Rat Race is a term first taught to me by Robert Kiyosaki. It stands for us running like rats towards our financial freedom. When our passive income exceeds our expenses then we become financially free and have won the rat race.
Robert created a game to simulate this race and it’s a great way to learn about the finances.
Yes, I know how it sounds, I was hesitant at first as well but my curiosity got the best of me. This game proved to be rather different. The idea of playing to get better with financial understanding or Financial IQ as master Robert Kiyosaki calls it.
Cashflow Classic is his game designed to train people in a fun way to teach the understanding of accounting and financial sectors. Cashflow Classic is a great game unfortunately it is a bit bulky, runs on PC, has limited android version available for £££, also it’s a bit outdated and has a feel of 90’s.
Good news everyone, there’s an alternative solution. It’s called Money Race (2) .
Money Race and Money Race 2 both are very similar, the main difference is that the first version does not require internet connection and the second one does not work without the internet.
What Money Race (2) is about?
This is a game played on my android / tablet and it’s a real life entrepreneurship & investing simulator. It assigns me a profile at random, I earn salary and have a job with zero assets.
At the beginning I am a regular employee with the active
income only. The goal is to reach the financial freedom by exceeding my expenses with my passive income.
Passive income is usually generated by my assets. My assets are – businesses, stocks with dividends, houses which can be rented out and other constant passive income generating activities.
Then I must find a way to balance my liabilities and manage my debt in a way so I would not go bankrupt before I reach my financial independence.
Game is balanced on the spinning wheel which randomly picks one of the 5 options:
- Business opportunity (2x)
- Charity donation
- Gift (Could be an expense as well as a reward) (2x)
- Job (May get a rise or lose a job)
Just like anyone’s life goes, we have expenses, must pay taxes, have business opportunities, get gifts and bad things happen at random, this game simulates it really well.
Every 4 turns I get paid = salary + income from businesses (Passive income)
4 turns represent one month and I get 50 turns every 1.5 hour or so.
50 turns equals 1 year and 2 weeks which again simulates real life quiet well.
Turns can be bought if you don’t like waiting but you don’t have to pay to play this game as it is completely free. Only in-game purchases are there for you to help grow faster.
Reading Balance Sheets
Some of the business opportunities are better than others and my job is to find those by reading company balance sheets. Once I get good at it I can tell which business will bring me fortune and which one will sink me, again very much like a real life.
As paying down-payments for houses often I must take on debt from banks, which reflect on my credit score and influences my cash flow.
A few wrong decisions and I can go bankrupt easily. Only by managing risk and borrowing money carefully it is possible to rise and gain the financial freedom I desire.
Unexpected job loses can have a big impact if I am still struggling with the income from businesses. It teaches the importance of the positive cash flow first. Paying debts before spending mon
Overall this is a great exercise to get confident with the dry accounting. I have learned those through my studies but never really knew their meaning until now. There’s no better way to apply theory but by using it in practical way.
I knew what balance sheet was before, what cash-flow stood for or the difference between a liability and an asset.
But only after playing this game for extended period of time these statements became a second nature to me. Now I can look at the financial side of the business and read it with confidence. I understand how investing works, managing risk and balancing assets versus liabilities, keeping a positive cash flow growing.
If you are struggling with understanding the financial side and the accounting statements, I highly recommend to play this game and learn by having fun.
All good things come to an end.
Today I reached the point when my positive cash-flow is 14 000 000£ ++, which is insane. I have won all the races and exceeded my expenses hundreds of times. Became a billionaire.
I can not learn anything else by playing this game, so it’s time to say goodbye. If I carry on playing I will just waste my time. It was a good fun! If you are just starting, I am rather jealous!