What Is The Cashflow Quadrant

What is the cashflow quadrant? The book known as “CashFlow Quadrant” was authored by Robert Kiyosaki, a well-known best-selling author of the book known as “Rich Dad Poor Dad.” The CashFlow Quadrant has been described as a powerful hand-guide for any person that is in search of financial freedom. In this book is also the story on how this mentor “Robert Kiyosaki” went from homeless in the year 1985, to becoming a millionaire by 1989. It also explains the steps that he took in detail, and how readers of this book can achieve the same success in a lot less time.

Here is a summary about the book known as “CashFlow Quadrant” Rich Dad’s Guide to Financial Freedom.

Today there are not many books available on the markets that have the ability to change your overall life or the way that you currently think. Yet many reviewers of this book have agreed that this may be the one that can really change your life in a dramatic way. Here is information on what this book has to offer and about who Robert Kiyosaki is. It will also give you more information on whether you may want to try this book for yourself.

cashflow quadrant

Who Is Robert Kiyosaki?

The man known as Robert T. Kiyosaki is an educator, entrepreneur, and innovator. In summary today, he is known as a multi-millionaire business-man, with a primary goal to educate others about investing, money and business.

Kiyosaki, has not always been so successful. In fact, when he was in school he really struggled and even failed English twice. His Dad (known as poor dad) was at the time an educator who strongly believed that you need to obtain a good education first and then a good paying job. But Robert’s Rich Dad (the best friend to his dad) believed that school was unable to teach the things that you should know about money and about getting rich.

On leaving school, Robert joined up with the U.S Marine Corp. He made this decision because he believed that joining the armed-forces would give him the lessons he needed about becoming a leader as well as develop him spiritually and mentally which is something that formal education was unable to give him.

In 1974, when he finally left the Marine Corps, he obtained his first job with a company known as Xerox, with the aim of not wanting to climb up a corporate ladder, but rather because he already knew this company offered a top-rated sales training program, which all formed a portion of his Rich Dad’s education.

In the year 1977, he formed his very first business which involved manufacturing. He happened to be one of the few companies of this time to produce Velcro and nylon surfer wallets which were available in vibrant and bright colors. He decided to close the doors to this business because he was unhappy about the way that this business was run in association to his workers overseas that were underpaid, and he believed they were being exploited. This caused his passion for this business to diminish.

Robert along with his wife then experienced many dark days over the next few years, which involved living in motel rooms and out the boot of a car. However, he sees this time as the point where he learnt valuable lessons and the fact that it is Ok to fail. He also believed that it is what you are able to learn from these experiences that will shape you into a person that you will become.

Today he is a highly successful educator and business man, with his number 1 bestselling book known as Rich Dad Poor Dad appearing in the New York Times top 10 for over seven years. He was also awarded with an honorary PHD entrepreneurship in 2009.

He continues as a highly passionate advocator when it comes to power, and importance associated with financial education. Today, with the record home-repossessions, the global economic-meltdown which is still going on, his teachings appear as prophetic and enlightening, with many of the nay-sayers and sceptics now becoming strong believers of what he has to say.

CashFlow Quadrant break-down

The Cashflow Quadrant involves a breakdown of 4 income types. These include E for Employee, S for Self-Employed, B for Big Business Owners and I for Investors.

E- Employee

In the form of an employee, it means you are employed and you have a Job. This section makes up most of the populations. It is within this category that you are trading time to make money. This also means you are working typically between 40 to 80 hours every week in order to get paid. Some examples of these positions include a banker, engineer, secretary, plumber, teacher, doctor, pilot, nurse of even a CEO for a company.  In the role of an Employee, you pay out the highest in taxes, while still continuing to trade your time to make money. As soon as you stop working, your salary also falls always.

S- Self Employed

In the role of Self-Employed you own your Job. The insurance agents, real-estate agents, accountants, consultants, lawyers and doctors that own a practice, along with the smaller business owners fall into this category. In this section you will also be trading your time to make money. In many cases you might work longer hours compared to the Employees and you will not have any paid vacations. When you are no longer working, your income also stops, and making money is solely dependent on you. Most of the Big Businesses usually start off their careers as Self-Employed. But they have a specific system in place.

