Leveraging and Duplication

Posts tagged ‘financial literacy’

Financial Renewing of the Mind

renew-mindThe meaning of some keys words you need a clear understanding about

Opportunity: an amount of time or a situation in which something can be done
Benefit: a good or helpful result or effect
Employer: A legal entity that controls and directs a servant or worker under an express or implied contract of employment and pays (or is obligated to pay) him or her salary or wages in compensation.
Employee: An individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties. Also called worker.
Worker: a person who is employed and works hard
Employed: People who are employed on a full or part-time during a specified payroll period.
Servant: one that performs duties about the person or home of a master or personal employer
Job: is the work that a person does regularly in order to earn money
Work: is the job that a person does regularly in order to earn money
Career: a job or profession that someone does for a long time
Salary: an amount of money that an employee is paid each year
Wages: an amount of money that a worker is paid based on the number of hours, days, etc. that are worked
Compensation: payment given for doing a job
Earnings: money received as wages or gained as profit
Profits: money that is made in a business, through investing, etc., after all the costs and expenses are paid : a financial gain : the advantage or benefit that is gained from doing something
Rules of 72: The ‘Rule of 72’ is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. For example, the rule of 72 states that $1 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into $2.

System: a group of related parts that move or work together.
Leverage: influence or power used to achieve a desired result
Duplication: the act or process of copying something
Multiplication: the process of adding a number to itself a certain number of times : the act or process of multiplying numbers :an increase in the number or amount of something (Starts with the number 2)

Empower: make (someone) stronger and more confident, especially in controlling their life and claiming their rights.
Empowerment: Empowerment is based on the idea that giving employees skills, resources, authority, opportunity, motivation, as well holding them responsible and accountable for outcomes of their actions, will contribute to their competence and satisfaction.
Earned income: includes all the taxable income and wages you get from working. There are two ways to get earned income: You work for someone who pays you or your own or run a business or farm
Residual income: (also called passive, or recurring income) is income that continues to be generated after the initial effort has been expended. Compare this to what most people focus on earning: linear income, which is “one-shot” compensation or payment in the form of a fee, wage, commission or salary.
Linear income: is directly proportional to the number of hours invested in it (40 hrs. of pay for 40 hrs. of work), but one of the great advantages of residual income is that once things are set in motion, you continue making money from your initial efforts, while gaining time to devote to other things… such as generating more streams of residual income!

Smartphone: a cellular phone that performs many of the functions of a computer, typically having a touchscreen interface, Internet access, and an operating system capable of running downloaded applications.

Wealth: is an abundance of valuable possessions or money. the state of being rich; material prosperity.

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Most Americans are Financially Illiterate


“The college educated are more likely to own stocks and less prone to use high-cost borrowing.” —Journal of Economic Literature

Financial literacy is important, but sadly, only a handful of states require students to take personal finance or an investment course. You can get a Ph. D. in economics and never take a class in accounting, business or personal finance!

How bad is financial education in this country? In 2008, two economists came up with three simple questions to test the financial knowledge of citizens 55 years or older. See how well you do:

1. Suppose you had $100 in a savings account and the interest rate was 2 percent per year. After 5 years, how much do you think you would have in the account if you left the money to grow?
A. More than $102.
B. Exactly $102.
C. Less than $102.
D. I do not know.

2. Imagine that the interest rate on your savings account was 1 percent per year and price inflation was 2 percent per year. After 1 year, would you be able to buy:
A. More than today with money in this account.
B. Exactly the same amount as with the money in this account.
C. Less than today with the money in this account.
D. I do not know.

3. Do you think that the following statement is true or false? “Buying a single company stock usually provides a safer return than a stock mutual fund.”
A. True.
B. False.
C. I do not know.

The answers to these three questions are: 1 (A); 2 (C); and 3 (B).

When I first read these questions, I thought they were so easy that nobody with any experience could get them wrong. And yet only a third (34%) of U.S. respondents aged 55 and older could answer all three questions correctly.

