What is Cash Flow Quadrant...
The follow-up to the bestselling personal finance book phenomenon Rich Dad, Poor Dad that reveals why some people work less, earn more, pay less in taxes, and feel more financially secure than others.
What is the difference between an employee and a business owner? Whey do some investors make money with little risk while most other investors just break even? Whey do most employees go from job to job while others quit their jobs and go on to build business empires?
The Cashflow Quadrant answers these questions and guides readers in finding their own path to financial freedom in a world of ever increasing financial change. It is a book written...
for people who are ready to move beyond job security and begin to find their own world of financial freedom.
for people who are ready to make deep professional and financial changes in their lives.
for people who are ready to move from the Industrial Age to the Information Age.
Have you noticed that many of the brightest graduates from our universities want to work for college dropouts... dropouts such as Bill Gates of Microsoft, Richard Branson of Virgin Industries, Michael Dell of Dell Computers, Ted Turner of CNN? Dropouts who are today the mega-rich of society. Whey does this happen? As The Cashflow Quadrant reveals, it is simple a matter of knowing which quadrant to work from and when.
Chapter 1
In 1985, my wife, Kim, and I were homeless. We were unemployed and had little money left from our savings; our credit cards were exhausted; and we lived in an old brown Toyota with reclining seats that served as beds. At the end of one week, the harsh reality of who we were, what we were doing, and where we were headed began to sink in.
Our homelessness lasted for another two weeks. A friend, when she realized our desperate financial situation, offered us a room in her basement. We lived there for nine months.
We kept our situation quiet. For the most part, my wife and I looked quite normal on the surface. When friends and family were informed of our plight, the first question was always, "Why don't you get a job?"
At first we attempted to explain, but in most instances, we failed to clarify our reasons. To someone who values a job, it is difficult to explain why you might not want a job.
Occasionally, we did a few odd jobs and earned a few dollars here and there. But we did that only to keep food in our stomachs and gas in the car. Those few extra dollars were only fuel to keep us going toward our singular goal. I must admit that during moments of deep personal doubt, the idea of a safe, secure job with a paycheck was appealing. But because job security was not what we were looking for, we kept pushing on, living day to day, on the brink of the financial abyss.
That year, 1985, was the worst of our lives, as well as one of the longest. Anyone who says that money isn't important obviously has not been without it for long. Kim and I fought and argued often. Fear, uncertainty and hunger shortens the human emotional fuse, and often we fight with the person who loves us the most. Yet, love held the two of us together and our bond as a couple grew stronger because of the adversity. We knew where we were going; we just did not know if we would ever get there.
We knew we could always find a safe, secure, high-paying job. Both of us were college graduates with good job skills and solid work ethics. But we were not going for job security. We were going for financial freedom.
By 1989, we were millionaires. Although financially successful in some people's eyes, we still had not reached our dreams. We had not yet achieved true financial freedom. That took until 1994. By then, we never had to work again for the rest of our lives. Barring any unforeseen financial disaster, we were both financially free. Kim was 37, and I was 47.
IT DOESN'T TAKE MONEY TO MAKE MONEY
I started this book about being homeless and having nothing because I often hear people say, "It takes money to make money."
I disagree. To get from homeless in 1985 to rich in 1989 and then to become financially free by 1994 did not take money. We had no money when we started, and we were in debt.
It also does not take a good formal education. I have a college degree, and I can honestly say that achieving financial freedom had nothing to do with what I learned in college. I did not find much call for my years of studying calculus, spherical trigonometry, chemistry, physics, French, and English literature.
Many successful people have left school without receiving a college degree. People such as Thomas Edison, founder of General Electric; Henry Ford, founder of Ford Motor Co.; Bill Gates, founder of Microsoft; Ted Turner, founder of CNN; Michael Dell, founder of Dell Computers; Steve Jobs, founder of Apple Computer; and Ralph Lauren, founder of Polo. A college education is important for traditional professions, but not for how these people found great wealth. They developed their own successful businesses and that was what Kim and I were striving for.
SO WHAT DOES IT TAKE?
