Of course, as with any game, there were plenty of lessons for life that worked their way into our games. Some of the best money lessons I’ve ever gotten I actually learned as a result of playing games, particularly some of the board games I played with my sisters. Now, I shall pass on the money lessons I learned (such a while ago). We’ll start with the most famous money-related game of all…

Monopoly

Of course, we could hardly start off our exploration of the money lessons from board games without an examination of Monopoly. The classic real estate collecting and trading game is easily the most famous board game in the world (to say nothing of being used by McDonald’s for their yearly contest). There are several lessons we can learn from this game (especially if we can make it all the way through a full game):

*Luck can affect our goals with money:

In Monoploy, the roll of the dice will determine what properties you’ll have the opportunity to buy. With good luck, you could end up with a useful set of properties in a good location without much trouble; with bad luck, you can end up with a few properties scattered all over the board. In life, luck can also have a strong influence on our fortunes. While there are many things we can control (or at least influence), other events can come out of nowhere and alter the progress of our lives. In the game, the best you can do is push onward and try to bargain your way to good fortune; while in life, insurance is a good option for smoothing out the wrinkles in life.

*Bargaining is a key to victory:

Unless you have the fantastic luck mentioned above, you’ll need to bargain your way into a better position in the game. There’s plenty of potential bargaining chips you might try to use to tempt the other players: property, money, even those elusive ‘Get Out of Jail Free’ Cards. In life, there’s also plenty of opportunities to bargain your way to better fortunes. Trading goods and services with those around you can provide you with ways of saving money on the things you need and want in life. Offer to swap some of your old stuff or offer to do some extra work with your neighbors as a method of saving money (to say nothing of getting know them better.

*Cooperation can win the day:

One of the best ways to improve your chances at Monopoly is to throw your lot in with one of the other players, forming an alliance in order to improve your chance of overall success. Of course, what happens when it’s down to just you and your ally is a whole different story… In the real world, cooperation is also important. You’ll need to work with your spouse or significant other to build a life together, with your coworkers to accomplish goals at work, and with society as a whole to keep things running smoothly. Being willing to work together to leave you in much better financial shape than attempting to tackle everything alone.

Careers

A popular game around my house (more popular than Monopoly, although that might have been due to the shorter game length), Careers had you going around a variety of different careers, attempting to achieve your own personal success formula. In spite of greatly underestimating how long it takes to complete a career (a few rolls of the die, rather than decades of hard work), there were numerous life lessons to be found in Careers, as well:

*We all have our own definition of success:

Careers enabled you to choose what combination of attributes you think would satisfy your game piece alter ego. You made up a formula that involved fame, fortune, and happiness (basically, the warm, fuzzy feeling you would get from pets or raising a family), and then attempted to achieve it. You could opt for an equal mix, lean heavily towards one or two attributes, or even go all out. Similarly, what satisfies me in the real world may not satisfy you; you may want fame and fortune while I’m happy with nice quiet home life and enough money to get by. We all have our own needs.

*What we want is not always what we get:

On the subject of defining our success, if you play Careers often enough, you’ll likely find yourself in situations where you could win, if you had only opted for a different success formula. Perhaps you’ve got too much money (a problem we’d all like to have), but not enough happiness, or a surplus of fame when you need more money (*Insert a joke about MC Hammer or your other favorite bankrupted celebrity here.*) In the game, the only option was to push on ahead, doing what you could to get your formula back in line, while in the real world, we can either try to bring things back in line with our ratio or adapt to current set of circumstances, and find a way to declare success with what we have (which in the game is called ‘cheating’, so don’t try it.)

*You’re probably going to take on several careers:

Talk about being ahead of its time: in spite of being released back in the Fifties, Careers could only be won in most cases by going through 2, 3, 4, or even more career paths, trying a variety of different forms of employment. In our modern economy, you’re quite likely to be fired, or end up quitting, or have a midlife crisis and opt for a completely different career. In any event, these transition periods are the perfect time to re-evaluate your life, to determine if you are enjoying what you do and whether you should continue on in your current career path. Luckily, if you are interested in being hired quickly, there’s plenty of advice out there to help you.

Game of Life

The Game of Life (not to be confused with Life Cereal, Life Magazine or Life Insurance) had you going through a truncated version of well, life. You played a little plastic peg in a car, and as you moved through the game, you would get a career, a spouse, possibly a few children, and plenty of money. That last part is especially important, as how well you did in the game was determined by your final net worth. What lessons could you learn from condensing the entirely of a person’s existence into board game form? Let’s find out:

*Whoever dies with the most money, wins!:

Hey, I never said they were all good lessons. But the Game of Life did have the advantage of stressing the importance of saving, investing, and even having insurance, all good pieces of advice for any would be financial expert. Plus, the person (or ‘family’, if we look at the little car with all its little pegs) with the most money heading into retirement was the winner, which is not a bad approach to take with our own retirement portfolios.

