Robert Kiyosaki’s Cashflow Quadrant
So today sitting with a few people at my local Panera bread there are other people around the table were all employees and they therefore discussed how career paths
looked from this side of the table, so knowing me I thought I could be a coach and present them to my career path forecast as an entrepreneur.
I am hoping this will give someone insight as it did for me when I read the book initially and woke my financial mind.
Robert Kiyosaki’s Cashflow Quadrant
In this post I want to specifically discuss is Robert Kiyosaki’s Cashflow Quadrant. It is draw out very simplistic to understand but this version is just a little enhanced to
add more value for added perspective it can add to your future.
First take a peek at the diagram and I will break down each quadrant and explain more as I go along. In essence, all we are talking about today is a cash flow diagram.
The diagram is broken into 4 squares hence the quadrant.
Employee – E portion of the quadrant
I would confidently say about 95% of the population is currently in this quadrant. They are an employee that is employed by a company or an organization and you are
basically trading your time for money. In this linear model basically if you want to make more money you need to work more time (my old employees loved overtime). Of
course you can job hop and get a higher paying job but the cycle is the same you go to work you make money and if you don’t show up you don’t make money.
Self Employed – S portion of the quadrant
Now most people when they start trying to knock down the cubicle wall because they know or self talk to themselves. Hmm I am worth more, I can be more they usually
transition to the S quadrant and buy themselves a job. The great thing is they have transitioned they have now moved from reporting to a boss to now being the boss and
work for themselves. Freelancers also belong to this category and such an example would be like a graphic designer.
Now at first this is awesome because you can work when you want and you can charge what you want but there’s one problem, if you don’t work then your not making
money! You should be proud though because your not an employee any longer, you have a higher salary but now you have a cool awesome boss, YOU! I help a lot of self
employed better their situation because now they are working 80 hours a week trying to survive.
Business Owner – B portion of the quadrant
Business owner basically owns a system that makes money. This type of system usually has employees working there and if the owner leaves they can take a two month
vacation and the system still operates and makes money. You no longer have to give hours for you to make money the system is making money even while you sleep or
while you are away.
Investor – I portion of the quadrant
I call the investor someone who has portfolio money which is 1 of the 3 income sources everyone should have. Similar to the business owner they dont have to trade hours
to make money but their money is working for them. Such examples of investments are; real estate, stocks, businesses etc. Once you make money in the B quadrant is
where you start to drop money in the I quadrant and slowly start to scale this allocation.
How Did I Get Where I am?
My plan that I help people with is to move from E to B and skip S completely because I do not recommend trading time for money. I help others get systems in place so they
can start an action plan to set a date to fire their boss. For those that are in the B quadrant and are struggling I help them assess their systems because one thing I find 98%
of the time is the small business owner wears all hats and this blurs their vision. The small business owner just need certain things in place in order to slowly get the hours
back they are trading.
I am definitely not knocking those who are in the E category because if it works for you great and if you love it great! I am speaking to those that want more time freedom
because I was once spending 12-15 hours a week in the car just commuting back and forth to work. Also, this is great information for those that want to retire early or just
have enough in their retirement accounts when that time comes.
Robert Kiyosaki himself states that says that the two quadrants on the right own 95% of the world’s assets, so at least if you want to earn some money -then you should start
to take a look at your own career path.
So you may be asking okay you have a point but what can I do now? Hmm,
if you’re an employee…
You need to start planning to get out of the E quadrant. Contact me if you need ideas on how or what to do because all money is like I tell most of the people I work with is an idea.
If you are in the S quadrant
You need to build a product or a system to start creating cash flow. I spend a lot of my time designing and maintaining current systems that create income for me.
If you are in the B quadrant
You need to invest a portion of your proceeds. I know Robert suggests real estate and I will be honest with I don’t have a passion for that so if you do that’s great but I invest
in other things just make sure it resonates with you so you can learn about it. One thing I love to do is help fund small start ups because the return is nice and I love being
part of the operational start-up.
If you are in the I quadrant
you should be making money already and you are on the right track. Many of you in the quadrant are probably like me with the money your making your creating new and
exciting businesses and just are a serial entrepreneur.
My only job with this post today was to inspire you to use your head nothing else!
Going through the traditional school system we learn so many things but financial education was not one of them. Has anyone ever taken a course in 401k? No but you have
taken courses on geology and and the science of rocks….. You see when you read Rich Dad, Poor Dad you will get the same interpretation from the book this is stuff the rich
teach their children so educate yourself and I would love to hear your thoughts just comment below.