I hope a portion of my post would help…It is the summary of the “Introduction” of “Rich Dad Poor Dad.” The introduction contains an explanation of how Cashflow works…
Some important points are:
1. Cash Flow is a board game aiming to teach financial education to prepare people for the world of business and investment.
2. This board game has two tracks – the inside track and the outside track.
3. The inside track is called the “Rat Race.” In playing this game and applying it in the real life, understanding the Rat Race is crucial. For a definition of the Rat Race, click this link: http://www.facebook.com/topic.php?uid=332418263177&topic=14385#!/topic.php?uid=293856197022&topic=12790
4. The outside track is called the “Fast Track.” The Fast Track simulates how rich people do business and investment in the real life. For a person to escape from the Rat Race into the Fast Track, the two necessary skills to master are accounting and investing.
5. As I have been playing both Cashflow 101 and 202 both online and with a community, I observe the following flow to escape from the Rat Race:
a. You need to increase your income by increasing your passive income
b. At first, limit your expenses
c. The aim why you are doing the first two is to increase your Cashflow. Cashflow is income minus expenses.
d. You add your monthly Cashflow to your cash on hand.
e. As your cash on hand increases, you can now look for a more lucrative investment that will later add to your passive income.
f. When your passive income exceeds your expenses, then you are free from the Rat Race and you now move into the Fast Track towards the realization of your dream. This is Financial Freedom!
Let me add the different reactions of the characters in the Introduction of Rich Dad Poor Dad as they played Cashflow:
1. The accountant finds Cash Flow a very interesting game making accounting and investing fun and exciting. While playing the game, she was disturbed with the fact about the ignorance of most adults about the basics of simple accounting and investing. She realized that ignorance of this subject was the primary reason why most people struggle financially.
2. A businessman said that he does not need the game for he could hire professionals such as accountants, bankers, and lawyers to do the work for him.
3. A computer programmer was also not impressed for he believes that all he needs is a software to teach him how to invest.
4. The banker was moved while playing the game. He realized that he studied all this stuff in school but he does not know how to apply his knowledge in the actual world of business and investment. With that realization, he saw the need for him to get out of the Rat Race.
Financial Literacy 