Can playing Cashflow game improve your financial literacy?

Yes, that is what Robert Kiyosaki thinks. He is the author of the best seller Rich Dad Poor Dad. He has authored many other books on financial literacy. His books teach general public how to build a passive cash flow and get out of rat race.

He has developed two board games Cashflow Game 101 and Cashflow 102. First one teaches you the fundamentals of active income, passive income, expenses, savings and investments. It is recommended for those who are 14 years and older. Second game is more advanced and meant for those who have won the first game many times over. It teaches you how to invest in sophisticated stock market instruments.

Cash flow for Kids is the game meant for children.

In my experience it is very important to read Rich Dad Poor Dad a few times before you play the games. Or else it may not make much sense. You should read Robert Kiyosaki’s book Cashflow Quadrant also before trying 101.

I would recommend the games only after you have read these books. I learned a lot from these games, especially Cashflow Game 101.

Even though the games are too simplistic and have some unrealistic elements in it, I must admit that they are great educational tools. They can make significant changes regarding your ideas about the way money is earned, saved and spent.

All the games have two tracks, the rat race track and the fast track. This is a multi-player game. As many as 5 or 6 can play the game. But this is a slow game; hence I would limit the number of players to 3 or 4 maximum. Once you become comfortable in tallying the income statements of the game, you may consider using Excel to speed up the game. Start using excel only after you have got out of the rat race at least half a dozen times.

Each player of the Cashflow Game has to choose a dream in the fast track, choose a profession and start rolling dice. Monthly paycheck, monthly expenses, new baby, downsizing, investment opportunities and doodads – you come across them all as you move along. Each one has a cash flow sheet which they have to keep tallying as your financial position changes on each roll of dice.

The idea is to make your monthly passive cash flow higher than your monthly expenses. To do this you have to save money and invest in cash producing investments like real estate, bonds, stocks and businesses. You can make capital gain by selling your investments at the right time and price.

Don’t expect the game to teach you to be a big shot in real estate field or a stock picker with Midas touch. But it definitely makes you have a re-look at the way you want to spend money.

You would learn that many things you thought would make or feel rich are just liabilities or doodads. They take money away from your pocket month after month. They don’t contribute to your passive income.

You get focused on one goal, make more passive income. You look at every opportunity with just one idea in mind, does this have the potential of giving me passive income now or in future.

As you progress your monthly passive cash flow increases and when it exceeds the monthly expenses, you can move on to the fast track.

Fast track also has investment opportunities; but they are not available to those in the rat race. Once you reach your dream column in the fast track and buy it, you win the game. Of course you will have to have enough cash with you to do it.

Learning to read your financial numbers is a great side effect of the game. Once you are comfortable with the way numbers are put in this statement you may want to try it with your real life figures.

If you are like most of the middle class, you have very small monthly saving, hardly anything in your passive income column, many things as liabilities (those you thought were assets) and just a few entries in the assets column.

As you pick up speed with the game and naturally with numbers, you may use excel sheets that do automatic calculations. But do it only after you have got out of rat race at least half a dozen times.

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