16 Genius Money Lessons From ‘The Game of Life

I was a loser in “The Game of Life.” The instructions on the reproduction of the original 1960 board game my family has say, “you too can be a millionaire in this game of life.” But I ended up broke at the “poor farm.”

My 12-year-old daughter actually walked away the winner with more than $800,000 when my family played this classic board game recently. Even my 7-year-old son beat me — which was pretty disappointing because I’m a financial journalist and “The Game of Life” is all about making smart money decisions.

Actually, there’s a lot of chance involved, too, which explains why my economist husband and I both lost to our kids. My 7-year-old claimed he liked the new version of “The Game of Life” we also own better because the classic version is harder. But real life is tough, especially when it comes to financial matters. That’s why I prefer the original edition of “The Game of Life.” Find out what great money lessons you can learn from this classic board game.

Going To College Can Pay Off in the Long Run

One of the first things you have to decide before you spin the wheel in “The Game of Life” is whether you want to take the shorter route to business and get a salary of $5,000 on each payday or go down the longer college route — which could lead to an income as high as $20,000 if you become a doctor. My husband chose the business route, and my daughter was lucky enough to land on the “doctor” space (ironically, I landed on “journalist”). Over the course of the game, my daughter earned $255,000 more than my husband because she went down the college path.

Although a GOBankingRates survey found that 42% of graduates said their college degree wasn’t worth the student debt it created, having a college degree can result in substantially higher earnings over your lifetime. According to the Social Security Administration, men with a bachelor’s degree make $900,000 more in median lifetime earnings than men with only a high school diploma. Women with a bachelor’s degree earn $630,000 more over their lifetimes than those without one.

No Matter How Safe You Think You Are, You Always Need Auto Insurance

At the beginning of the game, you have to decide whether you want to buy auto insurance for $500. Unlike in real life where almost all states require drivers to have a minimum amount of auto coverage, it’s an optional purchase in “The Game of Life.” But if you don’t pay the $500 upfront, you could end up paying as much as $25,000 for an auto collision. You quickly learn that buying auto insurance can save you a lot of money — forgive the pun — down the road.

You Have To Protect Your House With Insurance

Immediately after landing on the space that forces you to buy a house (apparently home ownership isn’t a choice), the next space asks if you want to buy fire insurance for $5,000. The answer is yes — that is, if you don’t want to pay more later for disasters such as a fire or cyclone. The cost of homeowners insurance is small in comparison with the cost of uninsured disasters.

Owning Life Insurance Can Pay Big Dividends

You have the option to shell out $5,000 in “The Game of Life” on life insurance after your first payday. It can be a tough choice to make if your pay is just $5,000 — and because there are no penalties for not having life insurance as there are for not owning auto insurance. However, you can get payouts of $25,000, $30,000, $50,000 and $100,000 along the way if you have life insurance and land on the right spots.

In real life, your loved ones are the losers if you die without life insurance and they depended on you financially. Fortunately, you don’t have to spend a lot to get a lot of coverage. The average monthly premium a healthy 30-year-old non-smoker would pay for a 20-year term-life policy with a $500,000 benefit is only about $23, according to ValuePenguin.

Being Careless Can Hurt Your Finances

After shelling out thousands of dollars for insurance, it hurts when you land on the space in “The Game of Life” telling you to turn in your fire insurance because you were too careless, or turn in your auto insurance because you were a reckless driver. If you’re not careful in real life and file too many claims, your insurer can drop you, too.

Up Next: 12 Essential Money Tips for Every Phase of Your Financial Life

You Need Cash for Unexpected Expenses

In “The Game of Life,” you get hit with a lot of unexpected expenses — such as having to pay $1,000 because your goat eats your neighbor’s orchids or paying $500 for new teeth. If you don’t have enough cash on hand, you can quickly end up in debt to cover these costs.

In real life, the chances of having to pay a neighbor for damage caused by a pet goat are pretty slim. However, you do need an emergency fund to cover medical costs, home repairs, expenses if you lose a job and any other unexpected costs without having to rely on credit.

Investing Can Put You on the Path to Wealth

In the “Game of Life,” you have the option to buy stock for $25,000. It’s a big investment, but the payoff can be even bigger. Yes, there are chances you lose money on your stock in the game as there are in real life. But the chances of making money on your investment are even greater. My husband, kids and I all made more money from our stocks than we lost.

