I AM STILL STUCK IN "E" QUADRANT
Cashflow Quadrant is written by Robert Kiyosaki along with Sharon L. Lechter. It was published as a sequel to the hugely successful Rich Dad Poor Dad.
Once you are done with Rich Dad Poor Dad it is tempting to know more about the cash flow quadrant. There is a lot of repetition from Rich Dad Poor Dad. How ever this book also can be considered to be an original in my opinion. It is worth rereading till you get the idea of the four quadrants etched into your mind.
In this book he gives detailed explanation on the concept of cashflow quadrant introduced in the book Rich Dad Poor Dad.
Each one of us resides in at least one of the four quadrants of the cash flow quadrant. There are four quadrants – E, S, B and I
Chapter one of Cash flow Quadrant has six chapters that discuss early financial struggles of Robert Kiyosaki.
Chapter two explains the characteristics of the four different cashflow quadrants and the people belonging to those quadrants.
E Stands for Employee. They work for others. It can be anyone from the presidents of the companies to the janitors of the companies. They work for money trading in their time for money.
Job security is the most important thing to them.
S Stands for Self Employed. “They are do-it-yourselfers”. They own a job. Small business owners and partners of professional firms belong to this group. They think they have a business. In fact, what they have is a job they themselves have created. If they don’t work, there is no income. Harder and longer they work, more they earn.
Being their own boss is the most important thing to them.
B Stands for Business Owners. They own and control business systems that generate income for them. This income continues irrespective of his working or not working. It is possible that the business owner is also an employee of the company. But he can replace himself with a professional without any damage to the business.
I Stands for Investors. They invest in businesses. They don’t work for money. Their money work for them.
In short Cashflow Quadrant explains the four quadrants as:
E – You Have a Job
S – You own a Job
B – You Own a System & People Work for You
I – Money Works for You
We have been taught in schools to get good grades and look for a safe secure job. Hence that is what most of us do after leaving the school. Security is very important to us. While those in E and S looks for security those in B and I quadrant knows that the real security cannot be achieved being in E & I. It is B & I quadrants that bring in freedom and real security.
Robert Kiyosaki suggests that one should be try to move from E and S quadrants to B. Once successful in the B quadrant you have enough money and experience to move over to the I quadrant.
Chapter 4 Discusses different kind of business systems – Traditional companies where you develop your own systems; Franchises where you buy and existing system and Network Marketing where you buy into and become a part of the existing system.
Chapter 7 explains the 7 levels of investors according to their sophistication and the level of risk they are ready to take up – those without anything to invest, borrowers, savers, ‘smart’ investors, long term investors, sophisticated investors and capitalists. It is a good idea to find out where you are presently.
Chapter 8 has tips on differentiating between an asset and liability. The basics of a financial statement that lists assets, liabilities, income and expenses are clearly explained in this chapter.
Chapter 9 of Cashflow Quadrant has the advice I liked the best: BUILD A SYSTEM AROUND YOUR PASSION.
Chapter 10 has a really BIG question: How Do I Get Rich?? People in different quadrants respond to the idea of money differently. They have different emotions. So it is important to assimilate the way rich look at money before one gets rich.
Chapter 11 discusses why it is important to be aware of the tax and corporate laws when one sets out to move from the left quadrants to the right ones.
The next 7 chapters are about the 7 steps of finding your financial fast track.
--- It’s time to mind your own business
--- Take control of your own cash flow
--- Know the difference between risk and risky
--- Decide what kind of investor you want to be
---Make disappointment your strength
--- The power of faith
Now that you are done with Cashflow Quadrant, go to the Rich Dad Poor Dad review.