I was playing Cashflow 101 the other day with my friends when I realized a very important truth: passive income is what truly matters. Passive income equals freedom. For those who are not familiar with Cashflow 101, it’s an educational board game created by best-selling author and financial advisor Robert Kiyosaki. It’s a great game for improving financial literacy.
The game goes like this. First, you pick a profession. You can be a doctor, lawyer, janitor, or truck driver. There are many more to choose from. The higher your active income or salary is the bigger your monthly expenses. I got to be a doctor. My income was $13,200 per month. But I had expenses worth $9,800. So my net cash flow per month was only $3,400. The objective of the game is to get out of the rat race. How? By building your assets so that your passive income eventually exceeds your expenses. When this happens you won’t ever have to work again. You’ll no longer have to depend on your salary to survive because you already have a passive income every month.
It was during playing Cashflow 101 that I realized the true importance of passive income. Yes, I was a doctor who was receiving a large monthly salary. But my mortgage and other monthly expenses were killing me! I could barely save. It doesn’t matter how much you make. What matters is how much you keep. Saving is the first step to financial independence. When you save you will have money to invest when a good opportunity comes along. Then when a good investment opportunity presents itself invest for long-term growth. Invest for passive income. Invest for financial freedom.
During the game, I just kept on saving my money which I later used to buy a nice 3 bedroom 2 bathroom house and lot. This property provided me with a monthly cash flow of $160. Then I bought shares of a company for a low price which is was able to sell at a premium. This gave me the money to acquire more properties. I just kept on acquiring businesses and properties until my passive income eventually exceeded my expenses and I was out of the rat race.
You may think that this is just a silly board game. But it’s not. I’ve encountered many situations playing Cashflow 101 that some people have come across in real life. And I know that what happened to me in the game can also happen for real. If you want to be wealthy don’t aim for a high salary. Instead of working for money work for the skills and experience, it will give you. Then use what you have learned to acquire assets that will give you passive income. These assets and not a high salary are your true ticket to financial freedom.
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