Digging Yourself Out Of Debt Can Be Tough

You can borrow money from the bank in “The Game of Life,” which my husband had to do twice while we were playing the game. The least you can borrow is $20,000. You have to make a $500 interest payment for each $20,000 promissory note you have each time you get paid until you pay off what you owe in full.

So, my husband basically threw away $1,000 of each paycheck paying interest on his $40,000 worth of debt. Granted, borrowing money helped him stay in “The Game of Life,” but it put him at a big financial disadvantage compared to me, my daughter and son because we had no debt in the game. Similarly, taking on debt in real life can help you get ahead eventually if it’s to pay for an education, a home or a business, but it also can hurt you financially if paying off what you owe is preventing you from putting your money to better use.

Don’t Expect To Get Paid Back If You Lend Others Money

Sometimes friends and family members ask you to give them a helping hand. In the “Game of Life” when you have to give your father-in-law $10,000, you don’t get the money back.

In real life, lending money to family and friends can be a bad idea because it can hurt your relationship if the borrower doesn’t pay you back. If you’re willing to help someone out, think of the money you’re giving that person as a gift rather than a loan, and only give what you can afford to not get back.

Reckless Spending Can Wreck Your Finances

There are no shortage of opportunities to spend money on things you don’t really need. Unfortunately, in “The Game of Life,” you have to shell out money for items even if you don’t need or want them if you land on a spot demanding you pay.

My 7-year-old was actually excited when he had to pay $40,000 for a helicopter because having a helicopter was cool in his mind — even though it wasn’t real. However, my 12-year-old was not happy about being forced to buy a helicopter. “I’m doing reckless spending,” she said. “This is not OK.” And she was right. Spending on things you don’t need or don’t benefit you is a fast way to blow through your money and leave you with little in the real game of life.

A Windfall Can Change Your Fortune Entirely -- If You Don’t Blow It

There’s no shortage of chances to win big sweepstakes, hit the jackpot in Las Vegas or get an inheritance in “The Game of Life.” But you can just as easily lose your fortune.

Getting a windfall in real life can make you feel like the luckiest person alive, but it won’t do your finances any good if don’t make the right moves to protect your newfound money.

You Can’t Escape Taxes

Taxes are a fact of life — even in “The Game of Life.” You have to pay income taxes regardless of whether or not you land directly on the spaces telling you to fork over half of your payday salary.

When tax time comes around in real life and you don’t pay what you owe, you could end up being charged a failure-to-pay penalty by the IRS. If you go long enough without paying, the IRS can file a tax lien on your property to collect what you owe.

If You’re Down and Out, You Still Can Bounce Back

After racking up $40,000 in debt in “The Game of Life,” my husband made some smart moves — such as buying stock — and got a couple of windfalls that helped him bounce back. If you’re not happy with your current financial situation, don’t assume you’ll be stuck there for the rest of your life. If you take the right steps, you can remake your finances.

Big Risks Have Big Rewards -- Like Becoming a 'Millionaire Tycoon'

“The Game of Life” offers several opportunities to make more money by betting (so many that you can’t help but wonder if the creator had a gambling problem). The biggest risk you can take comes at the end of the game when you can try to become a millionaire tycoon by placing all of your money on a number on the board and spinning the wheel. If it lands on your number, you instantly win the game.

But, as I discovered, the chances of getting a big reward for taking this big risk are small. I bet everything and ended up going to the “poor farm.” Taking big risks in life have allowed entrepreneurs such as Richard Branson, Elon Musk and Warren Buffett to succeed. But, you need to weigh the pros, cons and chances of success before taking any risks.

If You Understand the Rules, You Can Increase Your Wealth

Everyone in my family could’ve been better off financially than we were when we played “The Game of Life” if we had bothered to read the instructions closer. Somehow, we managed to overlook how the “share the wealth” cards work and missed a lot of opportunities to save and make more money.

You don’t have to know the secrets of the rich to become wealthy yourself, but it does help to educate yourself on the basics of personal finance and strategies to grow your money.

In Real Life, You Don’t Have To Be the Richest Person To Win

There’s one lesson from “The Game of Life” you should ignore: To win the game, you have to be the richest player. To do that, you have to gamble what money you have to become the millionaire tycoon. If no one becomes the tycoon, then the player with the most money wins.

However, you don’t have to be the richest person in the world to win at the real game of life — far from it. In fact, a GOBankingRates survey found that nearly half of Americans said being rich isn’t about the money. Instead, they said relationships and a happy life are what make a person rich.

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This article originally appeared on GOBankingRates.com: 16 Genius Money Lessons From ‘The Game of Life’