I am continuing my discussion on the importance of increasing your financial intelligence regarding acquiring wealth. In my previous post, Changing Your Financial Mindset is Key to Creating Wealth, I mentioned that one way I applied some of the principles mentioned in Robert Kiyosaki’s [easyazon_link identifier=”0446677450″ locale=”US” tag=”healthytobewealthy-20″]Rich Dad, Poor Dad[/easyazon_link] is by playing his board game [easyazon_link keywords=”Cashflow” locale=”US” tag=”healthytobewealthy-20″]Cashflow[/easyazon_link].
One of Mr. Kiyosaki’s catch phrases regarding this game is “The more you play the game, the richer you become”. Based on my personal experience, I have to say that this statement is somewhat true–in the sense that I have learned how to better recognize a good deal when I see it. In addition, now I am not as fearful of making a deal ( buying stock, or making a down payment on a property, etc.) as I was the first time I played the game.
Cashflow’s Unique Features
I think that Mr. Kiyosaki is a genius in the way he created this game.
1. He actually depicted the “Rat Race” as a real circle on the game board. The markings on the board include: 3 Paychecks, 1 Downsized, 1 Baby, 3 Market, 3 Doodads, 1 Charity, and 12 Opportunities. These markings reflect what basically happens to people in life. We tend to run in “circles”–a seemingly never-ending cycle. We live paycheck to paycheck, try to keep expenses down but at the same time, buy things we can’t afford and/or don’t really need. The goal is to create enough passive income that exceeds your monthly expenses by first investing in either big and/or small opportunities and then selling those investments. You have to do this despite having some “life events” along the way, such as making frivolous purchases that increase expenses (doodads), being downsized, or having children ( up to 3 babies/player).
2. The Fast Track is composed of business investments and dreams–things where the rich like to spend or invest their money. The dreams are represented on the board as pink spaces. Before the game starts, you get to choose your “dream” by placing a piece of cheese on it. Businesses are represented as green spaces. Once you purchase a business, you get to place a token on that business, and it’s yours for the duration of the game; no one else can take it away from you. These businesses also have monthly cash flow which is how you build passive income.
3. Passive income is earned on the rat race track by making investments on the big deal, small deal opportunity cards and market cards. Landing on an opportunity space gives a player the option to choose either a big or small deal investment. The largest Small deal costs $5000; the smallest Big deal begins at $6000. A player will decide which opportunity to invest in based on amount of cash on hand and how much he/she is willing to risk. Market cards are those where a player will find buyers for his/her investments.
4. Each player is randomly given a Profession Card. These cards differ in income, expenses, assets, and liabilities. A player transfers information from one of these cards to a blank balance sheet that is used for the duration of the game. A player’s financial intelligence (how well he/she can spot a good investment opportunity) will be influenced by the information contained on these cards.
Does Playing This Game Increase Your Financial Intelligence?
Having played this game many times over several years, I have to say that my financial intelligence has definitely increased. I’ve made the following observations:
- It does not matter what profession you are dealt at the start of the game. It is definitely possible to get out of the rat race and onto the fast track if you have either a low salaried profession or a high-salaried profession with a lot of expenses. Most often, people tend to think that the more expenses they have, the less cash is available to buy assets.
- An opportunity that is perfect to invest in if I played the game today may not be the perfect opportunity to invest in tomorrow. You have to know when to go full steam ahead and invest in an opportunity and when not to.
- How to control the fear of failure. Even though fake money is used to make purchases or buy assets, I still found myself fearful of spending that money. I had this big fear of becoming bankrupt and losing the game. The best way I know of getting over this fear is to just continue playing the game. You cannot just stick your big toe in a pool of water and expect to win; you have to jump in and at least get both feet wet. Expect to make mistakes but learn from them. I’d rather lose fake money with a bad investment in playing Cashflow than lose money in real life. Each time I’ve played Cashflow, I learned something new, and I have begun to spot opportunities that I would have never considered before.
- Remember the real goal of playing Cashflow–to increase financial intelligence by buying assets that increase your passive income so that it exceeds your expenses and gets you out of the Rat Race. Once out of the Rat Race, you are free to enter the Fast Track where you can buy businesses and/or purchase your Dream. I’ve played the game with other people, and I marvel at people’s mindsets and how they play the game. For instance, I’ve played with people who are content to just collect their income every time they land on “paycheck”. They seem to have no interest whatsoever in purchasing any assets that would help them get out of the Rat Race.
In conclusion, I hope I have shed some light on why it is important to increase financial intelligence when your goal is to increase wealth. It’s a good thing to want to increase wealth, but it’s even better if you know what to do with it and how to maintain it. There are several ways to achieve this, such as by reading books (i.e [easyazon_link identifier=”0446677450″ locale=”US” tag=”healthytobewealthy-20″]R. Kiyosaki’s Rich Dad, Poor Dad[/easyazon_link]) or by going to seminars. However, I highly recommend playing Cashflow. You have a choice in playing either the [easyazon_link identifier=”B002LG7GN0″ locale=”US” tag=”healthytobewealthy-20″]E-game (electronic) version[/easyazon_link], or the [easyazon_link identifier=”B002LGDASK” locale=”US” tag=”healthytobewealthy-20″]board game version[/easyazon_link]. I think the board game is better because you actually get a better understanding in using the balance sheet as opposed to the calculations being done for you by the computer in the electronic version.
If you have either played or currently play [easyazon_link keywords=”Cashflow” locale=”US” tag=”healthytobewealthy-20″]Cashflow[/easyazon_link] or have any questions or comments, I would welcome your feedback. Thanks for taking the time to read my post, and I wish you much success.