The 10 Rules of Cash Flow 101

Cash flow is the lifeblood of all businesses. Learn the Cash Flow 101 Rules to free yourself from money worries. Use the basic rules of Cash Flow 101 to help you take control of your cash flow so you can create the business you have always dreamed of.

1. Never Run Out of Cash. Running out of cash is the definition of failure in business. Make the commitment to do what it takes so it doesn't happen to you.

2. Cash Is King. It's important to recognize that the basics of cash flow 101 are what keeps your business alive. Manage it with the care and attention it deserves. It's very unforgiving if you don't. Remember, cash is king, because no cash means no business.

3. Know the Cash Balance Now. What is your cash balance right now? It's absolutely critical that you know exactly what your cash balance is.

Even the most experienced person will fail if they are making business decisions using inaccurate or incomplete cash balances. This is fundamental cash flow 101. That's the reason why business failures are not limited to amateurs or people new to the business world.

4. Do Today's Work Today. The key to keeping an accurate cash balance in your accounting system is to do today's work today. When you do this, you will have the numbers you need - when you need them.

5. Do the Work or Get Someone Else. Here is a simple rule to follow to make sure you have an accurate cash balance on your books. You do the work or have someone else do it.

6. Don't Manage From the Bank Balance. The bank balance and the cash balance are two different forms of cash. Rarely will the two ever be the same. Don't make the mistake of confusing them.

It's futile and frustrating to attempt to manage your cash flow using the bank balance. It's a prescription for failure. You reconcile your bank balance. You don't manage from it.

7. Know Your Six Months Cash Balance. What do you expect your cash balance to be six months from now? This one question will transform the way you manage your business and help you pass cash flow 101.

This question really gets to the heart of whether you are managing your business or whether your business is managing you.

8. Cash Flow Problems Don't Just Happen. You would be amazed at the number of small businesses that fail because the owner did not see a cash flow problem in time to do something about it. The key is to always be able to answer the question - what do I expect my cash balance to be six months from now?

9. Have Cash Flow Projections. Cash flow projections are the key to making wise and profitable business decisions. They give you the answer to the all-important question from Rule # 7. It's impossible to run your business properly without them.

10. Take Care of Customers. Eliminate your cash flow worries so you are free to do what you do best-taking care of clients and making more money. Use these cash flow 101 rules to free yourself from cash flow worries. That way you can focus all your time and talents where you can make the most difference in your business.

No more wasted time worrying about what's going on with your cash flow. Instead, you can focus your unique talents and abilities each day on ways to grow your business and make more income each year. That is a recipe for success and wealth creation.

CASH FLOW 101

Cashflow 101 is an educational tool in board game format designed by Robert Kiyosaki (author of Rich Dad, Poor Dad), which aims to teach the players concepts of investing by having their money work for them in a risk free setting (play money) while simultaneously increasing their financial literacy and stressing the imperative nature of accountability.

There are two stages to the game. In the first, "the rat race", the player aims to raise his or her character's passive income level to where it exceeds the character's expenses. The winner is determined in the second stage, "the fast track". To win, a player must get his or her character to buy their "dream" or accumulate an additional $50,000 in monthly cash flow.

In place of “score cards”, there are financial statements. The game requires the players to fill out their own financial statements so that they can see more clearly what is happening with their money. It generally shows how assets generate income and demonstrates that liabilities and 'doodads' are expenses.

Robert Kiyosaki also designed two other Cashflow games: a children's version called Cashflow for Kids, and a follow-up game to Cashflow 101 for more advanced players, which he released as Cashflow 202.

Didactic Games

Kiyosaki stresses the value of games, particularly Monopoly, as tools for learning basic financial strategies such as "trade four green houses for one red hotel". Kiyosaki has created several games to reinforce the information in his books.

Cashflow 101

Main article: Cashflow 101

"Cashflow 101" is a board game designed by Kiyosaki, which aims to teach the players concepts of investing and making money, it costs $195.

