Rich Dad's Cash Flow Quadrant: The Four Workers

www.cebusupport.com

 

 

 

 

What is the difference between financial freedom and financial security?

Where do you want to be in the quadrant?

 

The questions above were asked by Mr. Robert Kiyosaki before I proceeded reading his book.

 

A month before my resignation took effect; aJapanese manager introduced me to read the “Rich Dad's Cash Flow Quadrant” by Robert Kiyosaki.  He told me that the book would be helpful for my new journey in life. That was the second book given by a mentor. The first one was given by our COO, “Management” by Peter Drucker.  To be honest, I wasn’t really a fan of reading books but because of my inexperience and the nature of my work, I challenged myself to continue learning and improving.

 

Before quitting my job, I thought I was ready and prepared. At that time, I believed my experiences as General Manager were enough despite the fact, only my dreams and passion were big but my savings wasn’t that much.  When I started reading “Rich Dad's Cash Flow Quadrant”, it struck me to realize that to reach my new destination, It wouldn’t be that easy.  I needed more fruits of knowledge towards my own success story.  But on the other hand, my goal also was getting clearer to a point that I became more logical with my decisions.  The book opened me to another chapter and reminded that the new road I took wouldn’t be as easy as I imagined.  I would encounter a rocky and winding path, obstacle course that would push me to give up and potholes that would bring me down . To get there was like the “Road Less Traveled” for me.  On the silver lining, thanks to the insight of the author, it enlightened me also to continue pursuing my dreams though it’s hard. Before the author became successful, he and his wife were homeless for weeks.  But I was surprised because being homeless was their choice.  There were good opportunities that came along their way, but their mind were already head locked with the bigger goal and that’s towardsfinancial freedom over financial security. 

 

 

After reading the book, I have been inspired to follow the road they have taken.  But to be where they are, I have to make my own way.  I have to do it step by step.  And most importantly to continue learning.

 

Below I would like to share a brief overview of the Rich’s Dad Cash Flow Quadrant of the author.  This is the reason why he and his wife sacrificed from the beginning but didn’t have to work hard at the end. Now they only have to work less but spend more time to do what they love the most. 

 

 

Note: The author didn’t mention which quadrant is better or not. He just defined the quadrant based from his own experience and  understanding from his rich dad.  Some of you might disagree with him, but it’s just his opinion.  It’s up to you which quadrant you are comfortable with. 

 

 

 

 

 

 

E-Employees

 

This quadrant has a job.  They are employees. They have a boss and work for a company.  They earn their income from working. If they stop, income also stops.  So even if they are sick, they tend to work. They have fear of not having money or losing job. Most of them prefer a company that offers financial security.  Some of them work over time.  If the company provides them financial security and better benefits, like health insurance or retirement plan, then they will stay and be loyal in their lifetime at work. 

 

S-Self-Employed

 

They don’t have a boss. They own a job. They control the time and want to work independently.  Most of them are well –educated professionals who spend years in school, such as lawyers, doctors, and dentist. Also these are people who are receiving commissions, like real estate agents, consultants, artists and other freelancers.  If they are good, most business owners or clients prefer to get their service.  Their income depends on the number of clients they have.  The more skillful they are, the more clients they can get.   Most of them must be good in their field of expertise because they have a lot of competition.  However, because of deadlines they don’t have much time also to spend with their family.  Some of them prioritize their clients for it’s their source of income.  If they stop working, income also stops.

 

B-Businessmen

 

They are business owners.  They own a system and then hire competent people to operate the system.  They hire employees to work for their company or business.   They must have the ability to lead the people and make sure that the system works well.  Even if they are on vacation, they can still earn an income because they let their leaders or managers take care of the system.   Not all of them are rich at first.  Some of them started using Other People’s Money (OPM) by borrowing money from investors or from the bank.

 

B- Investors- They make money with money.  Money works for them. The author said that this quadrant is the playground for the rich. They get rich from utilizing Other People’s Time and Other People’s Money as well.  Most of them are risk takers.

 

Mr. Kiyosaki in his book discussed about the four quadrants.  On the left, you can see the E and S, while on the right the B and I. The author said that Financial Freedom is found on the right side and that’s the quadrant they chose to be with.

 

After identifying the four categories, there were questions that I would like Mr. Robert Kiyosaki to answer.

 

1.As a worker who just quit his job with only minimal savings, how is it possible for him  to have financial freedom?

2.How can I move from the left side to the right side?

3. How about the workers who are on the E side and want to be on the right side but don’t have capital? Having a business requires a lot of money, however, majority of us don’t have the financial capacity to even start a small business.

 

To answer these questions, follow my next blog and I will explain it to you.

 

Please comment or share this blog if you have any opinion or disagreement.