You can teach kids some personal finance basics, such as diversification and debt management, by playing the classic board game with them. Christopher Churchill By Anne Kates Smith, Executive Editor From Kiplinger's Personal Finance, May 2013 Kids can learn a lot about money — and life — from Monopoly. So says game-industry executive Philip Orbanes, the author of Monopoly, Money, and You: How to Profit From the Game’s Secrets of Success. He also judges the U.S., Canadian and world Monopoly championships. Here is an excerpt of our interview with him.KIPLINGER: Can Monopoly’s lessons apply to real life? ORBANES: Monopoly is almost a perfect training ground for financial decisions. Young people don’t necessarily come out of school with the training or experience to invest or handle money, and advice that’s typically offered is rather abstract. Monopoly can help them see why the advice they get really works. See Also: Financial Literacy for Kids How does Monopoly help us make good decisions? Buying properties teaches diversification. The orange properties are the best group (they’re landed on the most, and they’re economical to purchase and develop), but they’re not certain game winners. You have to have income holdings (railroads) and defensive holdings (properties that prevent other players from building against you). You also learn asset management. If you don’t hold back enough cash to meet inevitable expenses, such as rent, taxes or a $50 distribution to every player, then the only way to raise money is to sell houses or mortgage properties for half of what you paid. But as the game progresses, you need to be invested, and that means taking risk. If you stay completely safe in cash, eventually you’ll lose. Advertisement What about managing debt? In Monopoly, you can augment investments in income-producing properties by mortgaging properties that aren’t important to you. But if you have to mortgage to pay off penalties because you have no reserve and no ability to raise money, then you go bankrupt. What else does the game teach? Interacting with other human beings is almost as important as making the right financial decisions. You have a much better chance of winning if you’re the kind of player that others won’t mind losing to. Show respect in dealing with opponents. Maintain a pleasant demeanor. Be assertive but not aggressive. What doesn’t work, in Monopoly or in real life: browbeating, intimidation and rudeness. How can we enhance Monopoly’s money lessons for our kids? Play to win. If you always allow kids to get the better of you in a trade, that’s not preparing them for real life.