B- Big Business Owner

B represents Big Business Owner, which Robert Kiyosaki describes as having 500 employees or even more. When it comes to Big Business owners they are in search of systems and they also make use of leverage. Unlike the Self-Employed category, these individuals do not run a company on their own. They seek a team made up of smart individuals that run the company on their behalf. The individuals who would like to be the “Big Deal” usually stay in the Self-Employed category.

The Big Business owners leverage work from others. They also pay the minimum in taxes and the business will continue to bring in cash-flow even when the individual is not there. In this section, you will usually work hard over the first few years of the business and then usually obtain a passive income which continues even when you retire.

I ” Investors

The Investors are the type of people who find a way to make their money work very hard for their benefit. The majority of the genuine investors obtain initial income through the B category. Similar to the Big Business owners, the Investors also pay far less taxes in comparison to the Self-Employed and Employees.

The core thoughts of individuals in the B and I categories is entirely different to individuals in the E and S categories. One of the stand out differences of people in the E and S categories is that they think Time = Money, while people in the B and I categories believe that Thinking = Money.

How To Make A Profitable Real Estate Investment

In the CashFlow Quadrant, you will find out about the “Insider’s secrets” on how to become financially free. A few of these lessons include:

The 3 types of Business Systems you are able to build:

– The differences between being wealthy and being rich

– The differences between the B type business and the S type business

– Ways to manage risks

– The importance of opinions versus facts

– The reasons why people financially struggle

– Ways to get rich

– How to become the Bank and not the Banker

– Ways to become a successful Investor and Business Owner

The most valuable lessons that you can learn from the CashFlow Quadrant include the following:

Your Boss Will Not Make You Rich

This is probably one out of the more important lessons inside this book. You will find many people trying to find a way to become rich from their salaries. Yet, the truth is that it is really difficult and usually impossible to get rich from a salary. In processes of trying to become rich off a salary, most of these people are breaking a law with money that states, “Don’t ever try to get rich on your salary”.

When you start to realize that a boss does not perform the role of helping you to get rich and is rather there to ensure you receive a steady pay check. Having a job will rarely ensure that you become rich yet building your own business will.

This is an essential lesson for the majority of people because most of these individuals dream about finding that “high paying” job, saving the money they make which will make them rich. If you want to learn the basics of obtaining wealth without earning a pay check, you should definitely read the CashFlow Quadrant.

You Need To Build Your Business System Around What You Are Passionate About

This is a lesson that is applicable to the lives of the entrepreneurs. Many entrepreneurs are known for starting up a new business venture with a lot of passion and excitement and over time they start to lose enthusiasm and interest and the business starts to crumble. There are also the entrepreneurs that are constantly looking for a new product every month, and the best products that they should be marketing. Yet they cannot understand that are failing to make headway.

If you fall into the category of the entrepreneurs, you need to be building your business around what you are passionate about. If you look into the backgrounds of the most successful entrepreneurs, you will usually find that they all built up their companies around their true passions.

For example, Steve Jobs, Bill Gates, Michael Dell and Larry Ellison all built their businesses associated with their passion, which included “Computers”. While Mark Zuckerberg, Jerry Yang and Larry Page, built their business systems around their passions which is the “Internet”. If you are interested in building a business that is successful, you first need to find out what your passions are and then build your business around this.

You Need To Watch The Words You Are Using

After you have read the book the CashFlow Quadrant you will come to learn that there happen to be specific words that are used by employees, business owners, self-employed and investors. You will also learn that words that we use have an effect on our lives in an unconscious manner because words happen to be incredibly powerful tools.

If you are interested in becoming a successful investor or business owner, then you need to first learn about and then make use of the specific vocabulary that investors and business owners use.

Every person in some way desires financial-security and most us have dreams about attaining financial freedom. The CashFlow Quadrant teaches principles of cash flow, assets and income. Understanding these different methods on how money or income is generated and how it is used is in summary what the book CashFlow Quadrant is all about.

Below are the steps to take to make the most out of the CashFlow Quadrant:

Learning About The Concepts Of The 4 Individuals

The premise for the Rich Dad, Poor Dad book series involves that the world of business involves 4 individual types:

– E- Employee- has a job

– S- Self-Employed- owns a job

– B- Business Owner- owns a type of business system

– I- Investor- has found a way to make their money work for-them

Identifying Where You Are Currently

Finding about where you fall in the CashFlow Quadrant is achieved by looking where the majority of your current income is coming from. What will affect what quadrant we make a decision on where to generate an income from will be associated with internal differences linked to our interests, core values, life stage, outlook etc.

