Recently I joined a group of young people to play the “Cashflow” game. The game designed by Robert Kiyosaki, mimics our financial lifestyle, while trying to teach how to get out of the rat race, the hand to mouth existence, many of us locked into often because we do not know better.
The main aim of the game is to graduate from the rat race, by
building a passive income that exceeds ones expenses. Passive income is that income
earned without selling your labour it can come in the way of rent, dividends,
royalties and interest.
At the beginning of the game all the players have a salary, which
the leverage to buy shares, rental properties and other assets, with the deals
growing bigger and bigger as the players income increases.
But like in real life you are tempted by consumption, get babies,
get sacked from your job, get conned by friends and family and any other number
of unwanted expenditures that slow your progress to building passive income.
There are several lessons that I learnt from the game.
1.
Money is an idea
The paper or set of numbers on our account that represent money
are first appreciated in the mind. As an
example even if it was just a game played with fake money, players suffered
real anxiety when faced with making decisions, experienced unbridled elation
when they made deals and sunk into depression when the game was not going their
way.
The game showed up our attitude towards increased or decreased
income, our reluctance to release this accumulated money for investment and our
competitiveness in trying to accumulate more cash than our neighbor.
The game showed that in real life our financial fortune or
otherwise is a function of our psychology around money.
2.
Building passive income is a long and arduous
journey
On an intellectual level everybody understood what needed to be
done to get out of the rat race, but execution was a challenge. Say for example
a 3 bedroom, 2 bathroom house came up for sale. It cost $100,000 but required a
down payment of only $5,000 to earn cashflow of $100 monthly. The player with the
opportunity has only $2500 to their name.
Often our first instinct is to pass on the deal.
The option to borrow and top up the amount required to get the
house is at the beginning of the game avoided like the plague. “Me, I don’t like
debt”. So they forgo the deal for the illusory comfort of keeping a fat bank
account.
3.
Everything is negotiable
In our lives we get paid a fixed salary. When we go to the shops
we pay according to the price tag. If there is a deal to be had we think the
asking price is final. The game shows that negotiation is always an option, and
while it is good to negotiate from a position of strength that is not always
possible.
In the game deals don’t always come to you but might go to other
players can you negotiate for the deal even if the other player wants it just
as bad? Or to turn the tables you are not in position to execute a deal but there
are players around the table who can, can you leverage your “weak” position to
achieve your goals?
You learn in the game that negotiation is a manipulation of time,
knowledge and power and that you learn what you negotiate for not necessarily
what is due to you.
4.
It is personal
Like any game the temptation is to compare yourself with other
players and their races. This can often lead down a black hole. The game
teaches you to focus on your circumstances. You may learn from the others as
the game goes along but you quickly learn that envy is useless.
Whether you come out of the rat race first of last does not matter
what matters is to get out of the rat race. Same as in real life we get
distracted from our own journey by our neighbours worse or better fortunes,
whereas our financial health often has little or nothing to do with how our neghbour
is faring in their own journey. Focus.
5.
Cash is trash
And this really is the crux of the matter. Money possesses some
unhealthy fascination for us. When we don’t have it we can think of nothing
else. And when we do have it we become elated and quickly look to deplete on
one hand or hoard it and derive pleasure from looking at a bank account with
many zeros.
The game helps to reconfigure the players thinking away from consumption
to making iot work for you. On an intellectual level many of us understand this
the trick is to execute.
It’s a fantastic game that I recommend anyone interested in
improving their financial situation should play. A great learning opportunity
that may very turn your thinking about money upside down.
