The Cash flow board game is the brain child of Robert Kiyosaki which is a financial education tool. It was designed to be fun and educational at the same time to help people become financially free. There’s not many tools I know that compare with this one and it’s a good investment for your financial future.
Since wealth creation is a subject not taught in schools Robert has made it his mission to bridge that gap. The truth is that most families don’t have conversations about money either so most people don’t understand how money works.
You can purchase the physical board game or on your app store for both Android and iOs devices. I’ve played the game a number of times and learned a lot in the process about wealth creation.
Here are 10 lessons I learned playing Cash flow:
1. Start with a vision
Defining what you want to achieve with your life is the first step to financial freedom. When you start the game this is the first thing you do. How many people were ever taught the value of having a vision growing up? Not many I suppose seeing how most people live unfulfilled lives.
Your vision shouldn’t be limited by what your current situation may be suggesting to you. This is more important if you know your identity in Christ Jesus. You’re defeated straight away if you don’t have a vision of where you’re going in life.
While having a vision alone doesn’t guarantee its fulfilment, having no vision at all guarantees failure in life. Many people grow up hearing that they can’t afford this or that and they never bother to dream. Don’t let this be you because you’re more powerful than you think.
God gave you the capacity to be creative and achieve His heavenly purposes here on earth. Get connected to God and He will reveal His plans for your life. So at the start of the game there’s a set of dreams you can choose from. Define your vision as God directs you and don’t allow anything to limit your imagination.
2. It doesn’t matter how much you earn
Because many people were never taught how money works they think that making more money will solve their problems. As you choose your dream at the start of the game you’re assigned a profession which also indicates your salary.
Some jobs or professions pay low salaries and others higher salaries. You’re also shown your current monthly expenses at the start. Having played this game several times I’ve realized that as long as you have no financial education you remain poor. In saying poor I mean being stuck in the rat race.
To get out of the rat race requires you to make a monthly passive income that surpasses your monthly expenses. The problem with most people is the more money they make, the more they spend with no plan for wealth creation. The sad part is that they were never taught how to do that and that’s what the Cashflow game does.
So whether you earn much or not you need to have a plan for increasing your financial portfolio. Start with what you have and use it wisely. You look for ways of earning more as well as lowering your monthly expenses. This is the basic strategy for increasing your wealth.
3. Save to invest
Saving money is a good habit to develop which most people don’t do. The few that do are better off than those that don’t. When you save money it should have a purpose that it should serve so it shouldn’t be idle.
At various points of the game you’ll receive money which increases your cash reserves. The prudent thing to do is to invest in the deals the game offers you to grow your wealth. Holding on to a lot of cash can make you feel wealthy but it’s not always the case. While having some cash reserves is important for emergencies you should also invest the excess.
I noticed the more I played the game that if your money is not planned for, something will use it. The Cashflow game is not all rosy; it also has elements that increase your expenses or deplete your cash reserves. It’s a true reflection of how life is.
Avoid holding on to excess cash and have a plan for it to increase your wealth. This for me has been one of the major learning points. Money alone is not enough, you need to generate cash flow through income generating assets to create wealth.
4. There are multiple options for wealth creation
Another cool thing is that there are many ways to create wealth which cater to different people. You can do it through real estate by buying properties to rent out that generate a positive monthly cash flow. It’s worth mentioning that a house is not an asset if it’s not generating money for you.
Another way of creating wealth is through buying shares on the stock market. This is more of a long term investment though you can earn dividends when they are performing well. Stock market prices have a tendency to fluctuate but if you’re prudent you’ll know when to cash in on them.
Starting or buying a company can also generate cash flow if it’s performing well. There are other deals you can cash in on such as items of value you can sell and make money. While these deals don’t generate cash flow you can use the money you make to acquire other income generating assets.
These options appeal to different types of people but a combination of some or all of them works better. What’s important to remember is to develop your skills for the different options to increase your chances for success.
5. Understanding financial statements is critical
Before each playing turn you are shown your current financial statement which gives you a picture of your financial state. It’s like a scoreboard that gives a reflection of the game at each point which informs a coach’s decision making.
Doing this teaches you to think through your financial choices before making any decision. This exercise can save you unnecessary heart ache later on by helping you make smart decisions consistently. The financial statement shows your income and expenditure as well as assets and liabilities at any given point.
Your income is a combination of your salary and money you’re making from your assets on a monthly basis. The expenses column lists your monthly expenses e.g. loan payments, child care, credit card payments. By default the game starts you off with an income higher than your expenses.
