can
Every investment is another figurative pole in your tent.The typical opening strategy in Monopoly is to invest in any and every available space you land on. If you have the money, you shouldn't pass up on a good investment opportunity. If you do pass on the chance, you are basically passing a turn. The world passes you by.Monopoly's a zero-sum game. If you don't invest, someone else will land on the same spot and invest in that property. Eventually, you'll land on that space again and have to pay for your indecisiveness. Even if a property doesn't pay off that well, it is an extra bargaining chip. You can trade it later for something more valuable to you.
Of course, the business world isn't so cut-and-dried as a Monopoly board. In Monopoly, every space has value. In real life, not every investment has value. You have to know what is a good investment and what isn't.
But don't let your money get lazy. Don't let it sit around doing nothing. Make that money work for you. If you find an investment worth making, put your money to work and invest in that opportunity. This means you are diversifying, putting many poles in your financial tent. The more poles, the more stable your money situation will be.
3. Scale your Investments
Early in the game of Monopoly, you don't have an abundance of money. So you have to be smart about your investments. The best strategy is to buy up as many cheap investments as possible. This allows you to diversify.
Imagine buying Boardwalk at $450. For that investment, you could buy a half dozen cheaper properties. These properties might not pay off as well, but they will be six sources of income as opposed to one.
When you have a limited bankroll, which is common for new investors, you make a mistake if you sink all your money into one big investment. You might be tempted to invest in a get-rich-quick scheme, but you are taking a risky gamble.
But if you scale your investments, you can diversify. You are taking less of a gamble because no one investment can make or break your future. This has the added value of letting you gain experience in the business world, instead of jumping right in with one all-or-nothing proposition.
If you're like most of us in the business world, you'll have your share of failures. But the more investments you have, the more experience you gain. You can learn from both your successes and your failures. If you lose 10% on an investment but gain valuable business knowledge from that failure, hopefully your other investments cover the loss and you can press ahead with more practical experience.
On the other hand, if you don't scale your investments, you could end up losing a catastrophic amount on one investment. You'll be forced to trudge back into an employment situation, with very little experience to show for your losses.
The more you scale your investments, the less of a factor luck plays. Some if not all of your investments will pay off, giving you more money to invest. As you get more money, you can take on bigger investments. But this time, those big investments won't require your entire bankroll. You can put money into a large scale business opportunity, but still be diversified.
As you grow your portfolio, luck becomes less and less of a factor. Having gained experience and business knowledge also takes more the luck factor out of your finances. Luck always plays some role in the business world, but limiting your risk is important every step of the way. Monopoly teaches the wise player about risk management.
4. No One Gets Rich Renting
In Monopoly, the owners of property make money. Those who rent, lose money.
That's the same in the business world. People tend to dislike their landlords, and why is that?
Probably because people on some level realize the landlord is in a pretty good situation in contrast to the renters. A person who rents is constantly paying money to a landlord, with nothing to show for it but a temporary roof over their head.
Meanwhile, the landlord has a constant flow of money with a minimum of energy expended. The landlord lets a building make him or her money. That building takes money away from the people living there.
Just like in Monopoly, the renter pays money simply for living. The investor makes money without doing anything. That's a great situation to be in. Become an owner and not a renter.
5. Work For Yourself
This is the most important lesson you should learn from Monopoly.
To become financially independent, you must be your own boss. Don't depend on someone else. You are a slave to whims of the marketplace. If you draw a paycheck, you have one source of income. You are dependent on the financial success of one employer, be it a person or a corporation. If business gets bad, your entire livelihood depends on that employer retaining you.
You are also dependent on the personal whims of that employer. Even if business is good, you still have to worry about offending your boss. Office politics is a constant danger to your job security, whether you are productive or not. All is takes is being on your boss's bad side for a short time and you could be out of a job. You could be without a paycheck at a moment's notice.
If you are economically independent, you have many sources of income. If one of your investments doesn't pay off, you have something to fall back upon. No one person, no one factor stands can negatively affect your prosperity. That's a good thing.
Think about it. Which one is really riskier? Putting all your faith in one employer, or putting your faith in your many investments.
Consider the example of Monopoly.
Ultimately, you are always at risk if you are working for someone else. That risk becomes a lot less when you become your own boss. You don't have one source of income. That's the secret of success and economic independence in the modern world.
Life costs money, but it also brings a multitude of opportunities to collect that money, too. Take advantage of those opportunities and do not allow yourself to become a slave to the marketplace.
Winning The Game
Start slowly and prudently. Build up your portfolio. Cut your ties with the workplace and become independent of any one source of income. Become your own boss and invest in the world around you. In the end, people will pay you for doing nothing. That's the life lesson of Monopoly.
That's how you become one of the winners in the business world.