*Stuff Happens:

How many games involve purchasing insurance? How many games make it possible that purchasing insurance is one of the best moves you can make? One of the good lessons from the Game of Life is that sometimes, bad things just happen. Take the time to prepare yourself for the worst, and you’ll be in much better shape if they happen to you.

*People Dislike Change:

This is less a lesson from the game itself, and more a lesson from people’s reactions to the ‘new’ version released in the early nineties. A short perusal of the comments on Amazon shows that more than a few good old fashioned Life fans are disappointed with how the facility rebelled over the changes they made. In the real world, people can be just as scared of change, and many will attempt to avoid facing the chances that surround them. But learning to tolerant change, whether in our board games or our lives, is an important part of growing as human beings.

Other Board Games That Taught Lessons?

There you go; several lessons from of the more most money-related games in existence.

What lessons did you learn from the games you played? Am I forgetting any big lessons from these three classics? Has anyone reading this actually played a game of Monopoly to completion, or did everyone else’s family also quit about three hours into each game?

Inquiring minds would like to know!

In an ideal world, there would be no need for insurance, because negative, unplanned events would never happen. Alas, we do not live in an ideal world, so insurance is and will continue to be an important part of any financial plan. There are a variety of insurance types you will encounter. Below, please enjoy (if ‘enjoy’ is the right word to use for a discussion of insurance) a short checklist of some of the major types of insurance you should have to protect yourself and your family:

Life Insurance

What Is It: Sadly, life insurance does not ensure that you are not kill-able, thus making you immortal. Rather, it does ensure that if you do die during the coverage period, your family or other survivors will receive a financial payment, known as the death benefit. In this way, you can ensure that your loved ones have a financial cushion if something happens to you.

What Types Are There: Life insurance comes in two many varieties: term and cash value. Term insurance covers the insured person for an agreed upon period of time (the ‘term’) or comes in an annually renewable form, and provides the agreed upon benefits if the insured person happens to die. Cash value (or permanent) insurance comes in a variety of forms, such as whole life, universal life, and variable universal life, all of which will build asset value over time, in addition to providing coverage in the event of death. To make a long story short, if you have no problem saving and investing on your own, you’ll be best served with a term policy covering the period during which you need insurance. It’ll be cheaper, easier to buy on your own, and will do just what you need (provide a cash payment to your heirs if you die) from your life insurance.

Who Needs It: If you don’t have a spouse or any other dependents, you don’t need to bother with life insurance, as nobody will suffer financially from your death. (Emotional suffering is another matter, one unable to be addressed by a life insurance policy.) Similarly, if you are living off your investments, just pass on the investments rather than worry about life insurance. You will need insurance, though, if you have family members or other dependents whom depend on your income to meet all or part of their needs. If you have a spouse who is unable to work, parents whom you help to support, or dependent children, having insurance to cover them during your working years or until they grow up will be vital.

How Much: You’ll hear a lot of different numbers, usually expressed in multiples of your annual income. I’ve seen recommendations as low as five years’ worth of income to as much as twenty times your annual salary. The exact amount will depend on a number of factors, from how much of your income goes to supporting your dependents to how much you have available in other savings and investments. The best advice I can give is to be very conservative in your estimates of what your survivors will need, and then add an extra margin of safety onto that (say ten to twenty percent). If all else fails, shoot for a fairly high level of coverage, in the ten to twenty times your salary range; better safe than sorry, after all.

Disability Insurance

What Is It: Disability insurance provides regular monthly compensation if you become unable to work. Similar to life insurance, you’re not ensuring that you won’t become disabled; rather, you’re providing for an alternate source of income if you are unable to work.

What Types Are There: There are a variety of features to consider when getting disability insurance, with one of the most important considerations being the degree of disability covered. ‘Any Occupation’ insurance only covers you if you are disabled to the point that you are unable to do any reasonable income producing work. So if you are a bike courier who loses a leg, ‘Any Occupation’ insurance may not cover your disability. ‘Own Occupation’ insurance allows you to collect as long as you are unable to do your ‘own’ occupation (in this case, bike courier), no matter what other work you can do. As a result, ‘Own Occupation’ style policies are much more useful, but also more expensive.

