We cannot really talk about the Cashflow Quadrant without talking about its writer, Robert Kiyosaki first.
Robert Kiyosaki is a fourth-generation Japanese-American, born April 8, 1947 in Hawaii, and raised in Hawaii too. Just to give a little bit of Robert’s personal life, he graduated from the US Merchant Marine Academy in New-York, and later served in the Marine Corps as a helicopter gunship pilot during the Vietnam War, and was awarded the Air Medal right after this war. After trying different types of businesses, he finally launched Cashflow Technologies. Today, he is an investor, businessman and motivational speaker.
Robert Kiyosaki, has spent his entire career teaching how to generate cashflow by investing money properly, whether it’s in real estate or any type of business. What he says is that we should be able to support oneselft by such investments.
This is in the purpose of teaching how to generate this type of mindset that he created the Cashflow Quadrant. It looks like a square cut in 4 equal little squares, and each one of these little squares contain a letter : E, S, B, I.
E stands for Employee. Kiyosaki explains that working for someone else is (somewhat) secure, and we know that, even if the business is not at its best, we are going to earn our salary. But he also says that our entire life depends on a boss who decided how much he would pay you, and as a result decided what type of house you would by, but also what type of car you would drive, and in which school your children would study.
S stands for Self-employed. Kiyosaki has respect for business owners, but he specifies an important detail : a self-employed can make as much money as he wants up to a limit that is his personal capacity, but also limited to 12 to 16 hours a day of work. Also, when a self-employed is not working, he is not making money.
B stands for business owner. What makes the difference with a self-employed is that a business owner hired people to multiply his capacity of work, and as a result, he multiplies his 12 hours a day times the number of employees he has. Whether he’s here or not, the business owner makes money. But not without any risks.
I stands for Investor. The whole purpose of this quadrant, is to show that, according to Robert Kiyosaki, the best way to develop the best cashflow and build wealth is to invest, starting with little investments but collecting the compounding interests in a larger payout in the future.
These are some of the best ideals to live by. It would be in your interest to learn to use them in your life.