Cashflow For Life!

Link to Explore: Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom CD

I’m a big fan of Robert Kiyosaki, author of the runaway best-seller Rich Dad, Poor Dad. So I was excited to get this audio CD of Kiyosaki’s second book, Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom written with Sharon Lechter.

In the book Kiyosaki introduces what he calls the cashflow quadrant: a grid consisting of the letters “E”, “S”, “B”, and “I”. Kiyosaki’s book details the four quadrants, in which people could find their finances. One could be an employee, self employed, a business owner, or an investor. Mr. Kiyosaki advices that the reader strive to be in the “B” and “I” quadrants. He says that the “E” and “S” quadrants should be avoided.

Kiyosaki uses the differences between concepts and ideas characteristic of each quadrant, particularly as they relate to passive income and tax advantages. Again, as a self-help author, he invites readers to consider their own ideas about money.

Here is a short excerpt from the book, courtesy of Hachette Book Excerpts

WHICH QUADRANT DO YOU GENERATE YOUR INCOME FROM?

The CASHFLOW Quadrant represents the different methods by which income or money is generated. For example, an employee earns money by holding a job and working for someone else or a company. Self-employed people earn money working for themselves. A business owner owns a business that generates money, and investors earn money from their various investments-in other words, money generating more money.

Different methods of income generation require different frames of mind, different technical skills, different educational paths, and different types of people. Different people are attracted to different quadrants.

While money is all the same, the way it is earned can be vastly different. If you begin to look at the four different labels for each quadrant, you might want to ask yourself, “Which quadrant do you generate the majority of your income from?”

Each quadrant is different. To generate income from different quadrants requires different skills and a different personality, even if the person found in each quadrant is the same. Changing from quadrant to quadrant is like playing golf in the morning and then attending the ballet at night.

YOU CAN EARN INCOME IN ALL FOUR QUADRANTS

Most of us have the potential to generate income from all four quadrants. Which quadrant you or I choose to earn our primary income from is not so much what we learned in school; it is more about who we are at the core-our core values, strengths, weaknesses and interests. It is these core differences that attract us to or repel us from the four quadrants.

Yet, regardless of what we “do” professionally, we can still work in all four quadrants. For example, a medical doctor could choose to earn income as an “E,” an employee, and join the staff of a large hospital, or work for the government in the public-health service, or become a military doctor, or join the staff of an insurance company needing a doctor on its staff.

This same doctor could also decide to earn income as an “S,” a self-employed person, and start a private practice, setting up an office, hiring staff and building a private list of clients.

Or the doctor could decide to become a “B” and own a clinic or laboratory and have other doctors on staff. This doctor probably would hire a business manager to run the organization. In this case, the doctor would own the business, but not have to work in it. The doctor also could decide to own a business that has nothing to do with the medical field, while still practicing medicine somewhere else. In this case, the doctor would be earning income as both an “E” and as a “B.”

As an “I,” the doctor also could generate income from being an investor in someone else’s business or in vehicles like the stock market, bond market and real estate.

The important words are “generate income from.” It is not so much what we do, but more how we generate income.

Please visit RichDad to find out more or get The CASHFLOW Quadrant through this link!