Make A Decision On Where You Want To Be

The traditional schooling systems teaches us mainly to focus our energy, time and thoughts on either becoming an Employee or a Self-Employed individual such as an accountant, lawyer or doctor. While these ideas may not be wrong, it will become an issue when your main goal is to achieve financial freedom. In fact, financial freedom will rarely be found within the E and S quadrants.

Make A Decision If Financial Freedom Is What You Want

The words “financial” along with “freedom” will always go hand-in-hand. You will never be truly “free” in the world that we live in today unless you become financially free. The purpose of this life involves generating and experiencing more life. It is money that will allow for a way to “live” more of a life. It is financial freedom which means you have obtained enough wealth which involves cash-flow and assets, that will allow for a way to live more of a life on a more substantial basis.

– Changing from quadrant into another is explained as a life-changing experience that will in most cases necessitate fundamental shifts in your core values

– This will also require significant personal transformation and massive action. This means you need to be open to stepping outside of your current comfort zone. Once you have managed to cross over from the left side of the quadrant which contains the Employees and the Self-Employed into the right side of the quadrant which contains the Business owners and Investors there is usually no turning-back.

Gaining Financial Intelligence

Obtaining “financial freedom” requires a very high-level associated with financial intelligence. This means you have to be ready and prepared to move beyond the job security found in the E quadrant to initiate your own journey to financial freedom. It is important to realize, it is going to be a windy and bumpy road that is full of risks, that will have to be managed constantly. This is not a step to take if you prefer a normal and secure life. However, for those prepared to take this leap, the end result for this journey is to attain financial freedom.

Becoming Aware Of The Risks Involved

It is also important to know that success is never guaranteed. An example of this is that around 80% of the business start-ups usually never make its to their 5th birthdays. In addition, of the business that do go onto success, there are many successful business owners that end up losing their money through the over-confidential forays within the Investor quadrant. This road and journey to reach financial freedom will be full of people and casualties who make the decision to turn back on the goal due to fear.

Obtain The Skills That You Need

Most of the skills needed to reach success as a Business Owner or an Investor are usually not taught in a school. In fact, it is very interesting about how many of the most successful businessmen actually never finished school and obtained their real-education through the thrust and cuts in the business-world.

The more successful of the business owners are usually innately curious, thirsty for knowledge and uncompromising when it comes to their pursuit associated with each of their goals. They often choose to learn more through Mentors, they attend educational seminars and training courses, they also read voraciously and the convert all this knowledge into actions.

The rules are completely different in each of the quadrants. They are also entirely different in their words, and also require different skills, behavior, tools and mindsets. The act of continuous education and learning will become a constant bedfellow when it comes to assisting you on your journey through each of the quadrants.

Who Is The CashFlow Quadrant Book For?

This book has been written for the individuals that really want changes in their lives, especially for people within the E and the S Quadrants that have become tired of being a “slave to money” and would like to know how to change over into the wealthy side of the B and I quadrant.

This book is broken up into three important parts:

  1. Part-One shows you about fundamental differences between the individuals in each quadrant. It also gives you information on the reasons why some people naturally gravitate towards particular quadrants, and why they often become stuck. This section also includes where you happen to be right now, as well as where you would like to be within 5 years.
  1. Part-Two of this book revolves around change. It focuses on what the type of person you need to become so that you are able to achieve all your goals.
  1. Part-Three gives an explanation on the best way to transition from the left quadrant to the right quadrant. Here you will find out about the Rich Dad secrets on skills that you will require in order to achieve success in the I or B quadrant. It will also assist you in choosing your own path to achieve financial freedom.


The book is especially for those that are tired of their secure and safe 9 to 5 job and are interested in building their own pipeline to financial freedom and success. The book will not contain every answer you may be searching for but does provide answers on how to make the changes in your own life.

If you think that you are prepared to move away from job security and discover your own road to finding financial freedom this is the ideal book to try. This book has taught many people about making professional and deep financial changes in their lives. You will also learn about new direction, new options and a way to move away from this industrial age and rather into the information-age with a different type of financial future to look forward to.