How The Game of Life Teaches Personal Finance

My daughter loves The Game of Life (I'll just call it "Life" from here on out), so when our family has an extra, oh, THREE HOURS or so we play it (ok, it's not that bad, but it is a long game.) Fortunately, I get to be the banker, so I'm not bored all the way through. But I digress.

Life is centered around financial principles -- some good and some bad -- and I thought I'd highlight these and detail how my wife and I use the game to teach principles of personal finance. Let's start with the good things Life teaches about personal finance:

• Net worth is how you keep score. The goal of Life is to accumulate the most money (assets minus liabilities) during the game. In other words, you win the game by having the highest net worth at the end. By using this measure, Life hits the nail on the head as far as I'm concerned -- it's what you keep that is the key measurement to financial success. Key lesson: In financial terms, net worth is the main measurement you want to focus on and grow.

• It pays to get a college education/the career you pick has a big impact on your life. Going to college costs you $100,000 in Life (you take out loans to do this) and you have to pay back $125,000 (interest, you know -- another thing the game teaches), but it's almost always a good deal. Why? Because you can become a doctor, accountant, veterinarian, etc. -- professions that make a good amount of money (doctor - $100k, lawyer $90k, vet - $80k, etc.). This comes in quite handy as there are "pay day" squares all over the board, so you earn your $125k back pretty quickly. If you skip school, it's likely you'll get a low-paying job (like a hair stylist at $30k per year or a sales person at $20k) and suffer throughout the game. Key lesson: Going to college to get a good career is almost always worth the cost.

• College doesn't always make a difference in your pay. Of course, you can choose to go to college and then get the income shaft. You have to blindly draw your occupation from the college career cards, and if you're unlucky enough, you'll be a computer designer ($50k per year) or a teacher ($40k per year). These jobs pay as much as (or even less than) a couple non-college jobs that you don't have to fork over $125k to get. Key lesson: Make sure the career you're going into justifies the high price of a college education.

• Lose your job and you take a big financial hit. Here's the real kicker -- you can pay the $125k for a college education, get a high-paying job, then lose that job (there are nasty "lose your job" spots on the board) and end up making a fraction of what you once did. And, yes, you still have the $125k debt from college. It's a bit of a stretch -- after all, who really goes from being a doctor to a hair stylist -- but the key point of how important your career is gets made. Key lesson: Your career is your greatest financial asset so be sure to protect it.

• The more you make, the more you're taxed. Each career card comes with a tax rate for the profession and just like in the real world, the more you make, the more you're taxed. Welcome to the real world, kids. Key lesson: More income = more taxes.

• Kids are costly. Throughout the game you have the chance to "have" kids (you can choose a kid path or non-kid path.) My daughter always takes the kid path because she likes to fill up her car (the token you move around the board) with pink (girl) and blue (boy) pins. Me? I always go the non-kid path. Why? Because kids are expensive in the game. Quite often, you'll land on a space that will charge you so much per kid for this or that. If you have a carload of kids, you end up paying a boatload of money. Yeah, the game also has some financial benefits of having kids (for example, they can all get presents in cash), but not as many as the expenses they rack up. Key lesson: Kids are expensive.

• Don't get sued. Just like the real world, you can get sued in Life. And if you do, get ready to fork over $100k (ouch!). That is, unless you have a card that lets you get out of a lawsuit. In that case, you simply get to laugh at the person who sued you. ;-) Key lesson: Don't get sued. And just in case you might get sued, get umbrella insurance or a good lawyer (the no-sue card) to cover yourself.

• Don't get into debt. The last game we played, my wife got sued. Then sued again. Then sued again. By the time it was over, she had to borrow $200,000 to pay off her debts (and had to pay an extra $5,000 for every $20,000 borrowed.) Though she had lots of income the rest of the game, she got killed when she had to pay it back. Key lesson: Stay/get out of debt -- it's a financial killer.

• It pays to invest. At the start of the game, you can buy an investment. You pay $10k for a number on the spinner (1 thru 10) and every time someone spins that number, you get $5k from the bank. It's a good deal that has always paid off for every person investing. (If your number hits only twice you're at break even -- and most numbers will hit many more than two times.) Key lesson: Investing is a great way to make your money grow.

• Luck has a role in how well you do. Just like in the real world, luck plays a big part in how you do in Life. What numbers you roll, what cards you get, what spaces you land on, what decisions others make that impact you, etc. can impact your financial future. Of course, you can do all you can to position yourself for success, but luck can then take you one way or the other. Key lesson: Luck plays a role in your finances.

• Consumer spending can kill you. This game is so ironic. I, the biggest saver in the world, ALWAYS seem to land on the consumer spending squares and am forced to buy a big screen TV, a vacation home, or something similar. These can suck significant amounts of cash out of your pocket and at the end of the game they count as nothing when tallying up your net worth. Key lesson: Control your spending, especially on expensive items that don't have any long-term value.

