The Cashflow Quadrant by Robert Kiyosaki

A few years ago, I came across Robert Kiyosaki’s book – the Cashflow Quadrant.

The “Rich Dad’s Cashflow Quadrant” is a book that describes the difference ways people can make money. As you can see in the following diagram of the cashflow quadrant, the E and B are on the left side and the B and I are on the right side.

Cashflow Quadrant

So, what do the E, S, B and I letters mean?

The E, S, B and I of the Cashflow Quadrant are –

  • E – employee,
  • S – Self-employed,
  • B – Business owner, and
  • I – Investor.

The methods by which money is generated in each quadrant is different. For example –

  • E – is where an employee earns money by having a job or working for someone else,
  • S – where self-employed people earn money working for themselves,
  • B – business owners run a business that generates money, and
  • I – investors earn money from various investments (i.e. money generating more money).

Where do you sit in each of these quadrants?

A Few Tips to Remember…

After looking at each these quadrants, there are a few points to remember –

  1. You can earn money in each of the quadrants (as the same person can generate money in each of the four quadrants). The point is where you “generate income from”.
  2. You can be rich and poor in each of the four quadrants.
  3. Not all quadrants are equal, however you have to decide what is best for you.
  4. One quadrant is not better than the other, each has different strengths and weaknesses.

 

Reference –

Kiyosaki, R. (1998). Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom. USA: TechPress, Inc.

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