Role Playing Games and Personal Finance

“I didn’t spend all those years playing Dungeons and Dragons without learning anything about courage” – U.F.O. geek on X-Files

Growing up, I got pulled into “Dungeons and Dragons” (D&D) at a fairly early age, and played role playing games (RPGs) of one sort or another until I left for university. For those who haven’t encountered them, RPGs are games where a group of people sit around a table with dice and tons of rule books. One player is typically the Dungeon Master (DM) and the others are players. What proceeds is a form of collaborative storytelling where the DM creates an adventure for the players, who each control one of the main characters in the story. The story will be played over a number of nights, often stretching into years for dedicated groups.

The ultimate goal is for everyone to have a fun time, and it’s typically not competitive: the DM isn’t trying to “beat” the players. Instead, the players tend to work together to achieve goals (often called Quests). The dice and rules are there to provide a framework to resolve “risky” actions within the world. Say you get in a bar fight, the rulebooks provide guidelines on how to model the situation, then the dice help you figure out the resolution (who wins, and how badly each side is hurt). With a few rulebooks and a DM who can think quickly on their feet, anything can be ATTEMPTED within the game (although attempts can and will fail).

At the start of the game, the players are usually very wimpy. A wizard (called a “Magic User” in D&D) might be able to cast one spell a day, and a fighter may have trouble beating a couple of farmers in the above mentioned bar fight. As the game progresses, the players accumulate items (like a +3 Long Sword of Goblin Slaying) which make them progressively more powerful and more likely to successfully deal with challenges they encounter. They also gain “experience points” (XP) and gain levels, which make them inherently more powerful, allowing the magic user to cast more spells of greater power, and the fighter to kill entire villages of farmers (if that’s your bag baby). As you get further in the game, the players can fight and beat dragons, giants and even gods (often RPGs take place in a fantasy setting – think J. R. R. Tolkien and Lord of the Rings).

This has evolved into computer RPGs, and more recently into Massive Multi-player On-line Role-playing Games (MMORPGs) like World of Warcraft.

The compounding nature of finance and investing, as well as the risk element, always struck me as somewhat familiar to RPGs. As you get more “powerful” (wealthier), you have more options, and it becomes easier to deal with challenges (including the challenge of building more wealth).

The risk element is also present. As much as you may have a good understanding of the rules, as soon as you start rolling the dice, there’s no guarantee what will happen. Having the right equipment to deal with unforeseen emergencies (such as a potion of healing in case it looks like you’re going to lose) is vital. Monitoring the risk and status of your investments, and having contingency plans is also vital. Deciding whether to buy something to deal with a potential problem is similar to decisions about buying insurance.

The fact that you’re “playing” with other people is also important. If there’s a disagreement within your party, it might cause more problems then the “official” challenges of the game. The DM might interpret the rules differently then you expect, and this can throw a wrench into your plans (the DM is the ultimate authority in the game). No matter how well you understand an investment, other investors are playing with you. In situations like the tech bubble or the sub-prime meltdown, their perception of the situation can cause problems for you. Dealing with problems from personally misunderstanding an investment is probably a problem most of us don’t like to admit to.

I’m not necessarily advocating RPGs as a way to teach investing to children, but I think there are certainly elements that will lay the foundation for similar concepts that may appear in finances later.