Among foreigners, the Germans and the Swiss did the best (over 50% correct), while the Russians did the worst (4% correct) and the Japanese were in between (27% correct). There’s a gender difference, too. Men were generally more financially knowledgeable than women, no matter what the age.

Clearly the education systems throughout the world need to do a better job in educating their people about basic finance.

America Is Becoming the Land of the Financially Illiterate

Benjamin Franklin once said: “An investment in knowledge pays the best interest.” We seem to have forgotten those wise words when it comes to personal finance. Financial literacy is the foundation of building wealth. If you fail to understand the role of money and how it works in the world, it’s virtually impossible to secure your financial future. Unfortunately, financial knowledge is absent in the education system.

The majority of Americans have not received a formal financial education. According to a new poll from MoneyRates.com, 64 percent of respondents say they received little or no financial education in high school. In fact, only 43 percent of men say they received some or a lot of financial education in high school, while just 29 percent of women report the same. Not receiving lessons about money in high school has damaging effects.

Naturally, respondents who learn about money at an earlier age are more likely to be comfortable with financial topics later in life. Sixty-one percent of adults who say they received a lot of personal finance instruction in high school now consider themselves as fluent in both basic and advanced financial topics, compared to 22 percent for people who received only some but not a lot of instruction. This figure drops to 19 percent for people who received little or no personal financial education.

Most people in the survey believe financial education should be taught in schools in some capacity. Sixty-two percent of poll respondents say it should be a requirement in high school, and a total of 88 percent indicate that financial classes should at least be available as an elective. However, considering how slow change can occur, the responsibility falls on individuals to prepare themselves as well as their children to handle money matters.

Parents should remember that schools are not the only outlet for kids to learn about personal finance. “Financial topics come up all the time when you have kids — just think how often they ask for their allowance. Use those moments to teach them something about the thought process you use when making decisions about money,” explains Richard Barrington, MoneyRates.com.

“Also, periodically review your financial situation with your family, because every member of the household has a stake in it. Education is often described as an investment in the future. Nowhere could the potential return on that investment be more clear than in educating students to make better decisions about money.”

The Scary State of Financial Literacy in America
Only 40 percent of adults keep a budget and track their spending. Three-fourths of American families say they live paycheck to paycheck. More than one-fourth of American families have no savings at all. These troubling statistics are some of the reasons that we need to boost financial literacy.

Being financially literate means you understand how to manage money, how money works in real-world applications, and how you can use money as a tool to help others and grow your own stability and security.

Studies from organizations like the Jump$tart Coalition indicate that the average American doesn’t have enough financial education — or at least doesn’t understand how to apply this knowledge in the real world.

A Lack of Financial Literacy Creates a Big Problem
This has serious consequences. Look at our consumer debt problem. Collectively, American consumers owe $11.52 trillion to lenders and creditors. This debt burden balloons year after year. Last year alone student loan debt soared by more than 11 percent. The result is that many Americans fear for their financial stability and freedom. Only 50 percent of American families have more than three months’ worth of expenses saved. Nearly as many –- 43 percent –- are concerned that their savings won’t be enough to cover unexpected costs or emergencies.

Americans feel uncertain about their ability to retire — and for good reason. Statistics compiled by LearnVest and Chase Blueprint show what Americans, divided by age group, have saved for their retirement. For those 45 to 54, the median saved was only $101,000. It’s no wonder that 38 percent of adults are concerned about being able to retire on time, if they’ll be able to retire at all.

The good news is that efforts to raise awareness for financial literacy seem to be working. Three-quarters of American adults would like help with basic money matters and would appreciate the advice of a professional.

Most adults wish they had financial coursework. Only 5 percent say they were taught about money by a teacher, and 40 percent say they would give themselves C’s, D’s and F’s on their grasp of personal finance concepts. A full 85 percent of American parents believe that financial education courses should be a requirement for high school graduation. And 52 percent of teenagers want to learn more about money, and they’re most interested in budgeting, saving and investing.

