Passive income is money that comes into your bank account with you not having to ‘work’ for it. It is the dream way out for of a lot of people tied to a job, who have to make a living, giving up their time for money.
Sales of your book, CD or film is passive income. You put in a lot of work to create something at first, then you sell it over and over again without any further input. A basic but powerful concept.
This simple idea is used in Robert Kiyosaki’s game ‘Cashflow’. To increase your passive income until it is more than what you earn by working for someone else. Then you can leave your job and still pay the bills!
Most of us have had a go at ‘Monopoly’ and you either love it or hate it.
Based on buying, selling and renting properties, it is a bit basic compared to ‘Cashflow’, which has three main financial stands. These are also buying, selling and renting property, but include buying and selling shares and buying and selling businesses.
Like all games, it seems daunting at first, but if you treat it like Monopoly on steroids, you will get the idea.
You move around the ‘Rat Race’ circle collecting your regular salary plus any cashflow received from buying properties or businesses. Each property or business you buy generates cashflow which is added to your salary.
Sometimes the cashflow on a property can be negative, meaning it actually costs you money to keep it, but you may get a chance to sell it or any property at a profit on the open market. This gives you money to invest in bigger properties or businesses to increase your passive income.
Just to add a bit of spice, there are ‘Doodads‘. These are what we all fall for. They are playthings that lose value over time and just deplete your money resources such as TV’s, boats, cars etc. You will not be able to avoid these during the game.
Shares are bought on the turn of a card by you and the share price is different on similar cards that other players draw. You hold your shares until you or another player draws a card where your share has gone up in price. You then sell – simple!
If your passive income exceeds your salary less expenses, you get out onto the ‘Fast Track’. Here, you have little money worries and can buy up lots of businesses to further increase your cashflow to win the game. There is very little to stop you getting richer in the Fast Track and the game becomes a lot simpler, especially if no one else is there to join you.
There is an advanced version of the Cashflow game called ‘Cashflow 202’ which involves financial options, shorting shares and much more vicious real life dramas where you can lose all your property in one hit. Only for the keen investors this one.