3 Unexpected Personal Finance Lessons From the Game of Mahjong

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For the uninitiated, mahjong is a Chinese tile-based game in which players start with 13 tiles, going through rounds of drawing and discarding tiles until they are able to form a winning hand. A winning hand is usually made up of 4 melds (a three of a kind or three consecutive tiles) and 1 pair (also known as eyes).

For many, mahjong is an intense affair, with many gathering together late into the night to play round after round. But interest in mahjong really peaks at one point in the year: Chinese New Year.

Chinese New Year is a time when everyone gets together and celebrates the new lunar year, meeting distant relatives and soaking in the festivities. With these celebrations also come hours upon hours of mahjong.

But hey, did you know, mahjong actually isn’t that different from personal finance?

Oh, how so?

Everyone's Different

In mahjong, there are many ways to win the game. Melds can be formed from the 3 different suits or even the special honour tiles. However, beyond collecting the 4 melds and 1 pair required, there are special hands that allow the player to win. For example:

1. 13 Wonders/13 Orphans (十三幺)

1. Pure Green Suit (绿一色)

Because there are so many ways to win, depending on the hand you’re dealt in the beginning of the round, you’d likely be gunning for a different strategy as the players around you.

This would also mean that if you tried to copy any of the players around you, not only will you likely not win, you’ll probably also make a fool out of yourself and you’ll probably be teased about it forever at every Chinese New Year.

Likewise, personal finance, as the name would imply, is quite personal. Everyone has a different financial situation: different retirement needs, different insurance needs and different housing needs, the list goes on. As such, when we read advice or articles online (my articles included), we must first stop to consider if the advice is even relevant to our situation before deciding to implement it.

In investing especially, many beginners try to follow the trades or stock picks of more influential traders or investors, hoping to make it big like them. But in copying others, we don’t know what’s their plan, why they bought it and when they are going to sell.

And in doing so, this causes many beginners to panic-sell at a loss and to get caught in online pump and dump schemes because they don’t know what they’re getting into.

This leads to the famous saying on Wall Street for this, “Bulls make money, Bears make money, Pigs get slaughtered.” What this means is that, people who are optimistic and pessimistic can both make money in the market, but those who overlook risk and don’t do their own due diligence, will pay the price.

Therefore, we should understand why people do things the way they do and make the decisions they make before trying to apply any of it to ourselves. Through this, we can better apply relevant advice to our lives and also, likely understand our own needs better.

Adapt to Changes

In Mahjong, tiles are drawn and discarded in every move. As such, new information is being released to the players with every turn such as which tiles each player doesn’t want (and similarly, which tiles they’re probably looking for), how many of each tile has been played and what are the odds of getting the tile that you’re waiting for.

With new information released to the players, each player will have to adapt to the changes and their strategy in order to position their hand for the most likely victory. For example, if another player takes a discarded tile to form a consecutive meld on the table with a tile that you were waiting for, you might have to alter your strategy and wait for another tile.

Likewise, in personal finance, we cannot predict what will happen in the future. Life can throw us a curveball at any time and we have to adapt to the changes. In the Covid-19 pandemic, many people lost their jobs, were denied promotions or even saw their company shut down.

Such events likely derailed many of their plans and changes would have to be made to adapt to the new situation. Expenses had to be cut, investments might have had to be put on hold for the time being. The car might have to go and extra roles might have to be taken to help cover the expenses.

Hence, while we aren’t clairvoyant (at least most of us aren’t), we should aim to remain adaptable to changes and ready for any curveballs headed our way.

Make the Best Out of It

One last simple lesson, but an important one.

Ultimately, there’s still an element of luck in mahjong, as with most games. If you’re dealt a bad hand, you’re gonna have a much harder time winning, no doubt about it.

But what’s important to know is, regardless of the hand you’re dealt, you still gotta play, so we should look to giving it our best shot and making the most of it.

In life, we often lament how our financial situation could be better. We wonder about what would happen if we were born into a rich family without ever having to worry about money.

It’s easy to have wishful thoughts like that, but just like mahjong, once the tiles are dealt, you need to finish the game.

Hence, we should instead look at how to make it better and how to get to our goals from where we are today. And from there, we can take the concrete steps necessary to get there.

Image by LazarCatt from Pixabay