What You Can Do Today to Increase Your Financial Literacy
We may be a long way from seeing approved financial education classes in public schools, but a wealth of information is available online. You can become more financially literate, and more prepared to deal with your finances, if you’re willing to do a little research.

Get your finances in order. It’s hard to know where to go if you don’t know where you’re starting. Make a budget and track your spending; cut frivolous expenses and make sure you’re money is going to things you truly value (and not stuff you think you have to have because everyone else does).

Make a plan to pay off any student loans or credit card debt and try to max out your retirement contributions if you can. Even if you can’t make that happen today, it’s a great goal to set for yourself –- and goals help keep your finances on track.

Keep up the savings and investing habit once you’ve established it. And don’t stop learning. By continuing to educate yourself, it will be easier to build financial security for you and your family.

Today, we are caught up in a real life Monopoly Game playing with Fake Money. We are hoping to stay out of jail and don’t land on bankrupt. If you work a job today or get paid for your services through self employment and they give you a check or give you cash you lose because that is fake money. People with cash in their pockets are the losers today.

Technology today has change our outlook on money today. Banks hate paper money because the Banks money is Digital. Banks convert the federal reserve notes that you give them into gold because their money is digital and can be back by gold. You need to learn how to make digital money like the banks.

The LADA Groups Financial Literacy Training will cover the following areas:
• What is a 770 Account?
• Technology and E-payments
• The Need to become an Entrepreneur
• Purpose of Insurance
• Purpose of Banks
• Difference between a Financial Statement and Credit Report
• Purpose of FDIC and What’s Covered
• What is a Federal Reserve Note?
• What is the U.S. Federal Reserve Bank?
• Who owns The Federal Reserve?
• Purpose of a Credit Union
• What is a Safe Deposit Box? What is Money?
• How is Money Created?
• What is Digital Money? (All the banks money is digital)
• What is Electronic Money? What is Bitcoin?
• What is Electronic Currency Trading?
• What is the Forex Market? What’s a savings account?
• What’s interest? What’s a stock? What’s a mutual fund?
• What is an Asset? What is a Liability?
• What the US Constitution Says is Money
• The Reason why the FEDS had JFK Killed Executive Order 11110
• The Employee Retirement Income Security Act (ERISA) 401K
• Financial Terms That Every Investor Show Know
• So Let’s get started…….

Financial Literacy The LADA Group

An alarming number of African-Americans have little or no money saved in retirement accounts and do not own homes, largely because money management has not always been a high priority in a culture that for generations has focused more on “civil” rights than “silver

African-Americans, in general, perform better in the area of spending — rather than saving — when compared to any other racial group.

The problem stems from the fact that young black people are less likely than their white counterparts to receive money management education in school or from their own parents.

“They remember fathers who didn’t save enough to send them to school
. They remember being teased by their schoolmates because they didn’t have the latest clothes. I’m guiding parents to embrace the negative emotions they are holding to make revolutionary changes in their relationship with money.”

Parents sometimes try to give their own children what they believe their parents should have provided for them, but those behaviors could perpetuate a vicious cycle of financial illiteracy and economic insecurity.

The Athens, Ga.-based Selig Center for Economic Growth, which chronicles consumer buying power, reported that by 2012, African-American spending exceeded the gross domestic products of Spain and Canada at $1.1 trillion a year. The top five categories were for goods that have zero appreciative value: rental housing, food, cars, clothing and health care.

According to a 2011 study by Prudential called “The African American Financial Experience,” the Great Recession delivered an economic setback to all Americans, but African-Americans may have been hurt to a greater degree than the general population.

During the crisis, they were more likely to lose jobs and to own homes with appraised values that had fallen below what was owed on the mortgage. The Prudential study found six in 10 African-Americans have less than $50,000 saved in company retirement plans and only 23 percent have more than $100,000 in these plans, compared to 34 percent among the overall general population.

The Institute on Assets and Social Policy at Brandeis University in Waltham, Mass., used data from a nationally representative set of 2,000 families tracked from 1984 to 2007 and found that an initial wealth gap of $20,000 between black and white families mushroomed over the 23-year period to $95,000.

