Financial Life Lessons From Cashflow Game

Over the weekend, I got five of my friends together to play this game that’s like Monopoly.  The game Cashflow was developed by Robert Kiyosaki, author of Rich Dad Poor Dad.  It teaches people financial intelligence. 

How can anyone learn financial IQ from a board game right?  I was skeptical in the beginning also.  But I was a fan of his book so I wanted to see what it was about.  It’s now my fourth time playing and I definitely picked up a thing or two.

At my first time playing, I did not land on an opportunity square for the last hour and half of playing.  I was getting shorted even though the odds of my landing on an opportunity is extremely high.  It’s every other spot!  But in life, that happens.  But you can either decide that’s your fate or you can just keep fighting. 

By the fourth time playing, I realized you could BUY other people’s opportunities.  This meant that whenever someone landed on one, they could either use it themselves or sell it to someone else.  Sometimes, that person can’t afford it because they don’t have the necessary capital.  The analogy in real life is like having a really good financial adviser who can suggest opportunities for you.  All you have to do is shell out the money.

More People Knowing The Market = More opportunities for you

Because the Market card came up so rarely, it helped when there were more players in the game.  And the Market card was the only one that can shake things up both good and bad.  So for us in real life, we need to surround ourselves with people that know the market very well.  Only then we will be able to make the right decision to make a gain or to avert a lost.

Money In Bank Does Nothing

Yes, money in the bank gets you 2% interest after inflation.  Likewise, just getting a paycheck every couple of turns and not taking risks in buying investments will get you nowhere in the game.  It will do nothing for you to get out of the rat race.  Live with the fact that some investments will make money, some will lose.  But the more you do it, the better you will become in finding the ones that MAKE you money.

People With Smaller Expenses Get Out Of Rat Race Faster

At my last game, I was generating over $2500 in passive income.  My expenses however were around four grand.  And after doing the math on whether I could just pay down some of the expenses, I realize it was better to generate more passive income.  It was taking forever.  My friend however, had something like $1500 in passive income but her expenses was around a grand.  Because of that, she got out of the rat race.  I had 4 times as many real estate holdings but it was my expenses that was holding me down.  So note to self: keep expenses low (unless I want to keep going around the board as a rat).

Buying Someone’s Opportunity Saves Time

Because I had to keep generating passive income, I snatched up every opportunity that had positive cashflow.  Not only that, I brought other people’s opportunities when they couldn’t afford it.  Doing this saved me a roll of the die.  So instead of being able to buy just 1 opportunity on one turn, I was able to buy 2-5.  And that saved me time in the game.  And that saves time in real life.

The Cashflow Formula

Finally, I figured out the formula to get out of the rat race.  The player first HAD to buy up small opportunities.  There was just not enough capital to invest in the big ones.  But these small opportunities only generated a small amount of cashflow.  So second, they need to be sold for large lump sums in order to buy the bigger opportunities. 

These bigger opportunities are the ones that was generating significantly more cashflow, 4-5 times as much.  And that’s the way Kiyosaki did it in real life.  He started buying small real estate properties, 2-3 bedroom houses.  He then parlayed that into duplex, 4-plexes, and apartment buildings.  He did it this way because the knowledge needed to make a small deal is exactly the same as a big deal.  He looked at the numbers.  After having enough confidence in making small deals, that transfers over when making large deals.