Have you been told to get good grades, go to college, and get a secure job? This advice is the worst advice you could ever get according to Robert Kiyosaki, author of Rich Dad’s Cashflow Quadrant.
There are three parts to Rich Dad’s CASHFLOW Quadrant.
First, Kiyosaki explains the quadrants and then the key differences between the people in each section. Second, the book focuses on personal change for those who want to switch quadrants. Lastly, Kiyosaki concludes with 7 steps you can take to move to the right side of the quadrant.
Part 1: Rich Dad’s CASHFLOW Quadrant
Robert Kiyosaki created the Cashflow Quadrant ™ as an illustration to explain the four ways that people build wealth. The illustration looks like a plus sign with “E” and “S” being on the left side and “B” and “I” on the right side.
Kiyosaki explains that his poor dad (biological dad) encouraged him to earn money from the left side while his rich dad (friend’s dad) encouraged him to earn money from the right side.
The photo below is Kiyosaki’s CASHFLOW Quadrant:
CASHFLOW QUADRANT “E”
The “E” in the upper left quadrant stands for “employee.” Employees can be anyone from company presidents to cafeteria assistants depending on the agreement they have with the place that hires them.
A person in this quadrant often strives for a “safe and secure” job with good pay and benefits. These people also want to balance out their fears with written agreements. The feeling of security is often their top priority.
CASHFLOW QUADRANT “S”
The “S” in the bottom left quadrant stands for “self-employed.”
The people in this group are usually highly educated or took a direct education path to acquire their skill. For example, doctors, lawyers, consultants, plumbers, groomers, and therapists all fit into this category.
You will hear a person in this quadrant tell you what they are worth. For example, they may say, “My rate is $35 an hour.” You will also hear them say, “I can’t seem to hire someone who wants to do the job right.”
Self employed people do not like having their income decided by others. They place a high value on independence.
Additionally, they often believe that no one can do their job better than they can. People they do hire and train tend to wind up as their competition, therefore they end up working harder and harder. Self employed people own a job, not a business.
CASHFLOW QUADRANT “B”
The “B” in the upper right corner of the quadrant stands for “business owner.” True business owners own systems. Even if the owner isn’t present, those systems will continue to make money for the owner.
You might find people in this category say something like, “I’m looking for someone to run my company.”
People like Bill Gates and Henry Ford fit into this category. However, if you can go on vacation and your business continues to grow without you, you have officially moved to the “b” quadrant.
CASHFLOW QUADRANT “I”
The “I” in the lower right corner of the CASHFLOW Quadrant stands for “Investor.” Investors focus on making their money work for them. The “I” quadrant is also where all the rich people are.
If you want to become rich and build generational wealth, you will need to work to get into this quadrant. You may hear investors say something like, “what is the rate of return on my cash flow?”
The people in this quadrant generate income that they don’t need to physically work for. They use other people’s time (OPT) and other people’s money (OPM.)
Additionally, one of the reasons people in this category are so rich is because there are tax advantages in this category. Rich people pay less taxes because they hire smart people to tell them how to legally do it through their corporations.
Part 2: Bring out the best in you
Kiyoksaki is famous for breaking the mindset of millions of people. His approach to make people question their mental mindset is truly the most unique method I’ve ever read. The second part of Rich Dad’s CASHFLOW Quadrant focuses on doing just that.
Kiyosaki explains that money is an addiction. Whichever quadrant you earn money from, your brain will tell you to earn more money from it.
The following chapters explain how to recognize that addiction and how to handle the fears that each quadrant faces
Additionally, you will learn how to to rewire your brain from what you have been taught already. Schools teach you that mistakes are bad. You want to get good grades and do not want to get any answers wrong. However, in the real world, mistakes are the best way to learn.
“In school, you’re given the lesson first. On the street, you’re given the mistake first and then it’s up to you to find the lesson, if you ever find it.”
Robert Kiyosaki, from “Rich Dad’s CASHFLOW Quadrant”
Part 3: How to be a successful “B” and “I”
Lastly, the final part of Rich Dad’s CASHFLOW Quadrant discusses how to successfully switch to the right side of the quadrant.
Kiyosaki explains in detail “The 7 Steps to Finding Your Financial Fast Track,” which includes learning about risk, types of investors, finding mentors, and more. Each step also concludes with action steps readers can take to advance ahead.
The book then concludes with an eye-opening reference guide to wealth which compares the 22 common decisions made by the Poor, Middle Class, and the Rich. Check out this preview from my own copy of Rich Dad’s CASHFLOW Quadrant:
Grab a copy of Rich Dad’s CASHFLOW Quadrant
Rich Dad’s CASHFLOW Quadrant will undoubtedly raise your financial IQ. I’m a firm believer that everyone should read this book. To order a copy of Rich Dad’s CASHFLOW Quadrant, click here.
P.S. Want to see some other books we recommend? Check out our picks of the Best Financial Independence books for Beginners.
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