“In general, African-Americans tend to be more entrepreneurial.
We have a sense of self-reliance and in many cases tend to be more family- and community-focused,” Ms. Cox said. “These are good things.

“The problem occurs when African-Americans don’t establish boundaries or guidelines on the extent they will help family and members of the community.”

African-Americans also have a reputation for giving generously to their churches. That’s not a problem but, when combined with other gifts, it can leave them with little to save and invest.

“The problem is when churchgoers give tithes and offering to the church as well as support their adult children and help a sister-in-law with a loan that will not be repaid and pay off a niece’s student loan as well.” “There is such a thing as giving too much or giving until it hurts, when you are not financially stable to begin with.”

Parents often have trouble schooling their children about finances because of their own core beliefs. Conflicting beliefs about the relationship one should have with money could even stem from church teachings.

There is nothing righteous about struggling for your financial security”. It is actually a perfect storm of low self-esteem, lack of knowledge and generational conditioning.

“If we spent $1.1 trillion on land, it would be a different world. We are spending money on things that have zero value. Our children are watching the behavior of the adults and adults are expressing their own vulnerabilities and belief systems with these [misdirected] purchases.” Learn more at https://recyclingdollars.wordpress.com/lada-hedge-fund/

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Difference Between The Elite and The Average Citizen

What is it that the elites hold over the average American citizen?

Answer: financial literacy

The elite class in America knows the language of finance, banking, currency and economics. Because American schools leave students financially illiterate, even after graduating from college, they cannot properly manage their money and must rely upon the often self-interested misdirection of financial advisors, stock brokers, and bankers.

For example, most financial counselors recently advised their clients against withdrawal of funds from their 401(k) tax-deferred accounts, given that there are penalties for early withdrawal. The result: most 401(k) accounts lost 30% or more of their money. Now withdraw your money from those tax-deferred accounts, taking a 10—20% penalty, and you have sliced your retirement fund in half.

Halt financial anxiety

Most investors have little gumption to stand up to their financial advisors because they feel they don’t understand how money management works. There is anxiety in the process of making an investment. One survey showed that investors often feel a level of anxiety equivalent to going to the dentist.

 If young adults are being advised to invest in the stock market, they will not likely hear that stock markets are massively manipulated and represent nothing more than gambling parlor. The same goes for markets selling precious metals such as gold and silver, only the manipulation has served to vastly undervalue these shiny metals.

Financial advisors may recommend a certain stock, but may not inform you they are dumping that particular stock from their own portfolio and pushing it on you in a game of financial musical chairs. Certain mutual funds have taken management fees that are larger than what their investors made. In fact, counting for inflation and taxes, many mutual fund participants have lost money while the fund managers have made a killing.

 Students graduating from high school, or even college, may have never learned how to balance a checkbook, estimate the erosion of their banked money due to inflation, calculate total interest on a loan rather than the monthly or annual interest (total interest on a 30-year home loan is about ~48%), know whether they should rent or buy a home, or have ever even read a home mortgage document prior to the day they signed one. (Notice how home buyers are not allowed a few days to read over their mortgage document before signing it.)

Interest on bank accounts: it’s a shell game

If only young Americans were educated how banks make money. For example, let’s say a bank offers 2% interest on banked money (it’s less than 1% today). So on a $1000 deposit the depositor will receive $20 a year in interest, while a 4% rate of inflation would have resulted in a $40 loss of purchasing power of that money, for a net gain of $20, less any taxes on that small gain.

At the Federal Reserve website they even have the gall to display a chart which pretends to show how 1 can turn into $5,368,709.12 after 30 years of compound interest, without ever calculating for inflation and taxes. How absurd. Thanks to designed-in inflation by the Federal Reserve, the true value of a 1913-dollar today is just 3.

On the surface it doesn’t appear that banks are gaining excessive profits off of their depositors’ money. In this example, depositors receive 2% interest, and the bank lends out that money at around 5% interest.

