Most of us find educational material on finances, credit, and investments boring. After all, not everyone is a huge fan of learning essential information about making wise financial decisions, especially when you have to mug up entire paras of finance jargon.Fortunately, money management lessons disguised as strategy games can make learning about the finance world, easy and even fun.Some of the best money management strategy games that we have today have been around for years, yet somehow, we have missed out on the obvious. That said, it’s time we reprise our love for older board games and unearth their secrets of how to minimise debt and build wealth. We take a look atwell-known games such as Monopoly to the relatively newer Cashflow 101 and see how these games can help us develop and master our financial management skills.
1. Automate as Much as Possible
As a young professional, one of the best ways to achieve your goals in the long-term, especially your retirement, is to include automated investing in your investment habits. Instead of setting aside a lump-sum now and then, therefore, it is better to contribute towards your investments through Electronic Clearing Service (ECS).Under ECS, an amount of your liking would be automatically deducted from your savings account on a specific date every month. That said, you can continue making automated investments for a fixed number of months or can even go on with it on a perpetual basis. Further, you can opt out of the process whenever you feel the need. Just like in Cash flow 101, where you always want to get on to the “Fast Track” from the “Rat Race” and build wealth.
2. Play Rush
When we talk about Rush Poker, its most exciting part is that when you join a large pool of players and fold your hand, you are immediately moved to a different table that has an entirelydifferent assortment of players.Further, the next hand is dealt with immediately, so necessarily, you won’t have any waiting time between the time you fold and being dealt your next hand. While the action is continuous, you are also dealt a significantly higher number of hands than a "regular" poker game.The only catch, however, is that when you become extra tight, due to the possibility of being dealt another hand after folding, you risk having more cardsand lesser probability of extracting money from your competition. In real life too, when you become too much risk-averse and hold on to one type of investments, you risk limiting your ability to build more wealth.When it comes to investments, thus, you must play rush and diversify your investment portfolio to maximise your returns.
3. Incoming Should always Exceed Outgoing
If you wish to create wealth, it is apparent that you need to curb your expenses, while creating more than one sources of income just like in Monopoly, where you invest into properties and create a net worth more than the other players.In real life, it is crucial that your first analyse your current financial health, with the help of a financial plannerbefore starting on your way to achieving a sustainable retirement plan.
Three simple personal finance rules can help you understand where you stand today, which are:
Debt to Income Ratio
Savings to Income Ratio
Contingency Reserve
4. Balance of Resources
In Monopoly, you use your allocated money to purchase different properties, each one of which has different importance in the game. Eventually, your objective is to have as many properties as possible under your control, that ultimately tilts the balance of the game in your favour.Similarly, in real life, you need exposure to different asset classes, which is crucial for building your retirement portfolio. It is only when you diversify your investments into different asset classes (be it equity, debt or gold) that you canmaintainthe required balance in your portfolio Wealth investment plans from reputable insurers such as Max Life Insurance allow you to vary your asset allocation, as per your risk appetite and the remaining number of years for realising your goal.This way, you can make sure that you remain invested in instruments that help you maximise your wealth, in a balanced approach.
5. Resources Should Be Available When Needed
Just as you need different asset classes and income sources at your disposal, you also need to make sure that you have access to those resources in times of need. Consider this; you have invested in an investment plan that doesn’t allow you to make partial withdrawals for a certain period. Then, what good will your investmentsserve you if you have, say, a medical emergency to take care of within the same period? It is, therefore, vital that you create a contingency fund alongside your long-term investments so that you can take care of your immediate financial needs. That said, it is equally important to invest in instruments that allow you to make partial withdrawals at important life stages.
Play Like a Champion
Just like strategy board games, you don't need to earn a substantial income to build a good-sized nest egg and accumulate wealth. Instead, you need to take small steps on your investment journey, plan and impart balance between your expenditures and savings for crucial milestones in life, if you want to ensure a stable financial future. Whether you are a mid-life parent, a recent college graduate, or nearing retirement, you need to have a robust investment strategy and sufficient finances to support your lifestyle. And most importantly, you need to play a little more games, who knows what the next game you play might teach you?