If you are going to use the Rich Dad, Poor Dad cash flow chart, you will need assets. The cash flow chart seems simple, but there are some things you need to keep in mind if you’re going to utilize it. The profession is selling hamburger franchises, but the business is accumulating income-producing real estate. McDonald’s isn’t a hamburger business – it’s in the real estate business. Rich Dad, Poor Dad uses McDonald’s as a surprising example.Your business is how, independent of you, your money makes more money. Your profession is how you draw a salary. People who don’t become rich either spend all their income on expenses, or buy liabilities that increase their expenses but don’t add income.Ĭonsider that “money earning money” is your business.
Rich Dad, Poor Dad‘s cash flow chart looks like this: Meanwhile, they minimize their spending on Expenses and buying Liabilities, to have more money to buy more Assets. We’ll get more into distinguishing assets vs liabilities in the next section, but the main point here is that wealthy people use their Income to buy Assets that return more Income. (Shortform note: these are Robert Kiyosaki’s terms and don’t follow typical GAAP accounting.) Liabilities are something that spend money over time.
Assets are things that make money over time. It shows how much in assets and liabilities you have. The top box is an income statement, measuring how much income you get in a period, and how much expenses you pay out. The Rich Dad, Poor Dad Cash Flow Chart and Balance SheetĬonsider how the cash flow chart and balance sheet relate to each other. You can see this philosophy clearly outlined in the Rich Dad, Poor Dad cash flow chart below. You want your money to make enough money that you don’t have to work anymore. The key to financial independence is having money that makes more money.
The Rich Dad, Poor Dad, cash flow chart addresses an important basic principle of finance: having consistent cash flow helps make you rich. What Rich Dad, Poor Dad‘s cash flow chart, and what can it teach you about managing and making money?
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Like this article? Sign up for a free trial here. Shortform has the world's best summaries of books you should be reading. With 5-6 players the cards are being drawn fast enough that the part time businesses pay off as well.This article is an excerpt from the Shortform summary of "Rich Dad Poor Dad" by Robert T. The game with few players is heavily biased towards real estate. Also, players may make co-investments with the drawing player or even buy the deal from him if they agree. With each card event the drawing player may buy at that price, but all players may sell at that price. After a few games most people end up using the same financial sheets to fill out their own personal information. As they land cards and invest in different deals they dutifully log each change to their financial sheets as well. Players choose from a variety of starting careers (Truck Driver, Mechanic, Lawyer, Airline Pilot, etc.) and fill out their financial sheets appropriately.
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The heart of the game though are the player sheets where players learn how to fill out a financial statement. In the Fast Track your main problem is an excess of cash and finding investments to sink it into before you lose it to lawsuits, divorce or tax audits. Your main problem here is a shortage of cash. Some of the deals are good, others are bad. In the Rat Race you get paid for passing your Paycheck space, and then draw from one of four decks of cards depending on which space you've landed. The board has two tracks: A "Rat Race" small circle where you only roll one die to advance, and a "Fast Track" where you roll two dice to advance. Cashflow 101 is the first of several games created by Kiyosaki to reinforce the information in his books. Cashflow 101 is a serious game designed by investor, businessman, and self-help author Robert Kiyosaki to serve as a tool for learning basic financial strategies and accounting principles.
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