But that isn’t how the shell game works in banking. Unknown to most Americans, banks have the privilege of fractional banking — they make up 10-fold more money out thin air than the deposits they hold. So your $1000 bank deposit becomes $10,000 and the bank is supposed to keep your $1000 in reserve (they don’t even do that!) and loan out the remaining $9000. At 5% interest, the bank would make $450 profit, while the depositor makes just $20, and loses money after taxes and inflation are calculated.

Chart provided by the Federal Reserve showing how interest on banked money can produce a profit (notice the 10% interest rate, which is far greater than current interest rates offered by banks). The Federal Reserve doesn’t want to reveal to you how little you make on your banked money.

 What is strikingly misleading is that the Federal Reserve Bank of the United States (the central bank that distributes the money supply to smaller banks), suggests American citizens follow a saving plan that would result in the enlargement of their banked money to hundreds of thousands if not millions of dollars over a lifetime. The problem is that the Federal Reserve (not a branch of the U.S. government, actually a group of private bankers that masquerade as a federal agency and even uses dot.gov on their URL) never mentions that depositors are capitalizing the banks for free and losing purchasing power on their banked money, while the banksters make huge profits! It’s a wonderful shell game practiced under false cover of an American government-backed institution.
 How much did you say lenders make on a home loan?

Home buyers cannot fathom how much banks make on home loans. For example, a $270,000 home loan only requires a bank to come up with about $30,000 of their depositors’ money, held in reserve, which is the amount of money temporarily put at risk. The lender then turns that $30,000 into $300,000 via its fractional banking privilege (money made out of thin air), keeps the $30,000 in reserve, and loans out the remaining $270,000 @ 4.5% interest. The monthly interest payment plus property insurance and taxes is about $12,000 a year or about $1000 a month. It only takes the bank about 30 months to be made whole on its true investment ($30,000), and the remaining 27.5 years of a 30-year mortgage is pure profit. The only risk the bank holds is if the home buyer cannot make monthly mortgage payments, so the banks often sell these mortgages to other parties, completely negating risk. None dare call this usury, which is what it is. Usury was forbidden even in the Bible.

To make matters worse, most homes being sold today are overvalued and new home buyers are likely to hold a mortgage on a property that is underwater (more is owed than the house is really worth) from the outset. Naïve home buyers are still being sucked into these deceitful purchases.

Learn the language of finance

 Your children need to learn about money at an early age. They can begin to be taught the language of finance and banking. Some simple definitions (make up your own) are:
  • Fiat money — printing money out of thin air, or what is actually counterfeiting.
  • Fractional banking — a privilege given to banks and lenders to make money out of thin air.
  • Derivatives — also known as swaps, futures or options, which are a financial instrument or agreement between two parties, which has a value based on its expected future price.
  • Assets — tangible valuables that can be converted to cash.
  • Mark-to-market accounting — true value of property rather than its value when purchased.
  • Money supply — there are three measures of money supply: M1 = currency, traveler’s check, demand deposits; M2 = M1 + demand deposits and savings accounts M3 = M2 + large time deposits, currency substitutes (stocks, bonds, etc.)
  • National debt — the amount of money the federal government, over and above taxes collected, that it had to loan from other parties or even print out of thin air.

Many parents, particularly immigrant parents, want their children to get an education they never had an opportunity to acquire, and to get a college degree. But, regardless of the grades that child achieves in school and the diplomas earned, if he or she is financially illiterate they will surely be another victim of the financial system. They will blindly sign home mortgage papers, start checking accounts, apply for credit cards, and never catch on to the many tricks of modern banking and finance. Since the government oversees and insures bank accounts and currency, naïve Americans cannot believe how closely politicians work with banksters to commit what amounts to hidden fraud.

Don’t trust financial literacy programs

There are a number of financial literacy programs for children and adults, but they are often sponsored by banking organizations or agencies or quasi-agencies of the U.S. government that deliver information that leads to the financial ruin of those who follow their advice. Most of these programs are designed to aid individuals who mired themselves in unpayable debt. In other words, how to keep making their bankers rich, making payments on loans they never should have qualified for.