Who Needs It: As with life insurance, you’ll need disability insurance if you need to work for your income rather than living off investments. The risk that you could become injured, as a result of an accident or illness, is something that all of us have to confront. Even if your place of employment has no on-the-job hazards associated with it, it’s still important to have coverage in case something untoward happens to you outside of the office.

How Much: First, you’ll need to check with your employer to determine how much (if any) coverage they provide and the conditions attached. If you need more, which you might since the average group plan only will cover 60% of your salary (or if your employer doesn’t provide any coverage at all), you can find individual coverage (although it will tend to be rather pricey). Look to provide 70-80% of your salary in benefits, assuming that the premiums are within range for your expenses.

Automobile Insurance

What Is It: Automobile insurance will insure your car, if you happen to get into an accident. It will also typically covers damages to other persons or property while using the car, damage from non-accident sources, and other automobile expenses, depending on the specific policy. As a result there are actually a number of types of policies covered under the rubric of auto insurance

What Types Are There: There are liability policies, which pay for the damage caused to other people or their property. The typical liability policy limits will be quoted as a series of three numbers, as in 15/30/5. These represent the liability coverage for one person, for all the people involved in the accident, and for property damage, respectively. So this example policy covers $15,000 in bodily injury damage to one person hurt in the accident, $30,000 in total bodily damage for everyone injured, and $5,000 in liability for property damage.

There are several other types of automobile insurance which you may wish (or need) to add to your policy. Collision coverage, which covers damage to the car itself in a collision, and comprehensive coverage, which covers non-collision damage to the car, are usually limited to the market value of the car. Uninsured and underinsured motorist coverage will provide payments to you if you are in an accident with someone who has no (or insufficient) insurance coverage. Finally (or at least, the last of what we’re going to bother covering here), there’s Personal Injury Protection (PIP), coverage that will pay your medical expenses, lost income, and disability expenses if you are injured in an automobile accident.

Who Needs It: Short answer, most of us. Automobile insurance is the first type on our list that is actually required by law, at least in some states. In fact, as we can see from this table, all but three states in the US require some liability coverage (the three exceptions being Florida, New Hampshire, and Wisconsin), and several require other types of insurance, as well. If you want to stay street legal, you’ll need to have at least the minimum coverage required by your state.

How Much: I’ll refer you back to the above linked table, which will provide the minimum amounts of coverage you need to drive in your state. How much you want or need beyond that will come down to your needs, your concern about possible accidents, and the cost. If you feel you need significantly more coverage, consider getting a policy with a higher deductible, which will help to hold down your premiums (although, it will increase the amount you need to pay out of pocket in the event of an accident).

Homeowner’s/Renter’s Insurance

What Is It: Both homeowner’s insurance and renter’s insurance policies cover the contents of your house, although homeowner’s insurance also covers the house itself. These policies will also cover damages that others incurred inside your home (or damage from something like a fire that spreads from your home to neighboring houses).

What Types Are There: Obviously, there’s the difference between homeowner’s and renter’s insurance. There’s also differences in what exactly is covered, although most policies cover many of the same events, making comparisons between different insurance companies that much easier. Make sure that your policy covers all the unfortunate events that might befall your dwelling (homeowner’s policies are notorious for not covering floods, for example) or can easily get additional coverage for the uncovered adverse events.

Who Needs It: Unless you have enough money to rebuild your house, repurchase all your belongings, and provide for health care for anyone who is injured on your property, you’ll need some coverage. (If you do have enough money to do all that, you could do without this insurance, and probably most other types of insurance, as well.)

MLR’s note: Even if you have enough money to do all of those things, you’d have to be a pretty big gambler to take on that risk! Your best bet is to hedge against the worst case scenario and get insurance :)

How Much: Enough to cover the cost of rebuilding your home and/or replacing all your possessions, at least. (Be sure to go for a policy that offers replacement cost coverage (which pays enough to actually repurchase your lost belongings) rather than an actual cash value policy (which pays only for the depreciated value of all your stuff).) As with most types of insurance, it’s best to be conservative with your estimated insurance needs, so you will have more than you need after an adverse event.

Health Insurance

What Is It: Health insurance provides coverage for your health care expenses. Health insurance works more as a way to prepay for your eventual health costs rather than insurance against potential unexpected events. It also tends to differ from other insurance types as most people get their health insurance coverage through their employers (in the US).

