Cashflow Quadrant — Guide to Financial Freedom
“ Don’t work for money, Make it work for you”
This book is a sequel to Robert T. Kiyosaki’s Rich Dad Poor Dad. You can find this book on Amazon if you want.
I recommend readers to read Rich Dad Poor Dad book first to have sound knowledge of what rich teach their kids about money that the poor and middle class do not!
Which Quadrant are you in?
The Cashflow Quadrant is a way to categorize people based on where their money/income comes from. According to Kiyosaki, he frames four approaches to build wealth. The below picture describes the cashflow quadrant.
Each of us resides in at least one of the four quadrants. Where we are is determined by where our cash comes from. Each quadrant is unique, and the people within each one share common characteristics. The quadrants will show you where you are today and will help you chart a course for where you want to be in the future.
E-Quadrant People
A person from this (E-Employee) quadrant might say: “I am looking for a safe, secure job with good pay and excellent benefits”. Your income is derived via salary. No matter how hard you work, your income will always be capped.
S-Quadrant People
A person operating out of the (S-Self Employed) quadrant might say: “My rate is $100 per hour”. These are the people who want to “be their own boss” or like to “do their own thing” — All small-scale shopkeepers. If they stop working, their income stops as well.
B-Quadrant People
A person from this (B- Business Owners) quadrant might say: “Why do it yourself when you can hire someone to do it for you and they can do it better?.” These people are entrepreneurs who design systems and has leadership skills. These people can go on vacation forever because they own a system, not a job. Even if they go on vacation, they can generate money.
I-Quadrant People
Someone from the (I-Investor) quadrant might say: “Is my cash flow based on an internal rate of return or net rate of return?” People here use the money to create money. They don't have to work because their money is working for them.
Each quadrant has a unique way to achieve financial freedom. But, the right side quadrants will help you to attain freedom quickly.
Before deciding your path, try to gain financial literacy. Understand the real difference between asset and liability. In simple terms, an asset puts money in your pocket whereas a liability takes money from your pocket.
The Cashflow Quadrant is a useful model that helped me widen my thoughts on being a business owner and Investor.
Maybe it’s of use to you too. Peace ✌️
Play the Cashflow Quadrant game to gain more insights!