Have you ever played any game that teaches you financial literacy? Are you wondering if such game exists at all? Yes, it does. But it isn't Monopoly. All you do in Monopoly is buy, sell and collect money. I've found a much better game than Monopoly, that can teach financial literacy & investment skills. It's so enjoyable to play that you won't even notice that you're learning a lot while you're playing it.

It's Cash Flow 101 game created by Robert Kiyosaki, the best-selling author of "Rich Dad, Poor Dad". Although I read about the game in "Rich Dad, Poor Dad", I didn't have a chance to play it until last week. Once I played a few games and became familiar with it, I've been hooked with it.

As the name suggests, it's all about cash flow, and you've to try to win the game by moving yourself from "Rat Race" to "Fast Track", and then achieving your initial dream. "Rat Race" represents active income (or) salary (or) wages, and "Fast Track" stands for passive income such as investments and businesses. Your financial statement is the most important tool to guide you through the game. You need to prepare and balance it at every stage.

Cash Flow 101: Rat Race
As you can see in the above picture, there are 4 categories in the financial statement: Income, Expenses, Assets & Liabilities. According to Robert, assets are the ones that put money into your pocket, and liabilities are those that take money out of your pocket. I believe this is the most important concept in Cash Flow 101 as well as in the real world. You might think you are buying assets but if the expense of your investment is higher than the income it brings to you, then it will be a liability for you (unless the prices increase and you can sell at a higher price in the future, in other words negative gearing). But Robert doesn't encourage negative gearing, since you might have financial hardship if you can't sell it for a higher price.

The game is quite similar to real life. There are Opportunities (to invest), Doodads (unexpected expenses), Paychecks (income), Charity, Child expenses, Downsize (job loss, etc). If you are in the "Rat Race", your income may be just a bit higher than your expenses. You're financially vulnerable in this stage, so you need to save more money to buy investments that will bring positive cash flow. The more assets you have, the higher your income will be. Thus you can invest more and when your passive income is high enough, you can get out of the "Rat Race".

Cash Flow 101: Fast Track
This is the screen shot of "Fast Track". There are more opportunities in "Fast Track". Although there are still unexpected expenses, the damage they can do to you is not significant. This is the life of investors and successful business people.

After you've been in the "Fast Track", you need to achieve your initial dream to win the game, such as buying a yacht, etc. The first person who achieves his/her dream wins the game.

Cash Flow 101: Winner
There are so many things to learn from Cash Flow 101 and all of them are essential skills for every one, but they are hardly taught at school. If you haven't played this game yet, I would recommend you to do so. There is a more advanced version called "Cash Flow 202" that includes bull market, bear market, etc. I can't wait to play it.

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2 comments

  1. Wai Pyo // November 27, 2005 5:14 pm  

    I've read a few pages of the book and it is cool. Gotta try the game.

  2. Swanie // November 27, 2005 5:30 pm  

    Yeah, I would recommend the book to everyone who hasn't read it. It will change the way you see $$$.