What Types Are There: There are a seemingly endless number of health insurance companies, who will all offer plans with different terms. Some of the most important issues to consider are the premium being charged each month, the deductible you will have to pay if you need health insurance, and what is actually covered by the policy. Unfortunately, there’s currently little standardization in the types of policies offered by insurance companies, so it will take a little bit of research to find the perfect policy for you.

Who Needs It: Just about everyone who might at some point get sick, who lacks the resources to pay for health care over an extended period of time. Note that as mentioned above, many health insurance policies are actually offered through employers, so your first stop when searching for health insurance should be your Human Resources department. You’ll generally save money (to say nothing of time and effort) by taking advantage of the coverage offered by your employer. If you need search for health insurance on your own, there are a large number of issues you need to consider; enjoy this start to your research process.

How Much: Health insurance is generally sold to cover all your health care costs above and beyond the deductible. The higher the deductible, the less you will need to pay in premiums. Be sure that your insurance policy will cover any costs you expect to incur, including dental, vision, prescription drugs, and preventative care. Unfortunately, as mentioned before, there aren’t too many standards when it comes to insurance coverage, so making apple to apple comparisons will be difficult. But I know you’re up to the task.

Get Insured!

That’s it for this overview of insurance types; hopefully you now have a better understanding of everything that could possibly go wrong with your life, and how to protect yourself with insurance.

If you have a big ‘ol gap in your insurance cover, try to get it taken care of ASAP. Better safe than sorry, as they say!

This post is the first “staff” post from Roger of The Amateur Financier. He is going to start contributing some posts on a more regular basis to the tune of a few a month or more. I hope you enjoy this post as it is very timely, and give Roger a nice welcome!

It can happen to the best of us. One day, you’re going along like normal, working steadily at a job you tolerate, if not love; the next, you’re out of a job.

You are not alone; even as most economists are calling this latest recession over and are starting to talk about the recovery, unemployment is still over ten percent in the United States. (Even that figure doesn’t account for people who have given up looking for a job or who are working part-time when they want a full-time position.)

Landing On Your Feet

If you find yourself unemployed, whether you were downsized, fired, or had your employer go bankrupt, there are several steps you should take to get your financial life back in order:

1) Don’t Panic

Take a page from the Hitchhiker’s Guide to the Galaxy and put this phrase prominently in your mind as soon as you get the news about losing your job. At best, panicking will distract you from more productive uses of your time; at worst, it can lead you to make mistakes that will have a negative impact on your employment and finances for years to come. To paraphrase the Nike commercials, just don’t do it!

2) Learn Why You Were Let Go

The fact that you lost a job should be a learning experience. If you were fired with cause, be sure to find out why so you can avoid making the same mistake in the future. If your company was downsizing and eliminated you but not some of your coworkers, you should figure out what they did to make themselves more valuable to the company and attempt to emulate those behaviors at your next place of work. Finally, if your company went under, you can use that experience as a guide to what sort of companies to avoid in the future, or perhaps even reconsider the industry in which you’re working altogether.

3) File for Unemployment

Unless you’ve already got another job waiting, one of the first actions you should take after losing your job is to file for unemployment benefits. Each state has their own rules about how much you can receive in benefits and how long those benefits will last, making it hard to generalize about what you can expect to receive; but every dollar you receive is one less dollar you need to provide from your own pocket. Links to the individual unemployment offices can be found here for each US state and territory.

4) Take Care of Your Health Insurance

One problem with a health care system so heavily dependent on employer provided health care is that when you lose your job, you lose your health insurance coverage, as well. You should look into COBRA coverage to continue with your employer provided plan (although you’ll be picking up the entire bill now, making it significantly more expensive). You could also opt for getting health insurance on your own, which might be the less expensive option if you are young and reasonably healthy. Either way, making sure you are covered and don’t have to worry about a potential health crisis on top of your job loss should be a top priority.

5) Review Your Finances

If you don’t already have a good handle on your finances, doing so now is not a good idea, it’s a great one. Look over your assets, from your retirement investments to any property you own, so you know what resources you have available. Review all the sources of income you have, including your spouse’s job (assuming he or she isn’t in the same boat as you), your unemployment, income from rental property, and investment dividends, so you know how much you have available each month. Also go through your expenses, from mortgage/rent, utilities, and food to insurance (don’t forget your new health care costs). Then, try to cut your expenses as much as possible; at the very least, you need to be sure that your new, likely lower income will be enough to cover your basic needs for the foreseeable future.