Unless the next generation of young Americans becomes financially literate, they will see their earned money vanish, as their parents and grandparents are now experiencing. In the current scenario, Americans banked their money, had it loaned out to provide homes to people who were not creditworthy, and have not been told their banked money has vanished. The trillions of dollars of wealth that Americans worked to accumulate over their lifetimes as evaporated in an unprecedented collapse of banking and lending. The Federal Reserve, in its bailout program, has only replaced the lost 10% reserves, not the whole amount Americans had on deposit with U.S. banks.

 Lack of oversight

Under the watchful eyes of the Federal Deposit Insurance Corporation (FDIC), Securities Exchange Commission (SEC), the Federal Reserve bank, and the Department of Treasury, lenders were allowed to keep less than their required reserves, allowed to pass risky mortgages off to quasi-government agencies that, in the end, shifted the risk back onto the public, allowed lenders to conduct phony foreclosures to free-up even more money to lend out, and then allowed banks to “cook their books” and declare the value of their real estate assets at more-than-market prices. Somebody should have gone to jail here, but politicians are largely above the law and are too close to the banking and finance industry to invoke adequate discipline and penalties.

Don’t allow your children to be as financially uninformed as you have been. Your children are lambs among wolves. Make them aware of the hidden fraud in banking, lending, and currency before they become financially impoverished. Combating financial illiteracy: build a home library

There are good resources for parents to become financially literate first before they teach their children. When books by Ludwig von Mises, Henry Hazlitt, Murray Rothbard, Lew Rockwell and Ron Paul fill our family bookshelf, the banksters will not be able to get away with their crookedness.

Also there are online aids to help Americans to:

The American people are gullible. Even a university economics professor may have been deceived. Americans cannot rely upon government institutions to educate them out of their financial ignorance. Agents of American government and the financial community are far too chummy to begin a campaign that would essentially indict themselves of all this chicanery. Don’t let this go on for even one more generation. Begin now to teach your children how to wisely manage their money. Stop this ongoing “banks win, depositors lose” game that is now being practiced.

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Why athletes go broke: Financial expert Ryan Mack

Life A Game Of Monopoly

Life is just like a game of Monopoly

Why Monopoly Is A Terrible Finance Teacher
Monopoly is one of the most popular board games of all time. But with its plethora of inaccuracies, it doesn’t offer the best lessons in real-world finance.

Monopoly does get some things right. The purpose of the game is “to become the wealthiest player through buying, renting and selling of property,” and prudent property ownership decisions are indeed a proven path to wealth. Players also learn that property values are largely based on location, and they receive economic lessons about scarcity, tradeoffs and making decisions with imperfect information.

Still, if you’re hoping your kids will learn something about finance while they’re playing, here are a few of the game’s inaccuracies you may want them to be aware of.

Most Pricing Is Not Market Based
In Monopoly, prices for unimproved properties, houses and hotels are flat, and the rents players pay when landing on each other’s properties are fixed. The game’s property values are pre-established by a central authority (the bank) instead of fluctuating based on supply and demand like they do in real life – at least, in capitalist societies, and Monopoly is clearly capitalist. The rules do reflect reality somewhat, however, in that they allow players to negotiate trades for unimproved properties, railroads and utilities (but not houses or hotels), based on whatever values they agree upon.

Property Rights Are Unusual
When you buy an unimproved property, a house or a hotel in Monopoly, you buy it from the bank. In real life, only foreclosed properties are purchased from banks; properties are usually transferred between individual owners.

Monopoly players also must pay cash for land and structures instead of financing them with a mortgage. Mortgages are only used when players run into financial trouble; they may mortgage properties they own back to the bank for the mortgage price printed on the title deed card for that property. For example, a player who owned Kentucky Avenue, purchased for $220, could get $110 for the property by mortgaging it to the bank. While the property is mortgaged, the owner cannot collect rent. In real life, most people do not pay cash for properties; they use mortgages, and homeowners collect rent on mortgaged properties all the time.

