One of the new things I tried lately is playing CashFlow. It’s the board game created by Robert Kiyosaki, the author of “Rich Dad, Poor Dad”. Before diving too deep into this, let me tell you that I didn’t read the book, didn’t attend any Kiyosaki workshops or whatever, so I’m in no position to endorse, nor reject, the author himself. I’m playing CashFlow only like some sort of a gym for implementing and training specific financial habits.
What Is CashFlow, The Game?
If you played Monopoly, then you know how CashFlow looks like. It’s a board game played in a group of up to 6 persons, which are taking turns by rolling dice, and then advance their pawn on a board. Depending on the place you get to fall in, you can execute a series of actions.
You start a game with a certain profession, which is fixed, and which enforces a certain range for both monthly revenue and monthly expenses. It’s interesting to note that professions which are guaranteeing a higher revenue, like being an airline pilot, for instance, came also with a higher expense volume.
The actions you can perform based on the place you fall after rolling dice, are mostly buying or selling assets. There are also “hazardous” things you have to obey to, like having to pay for some “caprice”, or being fired.
The goal of the game is to get out of “the rat race”, or reach the point where your passive income is bigger than your monthly expenses. There are a few other flavors of the game in which you are “chasing a dream”, but I mostly played the “standard” version.
So, why I’m enjoying playing this and what are the financial habits enforced by it? Without further ado, let’s start.
1. If It’s Not Written, It Doesn’t Exist (Or It’s A Hidden Liability)
An big part of the game consists in writing down on a couple of forms all your activity, every time you roll the dice. These forms contain all your income, the expenses, recurring payments and revenue sources and some sort of a budget sheet, and it all has to be updated every time there’s a change. It’s quite complex and detailed.
I think this is one of the most important financial habits: keeping track of your financial activity. I started to do this consciously about 20 years ago, when I started my first company. I was somehow forced to do, obviously, otherwise I wouldn’t have the slightest idea if I’m doing things right.
But I continued to do this for my personal finances long after I sold that first company and it’s still one of the habits that I enjoy now. I keep a sheet for each month expenses which I then carry on for the following month. If I forget to put something into that sheet, sooner or later it hits me up – because most of the time it’s an expense that I forget about, not an income. So, if it’s not written down, it’s a hidden liability, waiting to explode.
2. Cash Is Not King – But It Can Make You King
It’s very easy to be lured into making a lot of cash, because this is how you measure your income and expenses. The brain is tricked into thinking “the more of that thing, the better”.
But as you advance in the game you realize that cash, in itself, is a very volatile resource. It is extremely important, but not in itself. It’s important because it gives you access to opportunities. At some point, some nice card will appear, with a very nice real estate property on sale, or some business partnership request, and, if you don’t have the required cash to enter, you will simply miss out.
Knowing that cash is just a resource, not a goal, is paramount if you want to experience financial “peace of mind”, and also one of the most delicate financial habits to implement. It’s delicate because we measure our “worth” with numbers, but what we really should be into are the processes which are generating those numbers.
3. It’s Not Only What You Gain, But Also What You Agree (Tacitly) To Pay For
When I played for the first time, a fellow gamer pointed to me that I was out of the rat race. When I looked at my numbers, I didn’t see how: I had a decent amount of passive income and some cash, but the passive income was still less than my monthly expenses. So she showed me that, with the extra cash that I was still having, I could pay out my car loan and my credit card. This lowered the amount of expenses below what I was making in passive income. In other words, I was already out of the rat race, but I didn’t see it.
Which brings me to the third of the 5 financial habits enforced by this game: expenses control. When you are focused on the next opportunity, on the next cash generating activity, you often lose sight of what you committed to spend every month. This can change. And it better change, otherwise you will find yourself carrying around huge amounts of commitments you’re not even interested in anymore.
This was, for me, one of the hardest things to do. I’m still working on this, but I’m getting there.
4. Small “Recurring” Is Better Than Big, But Only “One Time”
Another bias we’re almost always falling for is “how much can I get out of this?”. And we’re looking only for the raw numbers, without taking into account the repetition: is this something that I get only once, or something that I can get every month?
Because there is a huge difference between these two types of revenue. Even if the amount you get may seem insignificant in the grand scheme of things, the fact that you’re getting it every month makes a huge difference. It all just adds up.
Alas, we’re so wired towards “hitting it big” and solving all of our problems with a lucky shot, that we forget how easy it would be to just assemble many simple, easy and small revenue sources, that will kick in every month. It’s way more likely to get out of the race rat by adding up these small passive income sources, than winning the lottery.
5. Luck Is Opportunity Meeting Discipline
And that’s probably the most useful of all the financial habits enforced by CashFlow: discipline. If you keep keeping track of your financial activity, control your expenses, focus on recurring revenue, at some point something will show up.
For the rest of the players, this will seem like “luck”. But, in reality, it’s just an alignment of all your financial habits, with a market shift.
And this is exactly how it happens in real life too. Although it’s a bit more difficult to make it happen in real life, I admit it.
But just as you go to the gym to prepare for the next marathon, making sure that once you’re out there, at the beginning of the next 42km, you will be in the best shape that you can be, so games like this can help you prepare for the next big, totally “unexpected”, opportunity.