6) Decide What to Do Next

These first five steps have been pretty universal; everyone who loses their job (or retires, for that matter) will have to handle these issues at one point or another. Where to go from here depends on what your life situation looks like; here are a few suggestions regarding how to start the next chapter of your life:

Early Retirement: Before you get too excited, this is generally only possible for those who are near retirement age anyway or who have been very aggressive savers. Still, it’s worthwhile to take a look at your financial situation and see if you have enough in assets to sustain your lifestyle. Be very, very, VERY conservative in your estimates if you follow this route; it will be much harder to get back into the work force years from now if your money runs out than to jump back in while you are still relatively young and your skills are up to date.

Find Another Job: The option most of us will have to take, finding another position to keep bringing in money. There’s enough advice on finding jobs to fill several blogs, let alone a single blog entry, so here’s the best thing to keep in mind: networking works. Stay in touch with friends from your last job (especially those who are still working in your industry), reach out to any organizations in your field, and ask friends, family, neighbors, and people at your local house of worship for any help or suggestions they can offer; you never know who could have a lead on a job you would love. Here are some common methods of networking.

Reinvent Yourself: For many people, a job loss is the opportunity to attempt something new and very different from their previous occupation. If you weren’t happy in your last job, why not try something different? There are many options, from going back to school for a new degree (either an advanced degree in your field or something from a different field entirely) to attempting to start your own business. If you’re willing to take a bit of risk, there are plenty of options available.

Good Luck!

There; some tips to help you get through a job loss with as few problems and difficulties as possible. Hopefully, you’ll never have the need to put them into practice.

Does anyone have any other tips to share for someone going through this situation?

If you’re a high school student, chances are that planning for your financial future is pretty low on your list of priorities, somewhere between studying Latin and mowing the lawn. But if you get started now, you’ll be amazed at how much more prepared you will be with only a few simple steps. Here are three things I wish I had done while I was still in school:

1) Get a job…and save the money:

If you’re like most American high schoolers, you probably already have a part-time job. I know I did, working at McDonald’s. You might be tempted to spend every cent you earn; after all, when you’re giving up nights and weekends, and are only getting minimum wage to show for it, you probably feel you deserve to have a little fun. And you should; BUT putting aside part of your money in savings will help you in the future, giving you a cushion to fall back on, without needing to rely on your parents.

Extra Credit: Look into internships, especially during the summer when school’s out. Even if you aren’t being paid (and chances are, if you’re still a high school student, you won’t be), you’ll still gain some experience. Besides looking good on a college resume, this will help you to narrow down your career options; if you don’t like working as lab technician for a summer, how would you handle it for 40 years?

2) Invest in a Roth IRA:

I know, I know; when you aren’t even old enough to vote, why should you think about retirement? Well, the answer is simple: you have time on your side. If you can invest a mere $100 a month for two years, starting when you are sixteen and then stopping when you hit eighteen, you’ll end up with $95,000 when you hit sixty-five (with a fairly conservative return of 8%). Invest $200 a month (tough but possible, even when working part-time for minimum wage), and you’ll have $190,000 at retirement. Inflation will eat away at the real value of this money (by the time you reach retirement age, expect to be ordering off the Five-Dollar Menu at McDonald’s), but it should still represent the equivalent current value of about $40,000. And this of course assumes you never invest a penny after your eighteenth birthday; keep up the investments, and you’ll end up with much, much more when it’s time for you to retire.

Extra Credit: Convince your parents to match your contributions. Tell them it’d be like having your own personal 401(k); if they want to encourage you to save and invest, they might be willing to put up a few thousand dollars of their own. If you put in $200 a month, and get your parents to match that, you’ll be adding $400 a month to your Roth (nearly maxing it out at the current contribution limits), and you will have $380,000 at sixty-five, without adding another penny on your own. Keep up your contributions and your parent’s match through four years of college, and you’ll have over $1,000,000 waiting in your retirement pool. Not bad for six years of investing, hunh?

3) Start your own business:

When you’re young and have free time on your hands, it’s the perfect opportunity to spread your wings and try out new things. You’ll still have the safety net of your parents, so why not try to strike it out on your own, try something new, and perhaps even make some money at it? Plus, with all the new opportunities presented by the internet, you don’t have to rely on babysitting or a lemonade stand to make money on your own; try starting a blog, it’s fun and if you’re witty and entertaining enough, could be a decent money maker.

Extra Credit: Keep it up through college. If you find something that works, why stop? If you can maintain a website or keep up the babysitting work, take advantage of the added income opportunity and do it while attending school. Or consider the possibility of turning it into a career right off the bat…

There you go, three pieces of advice you can put into practice as a high school student, which will leave you in better financial shape by the time you hit college. Enjoy!