I have often reiterated that money management is no rocket science and 99% common sense. But is it??? To most of us it isn’t and we are often worried about what needs to be done next to make sure we are managing our money the right way. The concern stems from the reason that we were never taught money management lessons and even if we were they were too theoretical and boring. Recently I encountered my young daughter playing “Monopoly” which reminded me of my childhood days. This board game taught me the most important lesson of my life – The Money Management Lesson. And believe me it’s still as insightful as it was then. Let’s see what it teaches!!!!
Money in hand is Limited
When the game starts each player is given some money for buying properties during the game and other purposes. Mis-utilization of funds can make you bankrupt and you might lose the game. Since money in hand is limited, people draw a plan of action as to how and for what will they use it during the game.
Preparing a budget at the start of the month can help you falling short of funds in real life as well.
Emergencies might knock your Door
When you move ahead, though you have planned the things but there are chances that things might not go the way you planned. The game has many ups and downs such as house repairs or fire or going to the jail or loss of passport or otherwise and you might have to allocate some money to cater to these emergencies. The consequence is “the plan goes for a toss”.
It might happen with us in our daily lives as well as emergencies don’t come knocking at your door. And hence it is extremely important to build a reserve for them so that they don’t derail your budget and affect your life.
Buy what’s Worth
Going further it gives you too many amazing buying opportunities. But you cannot buy everything as you have limited money . Hence you have to evaluate every option very carefully considering the pros and cons of each and the impact it would have going ahead. A wrong move can make you lose the game.
Money in hand brings excitement and we want to buy all that we can think of with it. Wait think for a moment, “Is it worth it”??? Because the money is limited and if you spend it all today, nothing would be left for tomorrow. So spend cautiously.
The winner in this game would be the one who owns the maximum wealth i.e. Maximum (Assets minus Liabilities). The wealth is built by buying properties but the choice is not an easy one. As one has to evaluate various parameters before buying a property such as cost, location or the rental yields and the impact it would have on your financial well-being moving ahead in the game.
Similar is the case with real life investments which needs to be done judiciously as they not only affect your present financial well-being but affects your future as well. Invest your hard earned money for a goal (i.e. future needs) as reckless investing would never build wealth for you.
The game even allows you to take credit in case you do not have enough money. This gives you an insight on how debts affect your finances. Make sure you pay the debts as soon as you are in a position to do so. As assets in hand is not your wealth, your wealth is Assets minus Liabilities.
But here I don’t intend to say that you should keep away from debts or not have debts at all. Remember, debts bring interest along with them which can derail your finances and might even lead you to bankruptcy. So have debts that are good for you.
Do play this game with your friends and family as it may give invaluable lessons for life. The learning’s from this game can surely make you a better money manager no matter how old you are.