Cashflow 101: Advanced Monopoly

In my post yesterday, I shared the power of Monopoly and how the simple concepts pulled from playing that game are, in fact, the same concepts in business or personal finance. If you want to continue to increase your financial literacy and are looking for another game to help train you, Cashflow 101 may be for you. I will go into detail about the game, the strategies, and how they even more directly impact and relate to your life and company. Best of all, the more you play this game, the more you learn and the better you become at seeing opportunities, understanding financial statements, and increasing your monthly cashflow by continuing to acquire and manage assets.

Vocabulary To Understand

I first want to take a minute and go over some vocabulary. These are important terms to understand to better understand how to play the game, and ultimately, play this same game in your real life. Here is a short list of terms and their definitions.

Asset: Something that puts money in your pocket. This could be a rental property, a franchise, a book, a music CD.

Liability: Something that takes money out of your pocket. This would be your car, your mortgage, your vacation property.

DooDads: Materialistic things that you don’t neccessarily need, but are fun to have. It is fine to have these DooDads, but it is important to have your assets pay for them.

Cashflow: This is the money left over after paying all expenses for the month. So, for example, if you bring home $6,000 a month, after all expenses are paid, you may end up with only $1,000 positive cashflow.

Financial Statement: In the game Cashflow 101, the idea is to create a strong financial statement. A financial statement is a summary of your assets and liabilities and your networth. (Assets minus liabilities = networth)

The Basics of Cashflow 101

The Rat Race

The game begins by each player choosing a profession, be it a graphic designer, lawyer, pilot, chef, etc. Based on each profession, you are given a base salary and a list of expenses which may include a car, a mortgage, credit card debt, etc. Everyone first starts off on the Rat Race. You basically go around in a circle, paying bills, unexpected expenses, and slowly are introduced to opportunities. This could be a rental property or a part time business. As you start to acquire these assets, you begin to see that you can leverage your money from your day job and put it to work for you in other types of assets such as property or a side business.

Breaking Your Old Habits

The first couple of times playing, you may try to pay off all of your credit card debt and mortgage to try and get out of the Rat Race. This is caused by your brain reacting out of habit. The more you play Cashflow 101, the more you will be able to see other patterns and form new habits about money that you may never have been aware of.

The opposite is actually a faster way to achieve wealth. I have found when playing, the quickest way to get out of the Rat Race is to acquire as many income-producing assets as I can afford. The reason being is once your passive income is more than your monthly expenses, you can move to what is called the Fast Track.

The Fast Track

As you continue to play and experiment with different strategies, you will begin to see that the common advice told to the public about money doesn’t seem to work as well as we would all like it to. Once your passive income from positive cashflow assets is greater than your expenses, you have reached the Fast Track.

What happens here? The patterns that you have learned- acquiring assets that produce passive income becomes the focus. The only difference is the amount of money you earn and the size of the opportunity. Whereas in the Rat Race, you may have been given an opportunity for a 2 bedroom, 1 bath house with a positive cashflow of $300 a month, on the Fast Track, you may have an opportunity to acquire a restaurant franchise that has a positive cashflow of $2,500 a month or more.

Money As An Idea

The concepts stay the same, just the amount of money increases. Once you understand the concepts of Cashflow 101, you will begin to see things in a new light. For me, it was like night and day. The more I play, research and understand, the better I get at managing and acquiring assets. The same concepts apply whether the deal is worth $100 or $1,000,000, it doesn’t matter. Money is just an idea.

Applying The Game To A Business Or Your Personal Finances

This is one of the best learning exercises you can do to better understand business concepts, creating money, managing money, and how to think differently from the masses. If you own a company, this game can show you how to acquire assets or create assets to continue to increase the value of the company. As an individual, you can instantly make the connection being a professional and how to invest your money to have it start working for you.

I encourage everyone to play this game and to learn the concepts. Just as Monopoly has powerful, simple concepts that apply to everyday life and business, Cashflow 101 takes those concepts and goes into more detail, giving you a much better idea of how to actually make it happen in your life.

Update:

If you would like to purchase Cashflow 101, you can visit RichDad.com. I do not earn any commission off of this, just want to let people know where they can buy this game that can transform their financial outlook.