Since our recent move, we’ve had neighborhood kids over quite often. Today, we had six kids playing Monopoly on our living room floor. It brought back a lot of memories of me playing with my cousins when I was a child. Although the tokens have changed (I don’t remember a penguin or a dinosaur), the game otherwise remains unchanged.
During their third or fourth snack break, my son explained that he didn’t have much cash but owned a lot of properties and that he had recently made two other children go into foreclosure with his rent. He told me that he thought he would win if they kept playing. I was quite the proud capitalist father.
Although I didn’t subject him and his friends to one of my impromptu lectures about money, it made me think of the financial lessons I learned playing Monopoly that I want him to take away from the game.
Lesson One – Owning Assets is the Winning Strategy
Saving money is not the key to winning Monopoly. You must buy and build assets such as individual property, color sets, utilities, railroads, houses, and hotels. All these assets produce income if someone lands on them, and you want to use your money to buy as many as you can.
The less you spend on income taxes, rent payments, and hospital bills, the more you have to buy assets. Sound familiar? In this game, you can’t purchase doctor mansions, luxury cars, jewelry, or fancy trips. If you could, the average medical professional wouldn’t fare very well. By forcing you to focus on assets that produce income or increase in value, Monopoly forces you to invest for the future.
As in life, some assets are better than others. You’d rather own Marvin Gardens than St. Charles Place, but getting any color set and building houses gives you a distinct advantage. The more houses you have, the more rent you can charge, and the more houses and hotels you can buy. It’s a virtuous circle.
Fortunately, life is not a zero-sum game with a limited number of assets on the board. Everyone can participate in investing – through your retirement plan, a brokerage account, real estate, or starting your own business. If you are beginning a career as a medical professional, follow Business is the Best Medicine’s Financial Vitals Checklist to ensure you are taking the proper steps to win the game of personal finance.
Lesson Two – You’re Going to Feel Poor Before You Get Rich
When my son told me, “I don’t have much cash, but I have a lot of properties,” I couldn’t help but laugh. There was a time in my life when I felt the same way. I started working as an attending physician in 2006 and bought rental properties the following year. At some point, I owned five rental houses but felt utterly broke as I used my paychecks and rental income to buy the next property.
I inadvertently lived below my means at the beginning of my career. You should do it purposefully to have money to invest in appreciating assets. Following this path will sometimes leave you feeling cash-poor and asset-rich. As long as you do not become so leveraged you risk losing your assets, this feeling will pass as your income and net worth grow. As the saying goes, “Live like no one else will now, so you can live like no one else can later.”
Lesson Three – You Need Enough Time to Win
The kids played long enough to move the board from our living room floor to a “secret fort” they built upstairs. My son told me later that he had secured several houses and hotels and was building up cash when the neighbors had to leave to go home. He was planning on keeping the game untouched in the hope they would be able to return the next day to finish.
I remember this happening frequently when I was playing Monopoly as a child. If you are playing properly, the game simply takes a long time to win. Even if they don’t have school tomorrow, it’s doubtful all the other kids would want to restart a game they are now destined to lose.
Fortunately, this highlights a critical point when it comes to personal finance. You need enough time to win the game. Compound interest may be a superpower, but it takes a long time to work. The White Coat Investor recently highlighted this on his blog. According to Ramsey Solutions, the average millionaire becomes a millionaire after 17 years of investing, usually in their late 40’s.
Warren Buffett, arguably the most prolific and famous investor of our time, started investing as a teenager and became a millionaire at age 30, after 16 years. He didn’t reach billionaire status until age 55, and today, at 94, Buffett is worth “only” $146 billion. I say “only” because he would be worth an estimated $293 billion if he hadn’t started giving away his wealth in 2006.
Lesson Four – Luck Plays a Role (or Roll)
Regardless of your strategy, luck plays a role in Monopoly. You roll the dice and might get Baltic Avenue or Boardwalk. You expect to pass Go and collect $200, but occasionally you land on Income Tax. In life, some of us are born on third base, while others aren’t
Fortunately, luck isn’t just about the advantages you’re born with but the chances you take. In the game, you may take a Chance and go straight to jail or win 2nd place in a beauty contest and $10. I have received many lucky breaks in my life, which have helped me get to where I am today.
In Monopoly and life, strategy and perseverance can make up for some bad rolls but it sure is easier if you have good luck. However, you never know how things will turn out until you take a chance and play.
Conclusion
I am concluding this article with the kids back in school the following day. The Monopoly board sits upstairs, untouched. Yet an unfinished board game played by children has much to teach us about finances.
The lessons are simple but not easy. You must spend less than you earn and invest the difference in assets that produce income or are expected to increase in value. You will be forced to live below your means, trading comfort and luxury now for a more prosperous (and profitable) future. This process takes time. Only with time will the true fruits of your labor be revealed. And finally, there is some luck involved. If you are reading this as a medical professional in the U.S., you’ve already been lucky enough to succeed financially. There are still rolls of the dice to make and chances to take, but with the right strategy and enough time, you can win the game.
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