It’s called CASHFLOW, and I played it for the first time for 3 hours straight.
Believe me, I am not a usual advocate of computer or mobile games. I’d much rather recommend that you read at least 10 pages of a good book each day, or listen to informative podcasts, or get down on your yoga mat and plank for 5 minutes. They’re much more likely to create positive results a couple of years down the road. Time is precious, and the last thing we want to do is kill it!
But one of my finance mentors mentioned it casually and I got intrigued. Why would a busy person who’s got a packed daily planner and real life goals be interested in a mobile game? So I searched for it in the Android Play Store. Besides I needed an excuse to goof off for a few hours.
It turns out, CASHFLOW is a FUN way to learn the basics of personal finance and investing and get the ropes on what’s really important to keep on growing as an entrepreneur. Emphasis on the FUN! It’s kind of like a financial management class without the intimidating charts and the terrifying professors.
10 PERSONAL FINANCE TRUTHS I LEARNED FROM PLAYING CASHFLOW
- Have a clear vision of your dream right from the very beginning. This will keep you from getting sidetracked from what you really want to achieve. It’s easy to get pulled helplessly into a frenzy of promising opportunities if you don’t figure this out at the end. And you’ll find yourself changing direction too often, maybe even end up running in circles. Having a clear vision helps you prioritize and organize your spending and investments. If you can, take a few hours over the next weekend to create a dream board.
- Your first financial goal is to eliminate unnecessary debt. Most of our credit card debt are usually inessential and do not create income. Yes, your branded shoes are expenses not investments, even if they last 10 years and make you look like a million bucks. Minimizing debt will increase your monthly cash flow and allow you to invest your money in things that create more income. Otherwise, you will get trapped in an endless cycle of living paycheck to paycheck. Hello rat race!
- It’s okay to make a loan. Given that: 1) you will use the proceeds for a business that will bring in additional cash flow; 2) the monthly income it generates is significantly more than the monthly interest you have to pay for it; 3) your total income after the loan should still be greater than your total expenses including the monthly amortization. In short, the benefit should be greater than cost. This Benefit over Cost principle is important all the time, otherwise you could go bankrupt!
- Your aim is not just to “get by” but to create passive income. In the game, you achieve your dream by first getting out of the rat race. If you want to find the freedom to live life your way, you have to trade in your safe zone as an employee. This is not always the case in real life, but it’s a theme that is repeated way too often in success stories we read about – Mark Zuckerberg, Jack Ma, Steve Jobs, (fill in the blank). You get out of the rat race by increasing your passive income to cover your total monthly expenses. That way, your regular expenses are covered.
- The income you earn is proportionate to the cost and risk you are willing to take. There’s a lot of ways to earn passive income. You can invest or trade stocks, get into real estate, invest in bonds and other financial instruments. Deals that have smaller costs also have smaller risks and smaller returns. Bigger deals have greater financial costs and entail a greater amount of risk, but also create greater returns.
- A dream becomes more expensive the longer you wait to achieve it. The longer you stay in the rate race, the harder it becomes to catch up on the costs of making your dream a reality. Soon enough, inflation rises, you get more workload and less time for starting business, you incur more debt and get trapped in the endless cycle of bills-paycheck-payment-zero balance-bills. Plus your children grow and so do their needs.
- Safe investments are fine. But… almost all the time, they never generate enough income to get you out of the rat race. At least not enough to get you out in time to build resources for your goals. In other words, you have to be willing to involve a certain level of risk if you want to successfully build your dream.
- Make the most of your resources. That’s why you see a lot of scaling-up entrepreneurs indulge too much in luxuries, even if they can afford them. Luxuries will decrease your resources that could have gone to realizing your dream. Also, invest only in “assets” or properties that add to your monthly cash flow –e.g. rare coins, gold bars, a promissory note from a friend are not the best options when you’re trying to grow cash flow as quickly as possible. If you lend to someone, consider that money gone. Do not ever expect to get it back, much less earn a premium from it. Think of it as a chance to help out and not an income earning opportunity, because oftentimes, it’s not. Not in monetary terms anyway.
- Income becomes exponentially greater once you get out of the rat race. But risks are exponentially greater as well. So you have to be ready for greater things, both as blessings and challenges.
- When you reach your dream, all the sacrifices are worth it. In addition, you will find that you have grown so much bigger and better than the person you used to be when you were started out on your journey.
WHAT I LEARNED IN REAL LIFE AFTER PLAYING THE GAME
I spend more time hustling in real life than getting lost in a game. But there’s just one thing I learned. Your fiscal status is reflective of your personal growth and success, but how you spend it is reflective of your heart.
Financial freedom is a crucial part of personal development, despite being demonized by some conservative groups as materialism. What if we look at it the other way? How do you make sure your family does not go hungry? Or that nobody evicts them out of their home in the middle of the night because there wasn’t enough money to pay the rent? How do you give them good education? How could you help your friend get treatment for his kid’s cancer if you don’t have money for the treatment either? Money is a not evil really, but a blessing that we have to learn to manage as good stewards.
Having said that, being successful is not just about becoming rich. It’s about having freedom and creating positive impact. And well-managed personal finances is your best tool to do that.