For the reasons above, I think Life is a great way to teach your kids about how money works in the real world. That said, the game does reinforce some money-related ideas that simply aren't true and we often take time to point these out to our kids. In particular:

• The price of housing can't go down. In Life you have to buy a house (you have the choice of various prices). Each one you buy has a price as well as the amount you'll get for it when you sell it. In every case, the selling amount is either higher (most cases) or the same (a couple) as the buying price, implying that housing prices can't go down. Well, that might be true in Life, but if you've been breathing the past couple years in the real world, you know this isn't the case outside the game. Discussion point: Owning your home is a good thing and real estate generally goes up over the long-term, but it doesn't always increase in the short term.

• The lottery is a good deal. Every once in awhile, someone lands on a "spin" square. In these cases, each player gets to bet money on one of the ten spinner numbers. You can bet any amount you like on any one number. However, if you have a "spin to win" card, you get to place bets on four numbers (thus giving you a 40% chance of winning.) If your number comes up, you receive 10 times the amount you bet. Given these odds, your expected payout with one square is break even (you have a 10% chance of winning 10 times your money) and your expected payout is very positive if you have four numbers to bet on. In our last game, my daughter won the spin (lottery) twice -- netting her about $500,000. She thought that was a pretty good deal. We explained that real life is a lot different. Discussion point: The lottery is a loser's game.

• Get a job based only on the salary. Because the winner of Life is the one with the most money, all of your decisions come down to economics. But as we all know, picking a job isn't all about money. There's enjoyment of your occupation (what you like to do), satisfaction, quality-of-life issues, and the like to consider before picking a career. In addition, not everyone has the ability to do every job (for example, not everyone can be a doctor.) As we all know, picking a career rarely comes down to an economics-only decision. Discussion point: What you earn is one consideration when picking a career, but you also have to consider other factors like what you like doing, what you're able to do, and so on.

• Getting the most money is the most important thing in life. Contrary to the belief of some, life (real life, not the game) isn't all about money this and money that. Certainly it takes money to survive and live a particular lifestyle, but there's more to life than earning and accumulating money (that's why I have a category titled More Important than Money -- to regularly remind us all that money isn't the end all.) Discussion point: Making and accumulating a lot of money is fine, just don't let it be the whole focus of your life.

Given all of the various learnings (both favorable and unfavorable) in the game of Life, my wife and I spend much of the game talking our kids through the various money issues we're confronted with. We're careful not to be over-bearing (it's a game after all -- we're trying to have fun), so we comment here and there on how the game is and isn't like real life. Our daughter, in particular, seems very interested in these sorts of issues, and often asks additional questions which we discuss after the game. As such, we've seen that Life can be a great way to teach kids (or anyone else) about personal finance issues.

Comments

[Neo]

I used to LOVE the Game of Life. I had an older edition, as it was handed down to me by my brother. It sounds like I'm missing out on a lot of fun. Maybe I'll have to add it to our wedding registry so I can enjoy it again. :)

[Kevin]

I will definitely play Life with my kids when they are old enough. The opportunity to talk about "real world" money issues in the context of a game is a great thing.

[Minimum Wage]

I'd have a LOT of fun designing a game like this. (I have thought up some game concepts.) I'd include "hamburger flipper" career card, that would be a real bummer for a college graduate to draw.

[Tim]

At about what age do you think is the best time for kids to get the most out of the game?

[FMF]

Tim --

My kids are 11 and 9 and it seems to be perfect for them (though they do miss some of the comments we make.) But if we keep paying for the next few years, they should be set after that time. ;-)

[JLP]

I have NEVER liked the game of Life. I always hated that salary swap business. I never thought that was anything like real life.

[Neo]

@JLP, You could always change the rules. :) House rules sometimes make some of the best games even better. For example, with monopoly I always put money on the free parking spot, but not a lot of people do.

[FMF]

Neo --

That's a GREAT idea!!!!! Maybe we'll add some of our own rules to make it more realistic!

[Big Cheese]

Sounds like a great game! Maybe it can be adapted to account for the modern challenges we face in life (environmental decline, peak oil, outsourcing of jobs to developing countries, underemployement of college graduates nowadays, etc.) But overall it teaches some great concepts.

BC

[Danielle]

While it costs quite a bit more than "The Game of Life" a game has been developed by Robert Kiyosaki that might satisfy those who want more realism in their gaming.

A friend of mine has it and I have played it a couple of times. It says for ages 10 and up.

[DeeDee]

i have this game ut unfortunately my lttle sister lost the driections and now my family of 6 cant enjoy i was wondering if there was a way for u to coy and post it on th internet im searching every where on the internet and i have yet to find it