Another aspect of property ownership unique to Monopoly is that players cannot improve their properties until they own all the properties of the same color, and players must build evenly across their properties. Players also have to build small structures (houses) before they’re allowed to build large structures (hotels). While real-life rules do restrict what improvements owners can make to their properties through city zoning laws, neighborhood deed restrictions and homeowners association requirements, there is no need to own two or three adjacent properties before building is allowed, and there is no requirement to build multiple small properties as precursors to a larger property.

Income Is Based on Luck, Not Skill
In Monopoly, you receive a $200 salary every time you pass Go. How often you pass Go depends on the luck of the numbers you roll with the dice and any Chance and Community Chest cards you draw that may help you move around the board. Income is also based on which properties you happen to land on and whether you’re able to accumulate monopoly holdings of like-colored properties that allow you to collect rent from your opponents. Players get paid – and have to pay – when they randomly draw cards with instructions, such as “Your building loan matures: Collect $150” and “You have been elected chairman of the board: Pay each player $50.”

In real life, the amount of money you earn is primarily based on skill development and hard work. Only a small percentage of the population (gambling winners and inheritance recipients) receives an income based on luck. The idea that income is based on luck is a self-defeating attitude which prevents many people from reaching their financial potential.

Taxes Are a Gamble
You never know how much income or property tax you’ll pay or when you’ll have to pay it in Monopoly, and taxes fall on players randomly rather than being based on their actual economic activities. 

Monopoly players don’t pay income taxes on a regular basis – only when they land on the Income Tax board space. If Monopoly were like real life, players would pay income tax each time they passed Go and collected $200; they would also pay it when they drew cards like “Receive for services $25,” “From sale of stock you get $45” and “You have won second prize in a beauty contest: Collect $10.”

The way taxes are calculated in Monopoly isn’t realistic, either. When a player lands on the Income Tax space, he or she may pay taxes of either $200 or 10% of net worth (including cash, land and buildings), but cannot first add up assets and then choose to pay the cheaper amount. In reality, while many provisions of the income tax code do provide for two or more ways to calculate tax liability, taxpayers often have the option to choose the calculation that results in the lowest liability. Furthermore, real-life income tax is based on income, not net worth.

Monopoly players also don’t pay property taxes on a regular basis. Instead, players who draw an unfortunate Community Chest card get assessed for street repairs and must pay the bank $40 per house and $115 per hotel. There is no tax on unimproved property, but in real life, property taxes are based on the value of both land and improvements and must be paid on a semi-annual, annual or bi-annual basis. 

School taxes, which are paid from property taxes in real life, also are based on chance in Monopoly. A Community Chest card instructs unlucky players to “Pay school tax of $150.” A more realistic game would instruct players to pay school taxes based on a percentage of the total value of all properties owned.

The Bank Can Make Permanent Errors in a Customer’s Favor
Monopoly has a chance card that states, “Bank error in your favor: Collect $200.” In real life, if the bank makes an error in your favor, it will only be temporary. If you spend money that was erroneously deposited into your account and don’t repay it, you’ve committed theft. You’ll have to repay the money and you could also be fined.

Wealth Is a Zero-Sum Game
The last player standing after all the others go bankrupt wins the game in Monopoly. This rule implies that wealth accumulation is a zero-sum game; only one person can achieve ultimate financial success and only if everyone else is destitute.

To be sure, there are plenty of critics of income inequality who believe this Monopoly rule contains a nugget of truth. They think that when the top 1% get richer, the other 99% consequently become poorer. This belief persists even among well-educated intellectuals and economists and is perpetuated by the media.

In reality, there is no limit to the amount of wealth that can be created in a free-market society where government regulation is limited to essential functions. The world could have billions of billionaires if that many people could figure out how to create a billion dollars’ worth of value. Your income need not fall for Warren Buffett’s income to rise.

The Bottom Line
In the end, Monopoly is just a game, and even if some of its lessons about finance aren’t entirely accurate, at least it gives kids an awareness of things like mortgages, bankruptcy, property ownership, money management and taxes. They aren’t likely to get that awareness from most video games or television programs.

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