How to Play the Cashflow Game (Official Rules - Kim Kiyosaki)

Cashflow Game Setup and Gameplay

Key Concepts:

• Rat Race: The cycle of working for money, paying expenses, and accumulating debt.
• Fast Track: Building assets that generate passive income, leading to financial freedom.
• Passive Income: Income generated from assets without active work.
• Financial Statement: A tool to track income, expenses, assets, and liabilities.
• Cashflow Day: The equivalent of payday, representing monthly income after expenses.
• Dream: A financial goal that, when achieved, wins the game.
• Financial IQ: Understanding financial principles and applying them to real-life situations.

I. Introduction & The Rat Race vs. Fast Track

The core objective of the Cashflow game is to escape the “rat race” – a cycle of working to cover expenses – and transition to the “fast track,” where wealth is built through assets and passive income. The game simulates real-life financial scenarios and aims to improve financial literacy. The speaker emphasizes that financial education is the most important investment one can make. The game board visually represents this journey, with the rat race being a circular path and the fast track offering opportunities for wealth creation.

II. Game Setup – Step-by-Step

The game setup involves ten key steps:

1. Select a Banker: One player is designated as the banker, responsible for managing all cash transactions. The banker can also participate as a player.
2. Place Cards: Four types of cards are placed on the board:
   • Small Deals: Investments costing up to $5,000.
   • Big Deals: Investments starting at $6,000. The speaker advises starting with small deals before moving to larger ones.
   • Duds: Non-essential expenses like entertainment or hobbies.
   • Market: Where buyers and sellers connect to make transactions.
3. Distribute Financial Statements: Each player receives a financial statement mirroring those used in real-life financial planning, tracking income, expenses, assets, and liabilities.
4. Deal Profession Cards: Each player receives a profession card, dealt face down. A lower salary isn’t necessarily a disadvantage.
5. Transfer Profession Data: Information from the profession card (income, expenses, assets, liabilities) is transferred to the corresponding sections of the player’s financial statement.
6. Meet Your Auditor: The player to the right acts as the auditor, verifying calculations, including passive income and monthly cash flow. The auditor is consulted during deals and when questions arise.
7. Distribute Initial Cash: The banker distributes cash to each player, equal to their monthly cash flow plus their initial savings. The savings amount is then removed from the financial statement as it’s a one-time distribution.
8. Choose Playing Pieces: Players select playing pieces of the same color.
9. Choose Your Dream: Players select a “dream” – a financial goal – which serves as motivation and a winning condition. Landing on your dream wins the game.
10. Start the Game: Players place their pieces on “Start” and move clockwise, following the path of the rats in the rat race. The player with the highest dice roll goes first.

III. Navigating the Rat Race

The rat race consists of seven main spaces:

• Big Deal/Small Deal: Opportunities to purchase investments.
• Market: Draw a market card to find potential deals.
• Duds: Incur expenses for non-essential items.
• Payday: Collect monthly cash flow (salary + passive income - expenses).
• Baby: Adds a per-child expense to your financial statement (maximum of three children).
• Charity: Donate 10% of income and choose to use one or two dice for the next three turns. Using two dice increases the frequency of landing on Payday.
• Downsized: Pay total expenses and lose two turns.

IV. Transitioning to the Fast Track

Players move to the fast track when their passive income exceeds their total expenses. The auditor must verify this transition. On the fast track:

• New Financial Statement: Passive income becomes the basis for a new financial statement.
• Return Cash to Banker: All cash from the rat race is returned to the banker.

V. Winning the Game & Fast Track Gameplay

The game can be won in two ways:

• Achieve Your Dream: Land on and purchase your chosen dream.
• Accumulate $50,000 Monthly Cash Flow: Build a portfolio of businesses generating $50,000 in additional monthly cash flow.

The fast track features:

• Cash Flow Day: Collect cash flow day income, which increases with each business purchased.
• Obstacles: Tax audit, divorce, and lawsuit spaces result in financial losses.
• Charity (Fast Track): Donate $100,000 and choose to use one, two, or three dice for the remainder of the game.

VI. Key Arguments & Perspectives

The speaker advocates for prioritizing financial education as the foundation for wealth building. The game is presented as a practical tool for learning and applying financial principles. The emphasis on passive income highlights the importance of building assets that generate income independently of active work. The game’s structure reinforces the idea that escaping the rat race requires a shift in mindset and a focus on financial independence.

VII. Notable Quote

“The most important investment you can make is in your own financial education.” – The speaker.

VIII. Data & Statistics

While no specific statistics are presented, the game implicitly demonstrates the power of compounding and the impact of financial decisions on long-term wealth. The financial statement format used in the game reflects real-world accounting principles.

IX. Logical Connections

The game’s structure logically progresses from the challenges of the rat race to the opportunities of the fast track. Each step in the setup builds upon the previous one, creating a comprehensive simulation of financial life. The obstacles on the fast track represent the real-world risks associated with wealth building.

X. Synthesis/Conclusion

The Cashflow game is a powerful tool for learning and applying financial principles. By simulating real-life scenarios, it encourages players to think strategically about income, expenses, assets, and liabilities. The game’s ultimate goal – escaping the rat race and achieving financial freedom – underscores the importance of financial education and proactive wealth building. The speaker encourages frequent play with friends and family to maximize the learning experience and improve financial IQ.