Cashflow Quadrant is Robert Kiyosaki’s third book. It is also the best of the three of his books I’ve read, mainly because it actually teaches something that can really be applied. It is, however, advisable to read Rich Dad, Poor Dad first to get an understanding of the diagrams he uses to simplify the processes of money.
In this book, Robert Kiyosaki categorizes people into four types:
E - Employee
S - Self-employed or Specialist
B – Business (large) owner
I - Investor
An Employee is someone who has a job and works to make their boss rich.
A Self-employed or Specialist is the job and works to make himself rich. An S type may also be the owner of a sole proprietorship or a small business.
The problem with E‘s and S‘s is that when they stop working, the money stops coming in.
A Business owner differs from an S because a Business owner has many more people working for him, and usually these people are E‘s and an S or two. In other words, a B has other people working to make him rich.
An Investor is one who uses money to work for him.
The difference between B and I, and E and S, is that B‘s and I‘s can stop working and the money still keeps coming in.
In Rich Dad, Poor Dad, Robert Kiyosaki’s second book, the author teaches that an asset is something that puts money into the pocket, while a liability is something that takes money out of the pocket. The reason B‘s and I‘s can stop working and still have money flow in is because businesses and investments are assets.
Kiyosaki adds that if a person wanted to become financially free, the best way is to channel the income made from the E and S quadrants into the B quadrant, since the B quadrant is where the real money can be made. After that, to channel the money earned from there into the I quadrant.
That, in essence, is what Cashflow Quadrant is all about. The rest of the book goes in greater detail as to how to identify which quadrant you are currently in, and which quadrant you want to move into. It also teaches you to identify what kind of investor you are, and what kind of investor you want to be.
Title: Cashflow Quadrant
Tagline: Rich Dad’s Guide to Financial Freedom
Author: Robert Kiyosaki
Publisher: Business Plus
Year of Publication: 2000
Number of pages: 251