ROBERT KIYOSAKI, author of Cashflow Quadrant, is the co-founder of an international educational company that teaches business and investment principles. Kiyosaki is also the author of Rich Dad Poor Dad, a New York Times Best Seller that I wrote a blog post about in 2022. He is a long-time real estate investor and specializes in the development of small-cap companies. He is also an accomplished public speaker in the areas of financial literacy, education, and real estate strategies.
In Cashflow Quadrant, Robert T. Kiyosaki suggests that there are 4 ways to make money:
E -- You can become employed by getting a job.
S -- You can be self-employed.
B -- You can build and own a business system and have other people working for you.
I -- You can invest in other businesses -- effectively letting your money and other people’s money work for you.
In this book, the author explains in detail the differences in each “quadrant”. He gives examples using stories of the people he met during his life and shares his life experiences to help understand the pros and cons of each quadrant.
Since this book is technically part 2 of the Rich Dad series, which started with Rich Dad Poor Dad, I highly recommend reading both books in order.
Without spoiling the book, one of the major themes is:
True wealth is measured in time rather than dollars. Specifically, wealth is the amount of time you can maintain your current standard of living without physically working. The greater this kind of wealth, the more financial freedom you achieve. In short, to become financially wealthy, maximize the amount of time you spend acting as a ‘‘B’’ or an ‘‘I’’.
Kiyosaki explains that a person can be in multiple quadrants at once. An “E” or “S” will often have a goal to invest funds from these quadrants into the “B” or the “I” quadrant.
A popular example is to start with the “E” quadrant and build into other quadrants.
For example, Bob works a job at Walmart. This is the “E” quadrant. He saves part of his paycheck to pay for a lawnmower and equipment. On his days off, Bob cuts lawns to make extra money. This puts Bob in the “E” and “S” quadrants.
Why is Bob in the “S” quadrant, and not the “B” quadrant? Bob is cutting the lawns himself. This puts him in the “S” quadrant. If Bob were to hire others to cut the grass, that would put him in the “B” quadrant. What about the “I” quadrant? If Bob invested $5000 to help his friend Bill start a landscaping business, in exchange for a percentage of the profits, this would be considered the “I” quadrant.
Even though it was originally published in 1998, Cashflow Quadrant still gives simple yet very effective advice on how to structure your financial game plan to get where you want to get. What quadrant are you in now? What quadrants would you like to add? This book is a must-read for anyone looking to upgrade their life!
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