The assets and liabilities are listed side by side as you would see in a balance sheet. Assets are what put money in your pocket such as net rental income from properties or positive cash flow from a business. Liabilities are items that take money out of your pocket every month. These include things like car loans, credit cards and mortgages.
6. Analyzing deals is the key to success
Each time you are presented with a deal you have to analyze whether it’s worth it or not. The way you analyze them varies depending on whether it’s real estate, shares, land, a company, etc. For real estate details they’ll show you how much cash flow you’ll generate if you purchase it.
There are some deals that make a negative cash flow. I found that weird and tended to overlook such deals until I learned otherwise when playing with my wife. She bought one such property with a negative cash flow but cashed in on it when offered a good deal.
The money she received was enough to purchase another property that generated higher positive cash flow. So what I learned is that analyzing a deal is not just about the numbers. It’s not as simple as black and white but also look at the potential a deal might have. The more you play the more you’ll understand how to make good deals.
On the other hand a deal might look good on the surface but may turn out to be sour. Again, the numbers alone may not tell the whole story though they are important. In summary you want deals that will add to your wealth.
7. There is good debt and bad debt
Knowing the difference between good and bad debt can be the difference between becoming rich or poor. Poor people take debt to buy liabilities and rich people take debt to acquire income generating assets.
In the game you have that opportunity to borrow money from the bank and use it for what you want. You’re also able to pay off debts with the excess cash reserves you have at any point. While the game is fun to play it reveals your beliefs about money and shows whether they’re positive or negative.
If there’s corrective action to take you can learn from the game before investing your money in real life. If you’re going to get into debt it should be to acquire an asset that will make you money. That asset should cover the associated monthly payment for your debt and eventually pay it off.
Examples of bad debt include taking a loan to buy a TV or go on holiday. Doing that increases your expenses column putting more strain on your income. Most people that do this have no financial education and don’t understand the implications of their decisions. Choose to be smart and use good debt instead of bad debt.
8. Consistency pays in the long term
As you play the game you’ll have times when things go in your favor and vice versa. It’s a true reflection of life and it teaches you to embrace this inevitability. The key thing is to remain consistent in making good financial decisions for wealth creation. Perseverance always outlasts persecution.
Don’t be one of those people that wait to get one good deal to solve all their financial problems. This rarely happens and banking on such a strategy is dangerous to say the least. While they can happen they are not a strategy. In fact they tend to happen when you’re doing the right things.
You build wealth step by step and not through one giant leap. When you’re financially illiterate you can lose all your money even when you make a lot of it. That’s why increasing your wealth is a process because you need to learn things along the way.
That learning process also involves making losses and it’s a good thing. People with an employee mindset see mistakes as a terrible thing while rich people embrace mistakes and learn from them. That’s why rich people take more risks than poor people and achieve more as a result.
9. Passive income leads to financial freedom
The main goal of the Cash flow game is to teach you the value of making passive income. Passive income is money you make without your active involvement. When your passive income surpasses your monthly expenses you experience true financial freedom.
You achieve this in two ways – by increasing your cash flow through income generating assets and reducing your monthly expenses. If you’re like most people you were only taught one way of making money i.e. getting a good job. The truth is that real wealth creation doesn’t come from formal employment but acquiring income generating assets.
As mentioned earlier it doesn’t matter what kind of job you have or how much money you make. If you don’t have income generating assets you’re not going to create wealth in the long term. The sad part is that our education system doesn’t teach us these concepts and it’s by design.
If you’re poor you have no voice and will be kept under a leash by the system. This revelation might unsettle you but it’s a discussion for another day and it’s worth researching further. If you want to be wealthy you need to adopt a different mindset from that of an employee.
10. Life gets exciting when your money makes more money
Getting out of the rat race isn’t the end but just the beginning. When you get to this stage money ceases to be an issue. With the experience gained from generating passive income and having excess cash you become a good investor.
Once you’re out of the rat race you get into the fast lane where your money makes more money for you. Because you’ll be having excess cash at this stage making your vision a reality becomes an exciting prospect. This is where almost anything is possible to achieve in life because you have the resources to enable you.
Think about what you want to achieve in life and imagine having all the money you need to make it a reality. If other people can do it you can do it too. Everyone has the potential to live an abundant life and make a huge contribution to the world, including you. It comes down to getting financial education and applying yourself consistently to doing the right things.
No matter where you are today have faith in what the Word of God says. You can become all that He created you to be and acquire all you need to make it happen.