Cashflow 101 Education Program Lessons

Last night I was at Edmund Loh’s house with my wife - Yuenn, Matt Ng, and a few other friends playing the game Cashflow 101 by Robert Kiyosaki. Although I had read the book Rich Dad, Poor Dad several times and am familiar with most of the concepts there, playing this game was really an eye opener and it taught me a lot about my attitude towards money.

I’ll just share with you a couple of lessons I’d learnt:

1. Set aside at least 3 hours for this game. Don’t play it late at night. 4 hours if everyone is a newbie. (lesson: it takes time to plan your life… don’t rush)
2. The small ring in the center represents the rat race. In other words, you are still stuck in your 9-5 job trying to accumulate enough passive or residual income so you can break free from financial burden. (Lesson: Having a job is good, but you must have other alternatives part-time)
3. In your career, if you do not have enough cash flow you will miss out on a lot of opportunities because you are still ‘getting by’ with the bare minimum. E.g. you earn $2,000 a month - $1,000 goes to your expenses so you only make $1,000 a month. If you don’t accumulate enough assets that generate you enough passive income (like part-time companies, houses, stocks and other assets) you will never be financially free. (lesson: invest for the future, even if you have to sacrifice your savings for assets that will take a while to generate more passive income)
4. Being financially free is NOT about earning a lot of income every month. However, if your passive income exceeds your expenses every month, you are financially free because you don’t need to work anymore and you can still survive. E.g. if you collect rental from 5 houses at say $250 each house and you only spend $1,000 a month, you are more financially free than a guy who earns $10,000 a month but has $8,000 worth of expenses. (lesson: keep your expenses low throughout your life, unless you see a good opportunity that you can liquidate)
5. BORROWED MONEY is good! Many will be shocked to learn this, but if you take calculated risks, using borrowed money to invest in GOOD opportunities will give you more assets, better if you can break even on your bank interests. (lesson: cash is king. More cash opens up more doors and only the wise is good at manipulating loans to boost their cash flow)
6. Be willing to play big. Often, the size of your cash flow determines your fear. However, don’t be afraid to invest big even if you have to borrow from the bank. (lesson: play to win in life, don’t play to get by)
7. Doodad cards reflect real life. You will never know what kind of problems might happen to you (e.g. buying miscellaneous stuff like fishing rods, getting bracers for your kids and other things that will suddenly drain your cashflow). You have to have some spare cash just in case. (lesson: make sure you diversify your cash and investments otherwise, if you don’t leave spare cash around, you’re screwed!)
8. Diversify the assets you own. It could be condos, stocks, houses, businesses and other rare collectibles. Opportunities might not hit every single one of your assets so you got to be careful. (lesson: don’t put all your eggs in one basket)

To be continued (how Cashflow 101 relates to your Internet marketing business)……

Technorati tags: Cashflow 101, Cashflow quadrant