Escape The Rat Race Using Cashflow

I’ve written before about this great book, Rich Dad Poor Dad, but forgot to mention one of the tools I discovered from this book that has really helped me understand how we should be using money to gain financial independence.

This is of course the board game, Cashflow, which you can purchase physically from many online retailers, or as an app on Google Play or the App Store, or you can play free online on the Rich Dad website.

Here are some of the takeaways I got from playing this game.

(Please note that this is my own opinion of what I learned from the game and does by no means constitute financial advice!)

If It’s Not Making You Money, It’s A Liability

Everyone knows that owning your own home is an asset. You’re not throwing money away on rent as with every payment you own a little bit more of your home. Not only that but if/when you come to sell, the property will usually have gone up in value and you get a tidy bit of profit.

Except, your property only makes you money if/when you sell, until then it’s costing you money. So does that make it a liability? Yes!

This is a tough lesson to absorb as it opposite to what we are usually raised to believe, but it does have a lot of truth to it. Simply put, when you put a big wad of cash down on a property, you can no longer invest that cash elsewhere, you’ve lost the opportunity. You may be able to save that sum up again, especially if your mortgage payments are much lower than the rent you were paying before, but once you own your own home it’s easy to become complacent about saving and there are also all the expenses that will come along with owning your own property, such as maintenance and improvements.

Your Costs Of Living Tend To Increase With Your Income

One of the things that you will almost immediately notice with the physical board game, is how closely related income and expenses tend to be with the player roles.

bill_and_income

The airline pilot for example has a huge income, but to go with that huge income they also have huge expenses, including ‘other expenses’ that you can’t reduce throughout the game. This means that even if you clear their mortgage, car loan, credit cards and retail debt, you still need to generate quite a large second income to free them from the rat race.

On the other side you have the janitor with a very low income and very low expenses to go with that. Although this means you start off the game with very little extra money, you could potentially escape the rat race with just a few savvy investments.

Some Debt Is Better Than Others

When I was a beginner in playing this game, I saw the debt as one of the major obstacles to overcome and would try to whittle it down as early as possible. This meant I couldn’t spend as much on investments, but at least my expenses were going down right?

This seemed like a good approach until I did the maths. Taking out a loan in the game comes with a 10% rate with the total amount never reducing unless you pay it down directly on your turn. Compare this against the rates you have on mortgage, education and car loan and they are all far more favourable.

This taught me that if you are holding low interest debts and have an opportunity to pay them down or make an investment with a higher rate of return than the amount you could reduce your expenses by with the same money, the investment is often the better option!

Property Is A Good Investment, Businesses Are Better

Whenever I play this game and get an opportunity for a deal, I always hope to flip over the business cards because they almost always have a big payoff. The businesses that you can start yourself have low-ish start up costs but opportunities for high returns or selling them off at a good rate, and the automated business options like the car wash pretty much take care of themselves since they’re already up and running.

It will usually take a while to get enough capital for the automated businesses or for the start ups to pay off, but sometimes they are instrumental in getting you out of the rat race.

When my cashflow is lower, I always go after property as my most basic investment, starting in small houses and condos and moving up to apartment buildings.

Take Advantage Of Capital Gains

Sometimes you land on a space where a market opportunity comes up. This can be negative sometimes, such as interest rates going up and losing property (not too likely thankfully), but more often presents an opportunity to cash in some of your investments for big gains.

This was a tricky one for me to grasp initially, because when you have good money coming in from a source, you don’t really want to let it go.

Eventually I got the point that when you cash in your investments, you give yourself a much larger pool of money than when you started. This is how you get yourself into the bigger investments that you couldn’t imagine purchasing before, such as the 60 unit apartment building. You could also use that big bundle of cash to pay down some debts, but if they’re low rate like the mortgage, it is often better to invest that money.

Sometimes You Can Win Big With A Loan

On every turn you take you have an opportunity to take a loan at a 10% rate that continues to exist in full unless you actively pay it down.

When a deal comes up, you have an opportunity to take out a loan to finance it and then pay that back later. If you are just a little short of the investment amount needed and the cashflow it would generate is high, it can be a good idea to take out a loan to bridge that gap.

Sometimes you can even go high risk and use the loan to finance a large investment that you couldn’t finance otherwise, as the return is so high that it covers most of the loan. This is a really risky move that can also really pay off, but I like to try it sometimes because when it does bankrupt you, you’re still learning.

I haven’t yet figured out the golden ratio of risk-to-return here, but I’ll keep experimenting!


I wish I had read the Rich Dad Poor Dad book sooner in my life and played this great game, because it taught me so much with so little. You get to try different strategies and ideas and lose all your money with random events such as losing your job, buying big ticket items like boats or simply making poor investment choices just to get on the ladder.

Over time I’m learning more and more and becoming more comfortable with using money to grow and develop financially and in my career, rather than spending it on just fun or possessions. I still play with my money sometimes, but I’ve invested a lot in educating myself and even have one property investment, so I’m on the right track.

Anyway, thanks for reading, hope it helps and please do go and play the online Cashflow Classic game if you get nothing else from this post!

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