I am often asked, "If it doesn't take money to make money, and schools do not teach you how to become financially free, then what does it take?
My answer: It takes a dream, a lot of determination, a willingness to learn quickly, and the ability to use your God-given assets properly and to know which sector of the CASHFLOW Quadrant to generate your income from.
WHAT IS THE CASHFLOW Quadrant?
The diagram below is the CASHFLOW Quadrant.
 | The letters in each quadrant represent: E For employee |
WHICH QUADRANT DO YOU GENERATE
YOUR INCOME FROM?
The CASHFLOW Quadrant represents the different methods by which income or money is generated. For example, an employee earns money by holding a job and working for someone else or a company. Self-employed people earn money working for themselves. A business owner owns a business that generates money, and investors earn money from their various investments-in other words, money generating more money.
Different methods of income generation require different frames of mind, different technical skills, different educational paths, and different types of people. Different people are attracted to different quadrants.
While money is all the same, the way it is earned can be vastly different. If you begin to look at the four different labels for each quadrant, you might want to ask yourself, "Which quadrant do you generate the majority of your income from?"
Each quadrant is different. To generate income from different quadrants requires different skills and a different personality, even if the person found in each quadrant is the same. Changing from quadrant to quadrant is like playing golf in the morning and then attending the ballet at night.
YOU CAN EARN INCOME IN ALL FOUR QUADRANTS
Most of us have the potential to generate income from all four quadrants. Which quadrant you or I choose to earn our primary income from is not so much what we learned in school; it is more about who we are at the core-our core values, strengths, weaknesses and interests. It is these core differences that attract us to or repel us from the four quadrants.
Yet, regardless of what we "do" professionally, we can still work in all four quadrants. For example, a medical doctor could choose to earn income as an "E," an employee, and join the staff of a large hospital, or work for the government in the public-health service, or become a military doctor, or join the staff of an insurance company needing a doctor on its staff.
This same doctor could also decide to earn income as an "S," a self-employed person, and start a private practice, setting up an office, hiring staff and building a private list of clients.
Or the doctor could decide to become a "B" and own a clinic or laboratory and have other doctors on staff. This doctor probably would hire a business manager to run the organization. In this case, the doctor would own the business, but not have to work in it. The doctor also could decide to own a business that has nothing to do with the medical field, while still practicing medicine somewhere else. In this case, the doctor would be earning income as both an "E" and as a "B."
As an "I," the doctor also could generate income from being an investor in someone else's business or in vehicles like the stock market, bond market and real estate.
The important words are "generate income from." It is not so much what we do, but more how we generate income.
DIFFERENT METHODS OF INCOME GENERATION
More than anything, it is the internal differences of our core values, strengths, weaknesses and interests that affect which quadrant we decide to generate our income from. Some people love being employees, while others hate it. Some people love owning companies, but do not want to run them. Others love owning companies and also love running them. Certain people love investing, while others only see the risk of losing money. Most of us are a little of each of these characters. Being successful in the four quadrants often means redirecting some internal core values.
YOU CAN BE RICH OR POOR IN ALL
FOUR QUADRANTS
It also is important to note that you can be rich or poor in all four quadrants. There are people who earn millions and people who go bankrupt in each of the quadrants. Being in one quadrant or the other does not necessarily guarantee financial success.
NOT ALL QUADRANTS ARE EQUAL
By knowing the different features of each quadrant, you'll have a better idea as to which quadrant, or quadrants, might be best for you.
For example, one of the many reasons I chose to work predominantly in the "B" and "I" quadrants is because of tax advantages. For most people working on the left side of the Quadrant, there are few legal tax breaks available. Yet, legal tax breaks abound on the right side of the Quadrant. By working to generate income in the "B" and "I" quadrants, I could acquire money faster and keep that money working for me longer, without losing large chunks to pay taxes.
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so guys if you want to learn more about cash flow quadrant,get the book from Robert Kiyosaki.. its really good..
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with us Fourth Quadrant we will focus on INVESTMENT and also a bit of ONLINE BIZ..
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