Cashflow the investing game financial statement

There are two ways that you can work towards getting out of the Rat Race and winning the first part of the game: 1 increasing your passive income and 2 reducing your expenses. The game has a handy tracker to show your progress and financial statements that provide more detail. Throughout the game, you will have the opportunity to buy assets that generate positive cash flow on a regular basis.

This provides you with passive income. Some examples of assets you can buy include stocks, property, businesses and gold. For example, buying stocks does not generate any positive cash flow on a regular basis i. Dividends are basically regular payments of cash to shareholders — the companies you invest in can decide whether or not they wish to issue dividends. Meanwhile, buying a property usually results in some positive cash flow presumably from renting it out while you own it although there are some opportunities where there is zero or negative cash flow i.

When you sell the asset, you also give up the cash flow that it provided whilst you owned it. Reducing your expenses You start the game with some liabilities. These are amounts that you owe. These amounts contribute to corresponding monthly expenses. Related: Find out how to use the financial statements. If you have enough cash, each turn you have an opportunity to repay your debts. Sometimes, you can reach it just by paying off debt rather than waiting for an opportunity to increase your passive income.

This should be enough for you to start experimenting with the game. There is still lots that you can learn as you go. If you want to understand the nitty-gritty details of the aspects of the game, you can keep reading on.

What are the key aspects of the game? Learning about financial statements The Financial Statement tool is key to tracking your progress throughout the game. It consists of your payday amount, your income statement and balance sheet. You can land on Payday throughout the Rat Race the yellow tile. This takes into account your income and expenses and pays you the balance.

Your income statement shows you your monthly income sources salary plus any passive income from your investments and monthly expenses. Your balance sheet shows your assets and liabilities. One player will be the banker, giving out and taking money as needed.

While using the play money can be fun, it also slows things down a LOT. Another way is to just write down the amount of cash you have. Whenever the amount changes, erase or cross out the number, and write down the new amount. Whenever something happens that changes the amount of cash you have, you write down what is happening in the first column; the change in the second income or third expense column, depending on whether your cash went up or down; and the new cash amount in the last column.

You write "Pay" in the first column, "" in the second, and "" i. The third column is blank. There are times when having a transaction history like this is very helpful. A fourth way is to use software that automates all the arithmetic for you.

One that we use and like is cfAccountant, which works on Palm devices. It makes a lot of things go faster, in fact. It's shareware; you can download a free trial version at cfAccountant. Place your rat token on the "Start Here" arrow on this track. You will find four main kinds of spaces in the Rat Race. One is the yellow "Pay Check" space. Whenever you land on or pass this space, add the amount of your Monthly Cash Flow to your total cash.

Another space is the green "Opportunity" space. This means you have found an investment opportunity. When you land on this, draw a card from either the "Small Deal" or the "Big Deal" stack - your choice. Most Small Deals cost a few thousand or less; Big Deals usually take tens of thousands.

Next is the blue "Market" space. When you land on it, draw a Market card. These cards include buyers of investments you may own, such as real estate, and other economic events that may affect you. The fourth main kind of space is the pink Doodad space. A doodad is something that you spend money on, and which does not really contribute to your financial upliftment. The expense is not optional; when you land on this space, draw a doodad card, read it, and pay up.

There are other spaces too, which I won't go into here. You'll learn about them as you play. Getting Out As said before, the goal of part one is to get out of the rat race. So how do you do that? When you get your game sheet, you will notice that your income is broken down into two parts: salary from your day job , and what is called passive income. Passive income is income that comes in with little or no additional effort on your part.

If you have royalties from a book, income from a rental property you own, or stock that pays dividends each quarter, you have passive income. Sometimes you'll have to do SOME work - if that rental house develops a leaky roof, you'd better have it fixed if you want to continue collecting rent! The difference is that for a "normal" job, you have to invest your time continually to keep receiving income, and if you work half as much, your income immediately goes down by half or more. With passive income, after you do some initial work up front, you have an income stream that continues with little or no time on your part to maintain it.

So, again: in this game, how do you get out of the rat race? Very simply, make investments that give you passive income. Mostly these will come from Small Deal and Big Deal cards. When your passive income is greater than your total expenses, you are OUT.

Think about what this means. It means you can quit your day job, and maintain the same standard of living you had before. When that happens to you, announce it, and high five the people around you : A Final Note There is more to the game than is covered here. Having read this far, you don't know everything there is to know about the game.

That is fine, though, because you are over a large part of the learning curve. The rest will come more easily to you as you play. Keep in mind that some groups have their own quirks and house rules, so if your group does something different than what is written above, go along with how they do it. Take it lightly, and have fun.

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