3573: [Part 1] How The Game of Life Teaches Personal Finance by ESI of ESI Money on Personal Finance Basics

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[00:00:51] This is Optimal Finance Daily. How The Game of Life Teaches Personal Finance. Part 1 by ESI of ESIMoney.com. My dad and I would play Monopoly and Aggravation for hours when I was home from college. Until 3 or 4 in the morning at times. Then, when we had our own family, games naturally played a big part in our entertainment time. To this day, my daughter and dad play Aggravation for money.

[00:01:20] If I had to pick one game that we played the most, it would have to be Uno. We had every variety of the game, including the one where it would shoot out a ton of cards if you were unlucky. It was so fun to see someone else get loaded down with a stack of cards. One game my daughter used to love was The Game of Life. I'll just call it Life from here on out. So when our family had an extra, oh, 3 hours or so, we played it. Okay, it wasn't that bad, but it was a long game.

[00:01:49] Fortunately, I got to be the banker, so I wasn't bored all the way through. But I digress. Life is centered around financial principles, some good and some bad. 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. Number one, net worth is how you keep score.

[00:02:14] 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's the key measurement to financial success. Key lesson, in financial terms, net worth is the main measurement you want to focus on and grow.

[00:02:40] Number two, it pays to get a college education or 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.

[00:03:09] Doctor, $100,000. Lawyer, $90,000. Vet, $80,000, etc. This comes in quite handy as there are payday squares all over the board. So you earn your $125,000 back pretty quickly. If you skip school, it's likely you'll get a low-paying job, like a hairstylist at $30,000 per year, or a salesperson at $20,000, and suffer throughout the game. Key lesson, going to college to get a good career is almost always worth the cost.

[00:03:39] Number three, 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 at $50,000 per year or a teacher at $40,000 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 $125,000 to get.

[00:04:08] Key lesson, make sure the career you're going into justifies the high price of a college education. Wow, this is a lesson most American teenagers and their parents could use before they select a real-life college and major. Number four, lose your job and you take a big financial hit. Here's the real kicker. You can pay the $125,000 for a college education, get a high-paying job, then lose that job.

[00:04:36] 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 to pay the $125,000 debt from college. It's a bit of a stretch. After all, who really goes from being a doctor to a hairstylist? 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.

[00:05:02] Number five, 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 pay in taxes. Welcome to the real world, kids. Key lesson, more income equals more taxes. Number six, kids are costly. Throughout the game, you have the chance to have kids. You can choose a kid path or a non-kid path.

[00:05:30] My daughter always took the kid path because she liked to fill up her car, the token you move around the board, with pink for girl and blue for boy pins. Me? I always went 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.

[00:05:59] For example, they can all get presents in cash, but not as many as the expenses they rack up. Key lesson, kids are expensive. Number seven, don't get sued. Just like the real world, you can get sued in life. And if you do, get ready to fork over $100,000. Ouch. That is, unless you have a card that lets you get out of a lawsuit. In that case, you can simply get to laugh at the person who sued you. Key lesson, don't get sued.

[00:06:29] And just in case you might get sued, get umbrella insurance or a good lawyer, the no-sue card to cover yourself. Number eight, hear that on tomorrow's episode. You just listened to part one of the post titled, How the Game of Life Teaches Personal Finance, by ESI of esimoney.com. Dell PCs with Intel inside are built for the moments that matter.

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[00:08:54] using promo code OFD. As I'm reading this article, I'm really bummed that I never played the game of life growing up. As a bonus mom to a boy, I've been thinking a lot about how I can teach him about money. The interesting thing about him is that he loves to open presents, but he barely ever plays with any of the toys we get him. It actually drives me nuts because it feels so wasteful. So this year, we're being much more intentional about what we're buying.

[00:09:22] We're also trying to get him interested in earning money. We don't want to give him an allowance for chores because we want to teach him that doing chores and contributing to the household is just something you do. But I've been showing him a lot of videos and examples of kid entrepreneurs. We're encouraging him to dream up a business idea where we would be his initial investors. Time will tell, but I'm hopeful that by leading by example and continuing to have open conversations about money and life, we'll be setting him up

[00:09:51] to make good decisions when he's older. I also recently used Kiva, which is a peer-to-peer lending platform, to help him understand investing. I think the stock market has been a little challenging for him to understand. So rather than explain an index fund where we're investing in all the companies, I showed him on Kiva how we can invest in one business owner. She's a woman in Madagascar who needed funds to buy inventory for her grocery store. We saw pictures of her

[00:10:21] and her store. It was clear how she would use the money and it explained what our return would be. He seemed to really enjoy the selection process and I could see his wheels turning. Very exciting stuff. And we're just halfway through the post, so I'll save the rest of my comments for tomorrow. So with that, have a happy rest of your day and I'll see you on the Wednesday show where we'll finish up this post and where your optimal life awaits.