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Former Career Guy

Robert Kiyosaki’s Cashflow Quadrant

 So last weekend I attended a seminar for the Rich Dad University because one of the first books I read out of high school was Rich Dad, Poor Dad by Robert Kiyosaki. This
book was definitely the fire starter that started my mind down the path of self development. Typically they try to sell you on a couple of courses but I go to hear the trainers
the speakers usually speak very intelligently and I pick up things I may have not picked up in previous sessions. As I have stated before you need to have 3 sources of
income and if you do not I highly suggest you start making the year of 2015 the year of change.
1. Passive Income
2. Residual Income
3. Portfolio Income (investments)
One thing that I wanted to discuss was the cash flow quadrant because this was one of the first things I put into place when I read the book several years back. I feel it is
worth the share because there are many new people to the game and new generations out there I can help with this.

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.

kiyosaki-cashflow-quadrant1

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.

Take action now

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.

Your Partner,

Joe Carrera

3 comments… add one

  • Bobby Jackson

    This was an awesome and insightful article!! I have to say most try to start a business but we really don’t see the fact were buying a job but being in it for a while it makes sense and I need to fully transition myself to a full B.

  • Stephen Cossey

    The chart break down for me was the aha moment most of the quadrant charts out there needed to be expanded on. I sent you a message would like some insight on a business matter.

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