Personal Finance Games

I like talking to others about finance. Sometimes we get a good conversation going and we can speak about various ideas and strategies that actually make sense. More a philosophical debate, and realising that it’s called personal finance, because it’s personal to each person.

I also have less interesting discussions, because I’m speaking with someone that isn’t asking with a stable financial base. These are usually the tips folks, or the “it’s too complicated – my broker will handle it” folks.

The tips folks are frustrating, since you’re talking from two completely different view points. I’m looking at it as an addition to my portfolio, does the risk/reward make sense, do I understand it, what are the potential returns. The other person, generally is just YOLO into whatever is the hottest media item at this stage, (hello, Bitcoin!).

You can’t have a real discussion here, just gauge the mood of the room and move on. If everyone starts blabbering on about their speculative return or property and has no idea even how much they actually earned then you know this isn’t a conversation worth having. It’s generally worse when others know you’ve worked in finance. Then they either want to brag to you or expect that you’ll praise them for some big win. They’ll annoy you went their speculation has resulted in huge gains, and they mistake that for investing. In this scenario just smile and change the subject, or agree that Bitcoin is the best.

The second group of folks are more interesting. Those that have no interest in finance at all. They generally have a block about wanting to know more, and are afraid about how complex it looks – or they have no inclination because they earn so much, have no time, and are used to outsourcing everything.

The second group, I enjoy chatting to them, in particular by bringing in a different interest that they do like in order to illustrate the value of understanding personal finance. Also, it’s a lot of fun teaching and seeing people learn.

One of my favourite methods to teach people is through games. This is probably because I personally love board games and other digital games. I also love applying the concept of fun games to the real world and seeing what we can learn from them.

Monopoly

I put this one at the top, not because it is the best board game of all time (it really isn’t), Boardgame Geek ranks tens of thousands of games and Monopoly is not a well-rated game. However, the concept in Monopoly for personal finance is great, as is the fact that most households will have this game in their home.

In terms of personal finance, everyone knows that to win Monopoly, you need to buy properties and earn rent. You occassionaly hit some bad luck and get eliminated from the game or over-extended yourself and have to mortgage the properties, but playing enough times you get the message. You need assets/properties to win the game.

What’s the personal finance learning? You need assets. But, I found that there’s an even bigger learning. Most people know the rules of Monopoly, but don’t apply it to their life. Perhaps buying assets is too hard – but rather make this comparison: Imagine playing Monopoly like most people play real life. You only go around the board, collecting your $200 (paycheck) and try to stay out of jail. Do you think you’d win at Monopoly? Then why do that in real life?

Cashflow 101

The Robert Kiyosaki overpriced educational game for $200 is like Monopoly but on drugs. Although it is expensive for a board game, it has some good material for a financial education product.

The premise of the game, for those unfamiliar with it, is that you need to escape the rat race and achieve a financial dream. You pick a random occupation from janitor to doctor, who then needs to receive enough income from investments to cover their expenses and then move out of the rat race. Once out of the rat race you need to do bigger deals and eventually achieve a financial dream.

Things that I like about this game are that you see the real disconnect between high income earners, high expenses and how much you need to invest in order to exit the rat race. It becomes very clear that having a high income from being a doctor and the resulting student debt, can be a real drag to building wealth. Since everyone’s target is to build up passive income to cover expenses, even though the income is lower, it is easier to cover a smaller expense base rather than a high-flying career.

What I didn’t like about the game was that the investments in shares are too predictable/speculative. You know that the stocks never go bankrupt, and as such you need to just buy the maximum amount of a share when it is cheap versus selling when it is high. This teaches you to go all in on an investment with no concept of risk. A danger of people speculating too heavily on a hot stock. I would have preferred that they made it the index, then at least you learn to buy on something that is showing real value.

Jones in the Fast Lane / Careers

The concept of the PC game of Jones in the Fast Lane (“Jones”) or the board game Careers, is to take your character and improve in multiple facets, money, happiness, status, and education. The player chooses how to allocate their requirements, weighting any of the 4 categories higher than the others.

The character then does day-to-day tasks such as schooling, work, shopping and tries to improve. I enjoyed the fact that since it is a competitive game you learn two important lessons. Firstly, since you choose the weighting you can focus on those facets of life you would like to improve the most, which again is the personal portion of personal finance. Secondly, in order to win you need to reach your goals first. This teaches you to maximize efficiency to attain those goals. It let’s you optimise the method in which you earn, through higher-paying careers, or happiness by having more time for non-work endeavours. A great game of learning how to juggle/balance your own life.

Poker and Blackjack

I’m not a huge fan of gambling, however, I feel that Blackjack and Poker teach an important concept, namely risk and reward. If more individuals could learn to take calculated bets on high probability situations, knowing that no situation is 100% guaranteed, but just playing correctly results in a good pay off. This would prevent a lot of speculation as you quickly learn in Poker not to go all in unless you have an incredibly high chance of success. You learn when to hold and when to fold. This provides great insight into the world of finance, since so much is unknown, and highly linked to your fellow market participants. It also teaches you to risk your capital when the investment looks likely to yield results.

So I like Poker and Blackjack for the basis of teaching you probability and risk. These serve people well to be less speculative, and also to be more bold if they’re too cautious with investments.

Games that I dislike/avoid

Any stock market simulation game that allows paper trading. These are all creating reinforcement of quick gains, gambling and no real losses. You either quickly double your money or you lose it all with no consequences. It creates the excitement of winning which isn’t what investing is about. I also include anything to do with options in this space.

Most casino-type games that involve only luck, like Roulette or slots. They’re all terrible reinforcement of bad money habits, with quick gains and losses and there isn’t anything to teach.

Good games can teach great personal finance habits

I enjoy that you can make a topic like personal finance fun. Playing games is a wonderful social experience. If it lets you help people to learn good habits as well as fun, then it creates a well-rounded experience.

Let me know if you’ve discovered any other fun activities/games to teach others about personal finance habits. Teaching can be hugely rewarding to both teacher and pupil, and with board games/pc games you get to enjoy it without feeling like you’re lecturing a bored student.

What other games have you played that would teach personal finance?