Why Cash Flow Matters More Than Net Worth

“Rich people use debt to leverage investments and grow cash flows. Poor people use debt to buy things that make rich people richer”
– Grant Cardone
With so many options to grab attention from my digitally native children such as YouTube, social media and online gaming, it’s often difficult to pull them away to engage in a simpler manner. Back in childhood we did have video games, but we were more likely outside in a pickup game of basketball or football. If we were inside, we played a myriad of boardgames like Monopoly, Life or Chess to keep us entertained.

That’s why I love to pull my kids out of their screens and get them engaged in something low-tech like a boardgame. Recently, we played one of our favorite (well more like my favorite) games called CASHFLOW which was created by author of Rich Dad Poor Dad, Robert Kiyosaki.

The objective of the game is to get out of the “rat race” by generating enough passive income from assets such that it is exceeds your expenses. This is done by making different investment decisions while managing the typical life issues such as a downsizing or a birth of child. It’s a tremendous teaching tool to help educate individuals on income statements, balance sheets and most importantly cash flow. Unfortunately much of these basic financial concepts are never taught in our schools.

Below is a concise picture of the objective of the game with the focus on building cash flow instead of just accumulating net worth in an account. We are often taught to continue to save money through our qualified plans and invest for the future; that’s not a bad thing. However, if we view it from the vantage point of the financial institutions, they have created a lifetime of automated cash flow for their use and benefit while we take all the risk.

Why not take a clue from financial instituations and banks who are highly profitable?

To watch a quick video on how to generate additional cash flow click here.

Need help with increasing your passive income and cash flow?