Cashflow Quadrant (0)

Katre Semjonov
Cashflow Quadrant
I chose a book named “Cashflow Quadrant” written by Robert T. Kiyosaki. This book is written for people who are ready to change quadrants. This book is especially for individuals who are employees or self- employed and are contemplating becoming business owners or investors. It is for people who are ready to move beyond job security and begin to achieve financial security. It is not an easy life’s path but the prize at the end of the journey is worth the journey. It is the journey to financial freedom .
WHICH QUADRANT ARE YOU IN? IS IT THE RIGHT ONE FOR YOU?
Are you financially free? The CASHFLOW Quadrant was written for you if your life has come to a financial fork in the road . If you want to take control of what you do today in order to change your financial destiny it will help you chart your course . This is the CASHFLOW Quadrant:
The letters in each quadrant represent:
E- for employee
S- for self-employed
B- for business owner
I-for investor
Each of us resides in at least one of the four quadrants of the CASHFLOW Quadrant. Where we are is determined by where our cash comes from. Many of us rely on paychecks and are therefore employees, while others are self-employed. Employees and self-employed individuals reside on the left side of the CASHFLOW Quadrant. The right side of it is for individuals who receive their cash from business they own or investments they own.
The CASHFLOW Quadrant is about the four different types of people who make up the world of business, who they are and what makes individuals in each quadrant unique. It will help you define where you are in the Quadrant today and help you chart a course for where you want to be in the future as you choose your own path to financial freedom. While financial freedom can be found in all four of the quadrants, the skills of a “B” or “I” will help you reach your financial goals more quickly. A successful “E” should also become a successful “I”.
WHAT DOES IT TAKE TO MAKE MONEY ?
Many successful people have left school without receiving a college degree. People such as Thomas Edison, founded of General Electric ; Henry Ford , founded of Ford Motor Co; Bill Gates, founded of Microsoft; Ted Turner , founded of CNN; Michael Dell, founded of Dell Computers ; Steve Jobs , founded of Apple Computer; and Ralph Lauren, founded 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.
So 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.
THE DEFINITION OF WEALTH
The definition of wealth is: “The number of days you can survive , without physically working (or anyone else in your household physically working) and still maintain your standard of living .”
For example: If your monthly expenses are $1,000 a month , and if you have $3,000 in savings, your wealth is approximately 3 months or 90 days. Wealth is measured in time, not dollars.
Ultimately, it is not how much money you make that matters , but how much money you keep and how long that money works for you. Every day I meet many people who make a lot of money, but all of their money goes out the expense column.
Every time they make a little money, they go shopping. They often buy a bigger house or new car, which results in long-term debt and more hard work , and nothing is left to go into the asset column. The money goes out so fast , you’d think they look some kind of financial laxative.
OTHER FORMS OF INVESTING
People invest in their education. Traditional education is important because the better your education, the better your changes of earning money. You can spend four years in college and have your income earning potential go from $24,000 a year to $50,000 a year or more. Given that the average person spends 40 years or more actively working, four years worth of college or some type of higer education is an excellent investment.
Loyality and hard work is another form of investing, like being a lifelong employee of a company or the government . In return, via contract, that individual is rewarded with a pension for life. That is a form of investment popular in the Industrial Age but obsolete in the Information Age.
Other people invest in having large families and, in turn , have their children care for them in their old age. That form of investing was the norm in the past, yet due to economic constraints in the present , it is becoming more difficult for families to handle the living and medical expenses of parents .
A CHOICE OF PATHS
There are the different financial paths people can choose. Unfortunately, most people choose the path of job security. When the economy starts wobbling, they often cling more desperately to job security. They wind up spending their lives there.
HOW TO GET FREE
Taxes and debt are two of the main reasons most people never feel financially secure or achieve financial freedom. The path to security or freedom is found on the right-hand side of the CASHFLOW Quadrant. You need to go beyond job security. It is time to know the difference between financial security and financial freedom.
Remember that everyone’s financial situation is different. So you need to:

Seek out the best professional and financial advice you can find . For example while a C corporation may work well in some instances, it does not work well in all instances. Even on the right side of the Quadrant, occasionally an S corporation is appropriate.

Remember that there are different advisors for the rich , the poor , and the middle class, just as there are different advisors for people who earn their money on the right side and on the left. Also consider seeking advice from people who are already where you want to go.

Never do business or investing for tax reasons. A tax break is an extra bonus for doing things the way the government wants. It should be a bonus, not the reason .

If you are a reader who is not a U.S. citizen , this advice remains the same . Our laws may be different, yet the principles of seeking competent advice remain the same. People on the right side operate very similarly throughout the world.
Summary
This book is about choosing new options, new directions, and a new financial future. Rich Dad’s CASHWLOF Quadrant will reveal why some people work less, earn more, pay less in taxes, and feel more financially secure than others. It is simply a matter of knowing which quadrant to work from and when.
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