Cashflow Quadrant is a best-selling finance book by Robert Kiyosaki. This is a short, one-page summary of what’s inside.
- The Cashflow Quadrant is a cross with four letters in each section. The Employee (top left), the Self-Employed or Small Business (bottom left), the Big Business (top right), and the Investor (bottom left).
- The Employee gets his money from a salary, the self-employed is his own job, the Business owner from the profits of his business, and the Investor from his investments. The right side of the quadrant (“E” and “S”) have to work for their money, and the left side of the quadrant (“B” and “I”) don’t.
- There are three types of Big Business: The system you create yourself, buying another system (franchise), or buying a small version of another system (network marketing).
- There are many ways to invest. The two main ways are through stocks and real estate.
- Each quadrant has its own way of thinking. If you are an “E” type of person, you seek financial security and hate risk. If you are an “S” type of person, you tend to like to do things your self and seek perfection. If you are a “B” type of person, you tend to hire other people to get the job done for you, if you are an “I” type of person, you tend to take on risk to get ahead. Anyone can switch what quadrant they are in, they just have to learn that way of thinking.
- To cross over from the left side of the quadrant to the right side, you need to be financially intelligent and emotionally intelligent.
- Financial Intelligence is understanding financial statements, having more assets (what puts money in your pocket without you having to work) than liabilities (what takes money out of your pocket), local tax codes, living within your means, accounting skills, investment skills, managerial skills, etc. All these skills are learned through books, mentors, seminars, good financial advisors, etc.
- Emotional Intelligence is the ability to be brave, to step out of your comfort zone, dedication to long term goals, delayed gratification, adaptability, willingness to learn, ability to handle stress, etc.
- Benefits to being on the right side of the quadrant include Wealthy people get most of their money from the “B” or “I” quadrant include financial freedom, less taxes, and more security.