There are two stages to the game. In the first, "the rat race", the player aims to raise his or her character's passive income level to where it exceeds the character's expenses. The winner is determined in the second stage, "the fast track". To win, a player must get his character to buy his "dream" or accumulate $50,000 in monthly cash flow.

The game forces the players to do the accounts by themselves. In place of "score cards", there are financial statements. Therefore, players can see more clearly what is happening with their money. It generally shows how assets generate incomes and liabilities and 'doodads' affect expenses.

Cashflow 202

"Cashflow 202" is a more advanced game than Cashflow 101. It is designed to help players learn about more sophisticated investing strategies. Cashflow 101 was generally meant to teach investing techniques that would work best in an "up market" where property values steadily increase, whereas Cashflow 202 is supposed to teach investment strategies for a fluctuating market where property values depreciate as well as rise.

Cashflow for Kids

"Cashflow for Kids" is basically a children's version of Cashflow 101, good for ages 5 through 9. There is also a Cashflow for Kids e-game available for free.^[6]

Cashflow The E-Game

"Cashflow The E-Game" is a computer software version of the Cashflow 101 board game. It is not necessary to have the board game in order to play the computer game.

Cashflow 202 The E-Game

"Cashflow 202 The E-Game" is a software expansion of the computer game "Cashflow The E-Game". Its counterpart is the "Cashflow 202" board game described earlier in this article.

His Teachings

A large part of Kiyosaki's teachings focus on generating passive income by means of investment opportunities, such as real estate and small businesses, with the ultimate goal of being able to support oneself by such investments alone. In tandem with this, Kiyosaki defines "assets" as things that generate money, such as rental properties or businesses, and "liabilities" as things that cost money, such as house payments, cars and so on. Kiyosaki also proclaims financial leverage to be critically important in becoming rich.

Kiyosaki stresses what he calls "financial literacy" as the means to obtaining wealth. He says that life skills are often best learned through experience and that there are important lessons not taught in school. He says that formal education is primarily for those seeking to be employees or self-employed individuals, and that this is an "Industrial Age idea". And according to Kiyosaki, in order to obtain financial freedom, one must be either a business owner or an investor, generating passive income.

Kiyosaki speaks often of what he calls "The Cashflow Quadrant," a conceptual tool that aims to describe how all the money in the world is earned. Depicted in a diagram, this concept entails four groupings, split with two lines (one vertical and one horizontal). In each of the four groups there is a letter representing a way in which an individual may earn income. The letters are as follows.

• E: Employee — Working for someone else
• S: Self-employed or Small business owner — Where a person owns his own job and is his own boss.
• B: Business owner — Where a person owns a "system" of making money, rather than a job to make money.
• I: Investor — Spending money in order to receive a larger payout in return.

For those on the left side of the divide (E and S), Kiyosaki says that they may never obtain true wealth. Conversely, those on the right side of the divide (B and I) are supposedly following the only road to true wealth.

About Robert T. Kiyosaki

Robert Toru Kiyosaki (born April 8, 1947) is an investor, businessman, self-help author and motivational speaker. Kiyosaki is best known for his Rich Dad, Poor Dad series of motivational books and other material. He has written 18 books which combined have sold over 26 million copies ^[1]. Although beginning as a self-publisher, he was subsequently published by Warner Books, a division of Hachette Book Group USA, currently his new books appear under the Rich Dad Press imprint. Three of his books, Rich Dad Poor Dad, Rich Dad's CASHFLOW Quadrant, and Rich Dad's Guide to Investing, have been on the top 10 best-seller lists simultaneously on The Wall Street Journal, USA Today and the New York Times. The book Rich Kid Smart Kid was published in 2001, with the intent to help parents teach their children financial concepts. He has created three "Cashflow" board and software games for adults and children and has a series of "Rich Dad" audio cassettes and disks. He also publishes a monthly newsletter.