– nobody else will help to confer information and thus Teach them about value of money – Kids don’t understand value of not just money as a medium of exchange – but that their time has valued attached to it – I don’t think some adults know that either
- At the very basis level – Doesn’t matter on which child psychology you read (Piaget, Freud, Erikson) – all have the understanding that children are egocentric – the world revolves around them – dues to brain development and availability heuristics
- What about me? Constant question from kids – or variation – when are we going to be there, or the why game
- Isn’t a bad thing – shows curiosity that can be lost if no nurtured
- But when it comes to money and value of items, monetary system – Prime directive (StarTrack) shouldn’t be to worship money – but to understand value of what it can be exchanged for
- This doesn’t just apply to kids – value is very important – not the price
- Value is the very basis of every investment as well – would you pay $100 for something wroth $10? Through branding and marketing, some people do? But yet, put that money into something growing by 8% p.a. rather than being thrown out in 3 years, better one option than the other.
The need to understand Money
– Not to instil a sense of greed – the opposite- but that things aren’t free and that time is used as a medium of exchange – look at current state of society – lack of self awareness from protestors or disruptors –
- If You work – you spend time – let’s say 40 hours a week doing something – you get money in return – the Gov takes some away – then you have money left –
- Teaching value is important – transaction – free pocket money isn’t good – entitlements of receipt –
- If they need $100 for splendour for schoolies – say no – pre-plan requirement
- Helps to avoid getting burdened with debt at a young age as well – if you don’t value money, you wont value debt –
- Or understand the negative value of debt and how it depletes future wealth
What to talk about
- Is hard to talk about money with kids – Generational divides – Baby boomer generation – didn’t like to talk about it – culturally spread to the next generation and so on – generalisation of course – but Created taboo with money – created inept children
- Also – education – about basic economics and financial system is lacking – where do kids get a lot of economic education – board games like monopoly
Unfortunately – where do a lot of people get their financial education – word of mouth from friends or family – or Monopoly –
Mentality of a zero sum game –
Monopoly is the best example due to the mass familiarity and use of a bad financial mentality
- Does Monopoly provide any benefit to certain players?
- We all start with the same amount of money in the bank, and two dice to roll each turn.
- Unless Ms Monopoly where gender helps outcome – either way – going first is best: Head start – reduce chance of landing on taken properties.
- Over time this advantage diminishes
- Example – You roll 5, buy the railroad. then 2nd – 4, 3rd – 6, 4th – 8.
- Other players have rolled a sum of 9, 15 and 23 (which is rather likely) in order from your second turn
If you play Monopoly a lot like myself – start to pick up the Basics in monopoly game economics;
- Don’t allow other players the ability to build houses, if you can.
- Build houses strategically on the most profitable for the costs – the orange set
- Manage your cash flow and reserves
- Avoid mortgaging properties, and with it your ability to win the game.
- Other tactics paying to get out of jail early on. Once all the board is fully owned, it can pay to have a few turns rest.
How to win?
- The number of ‘wins’ to ‘losses’ each turn ends up compounding over time.
- The more of the board you control, the more wins you will have.
- The more each property is developed, the greater your wins are going to be. Increase the chance of a win each turn, plus the size of each at a greater rate than other players, you will likely win.
But the most annoying part of Monopoly Is chance – How much is chance?
- Everyone playing knows what works in the game
- Difference in outcome is likely to come from how the roll of the dice works in the first 8 turns.
- The rest is up to us, but how much of the game’s ultimate outcome comes from the luck of the dice?
- So when it comes to kids -0 so much of materialist consumer communications are spreading some bad psychological messaging – similar to how monopoly has installed a lot of people’s psychological monetary beliefs.
I’ll be honest, I don’t like monopoly!
- The outcome is too reliant on randomly generated chance
- Waiting and waiting for others to finish their turns = EG 8 people, then this may be around 88% of time played,
- Shift in the direction – clear who the winner is going to be
- We can just walk away from the table.
- But who likes to be robbed of victory?
It is lose-lose, Competition – which is why I am not a fan.
- If the real world was a zero-sum lose-lose game, then the outcome of life would likely take the same distributions of Monopoly where one person gets all the money at the expense of others.
- There have been similar times in history – Moa, Pao Pot, and Stalin.
- Stalin is the Top Hat and bank. First turn you get no money, he already owns the property. No $200 for passing GO. don’t leave – Stalin is a very trigger-happy kind of guy.
Thankfully we do not live in a society like this, or like monopoly.
How to best win any game: To cooperate or compete?
- Is it better to maximise your result through cooperation than competition?
- Competition in games is destructive by win conditions
- Healthy cooperation, improving yourself through interacting with other players to boost your results.
Societies that were in a lack of cooperation had no growth, so was zero sum competition!
Mentality comes from focusing on others as the cause of problems – Ignore others can be hard
- How do you truly measure another’s success to compare your progress? solely judge on our own criteria – project what we think their life is like
- But who cares what the 1% are going, any why waste time complaining about it? You will find out when you get there after all.
- It doesn’t help to think that Monopoly Man figures of the world are only wealthy thanks to stealing from the poor.
- 20-year-old protesters – whole working lives behind in accumulating wealth
- Warren Buffet -1% of what he is today when he was 50.
- But when you are only competing against yourself, nobody has to lose.
Practical side –
How can kids earn income?
- Chores for you or your neighbours – Child labour laws stop them from mining – but hospitality –
- Worked for my uncle during holidays labouring from 14 – getting a job in hospitality felt so much better after that
- Have them buy their own goods – have them work for it – don’t treat it as a punishment – make it a game – we all love games we can win –
- Kids are creative – Solutions: bake sales etc.
Focus on yourself your kids and what is best for you – Up to you! School isnt going to teach them practical skills to get through life
- It all starts at the individual level after all. If you want to change the world, start with yourself.
- If you have more capacity to help more, you can then improve the situation of others
- What can you do first?
Step 1 – Don’t compete with others, compete with yourself
- While there are other players in the game, you should only be keeping track of your own score.
- Competing against yourself – Focus on the outcome, not the competition.
- How are you going to compete against Warren Buffet? His 80bn at 13% a lot more in value than someone who got a 100,000% gain from someone invested $20,000 in bitcoin
Step 2 – Play by the bank’s rules!
- The bank will always be the last one standing! How?
- Have something that people want, and would exchange money for.
Plus – use the rules of the basic game:
- Spend less than you earn.
- Cash flow is important.
- Millionaires average car is a Toyota, Ford, Honda!
- Start young and let compounding do its thing.
- Marginal increases will compound into massive benefits.
- Invest wisely and keep at it. Never invest out of hope
- Minimise how much of your wealth is taken from you.
- Be confident that you are getting better, without needing to show it off.
- Question: Pretend to be rich or make it a possibility?
Step 3 – Cooperate – Community – shared knowledge
- Cooperation is listening to this podcast. Working with others, knowing what they have done.
- Learning and buying investments.
- The only way to make money is cooperate. Buy the companies you want to profit off (shares) rather than try to protest or plunder them.
- Don’t compete with Buffet – Buy Berkshire Hathaway
These are the sort of lessons which are available to kids –
Get them involved with money decisions – problem solving – if they had $10 and needed to feed themselves or buy a new toy – what would they do?
Yes the system is unfair – but it is unfair for everyone –
More you earn the more you pay tax – so learn something about the tax law and reduce it legally
Thank you for listening, if you want to get in contact you can here: http://financeandfury.com.au/contact