![]() ![]() Those earning income on the right side of the cashflow quadrant focus on getting a good job and earning a good salary. When you stop working or performing, your income stops. You are earning wages, salary, or commissions. This means for the income to come in, you must be active. The left side of the cashflow quadrant is what is considered active income. Left Side of Cashflow Quadrant: Active Income ![]() It is the most powerful and most leveraged side with the most income potential. However, I would argue that Kiyosaki makes a strong argument throughout the entire book that the right side of the cashflow quadrant model is the side you should aspire to operate in. They are just different methods of generating income.īy understanding these differences you can better figure out which quadrant will work best for you. People earn millions in all of the quadrants and people go bankrupt in all of the quadrants. Kiyosaki mentions that none of the quadrants guarantee financial freedom and success. Just to give you an idea of how powerful royalties can be, check out this quick video on the guy that created and owned the patent for super-soaker water guns.Īll Four Cashflow Quadrants have Rich and Poor People Wonderful (Kevin O’Leary) offers somebody a royalty in perpetuity (meaning they get paid a royalty for each sale… forever) and they turn it down… I cringe. I always think of the shark tank when I think of the investor category.Įvery time Mr. This could also include trademarks, royalties, and copyrights. These can be investments in stocks, bonds, real estate, or any number of investments that offer a monthly residual income. They are completely outside of the business and it operates without them (often even better than when they are there). Those operating a true business (B), can leave their business for a year and when they return their business will potentially be running better and more profitably than before they left. Kiyosaki states that you can tell if you’re in the quadrant of a true business owner (B) and not just self-employed (S) by taking an audit of what would happen if you left your business for a year or more. In this quadrant, the owner has set up systems and people to leverage their own time. The business owner quadrant is different from the self-employed quadrant because the income and business isn’t directly tied to the business owner. You own a system and people work for you. ![]() Often people start a small business so they are “in charge” and can control their time.īut it often requires they let the business dictate their time. That’s not freedom, but it is what it is.įinancial freedom is something very different. He hasn’t taken vacation in 10 years because the business will not and cannot operate without him. I have a friend who has his own contracting business. That’s why Kiyosaki states that you own a job (because the job owns you). Perhaps they bought into a franchise or built up their business with themselves as the primary earner.Įither way, the majority of the income generated in this category is from the owner/operator actually working. Many small business owners fall into this category. You may own a small business, but the income stops if you stop working. Some CEO’s make tens of millions of dollars, but they are still trading time for dollars.Īctive income meaning, if you stop working, you stop getting paid. Think of a hired CEO or president of a company. You can still be a high earner in this category. ![]() This means your income comes primarily from a job. To get us started, below is an overview of each of the specific cashflow quadrants as explained in Kiyosaki’s book. You can earn income from one, two, three, or all four of the quadrants. The quadrants are simply different methods for earning income. Kiyosaki’s cashflow quadrant is meant to teach you the fundamentals of how money works and how the rich leverage different quadrants to grow wealth. This can be represented in a visual of four different quadrants (above). The premise of the Cashflow Quadrant is that there are four main ways of earning income. Maybe you already read it or maybe you just need a refresher.Įither way, here we go. In this post, I’ll give you a summary and overview of the book. Maybe you don’t have time to read the whole book, but you want to understand some of the basic ideas so you can implement them in your life. It gets less attention than his book Rich Dad, Poor Dad, but I’m not sure why because it’s better.Ĭashflow Quadrant has more substance and changed my thinking on financial freedom more than any other of Kiyosaki’s books and I think it’s the best book in the Rich Dad Series. The Cashflow Quadrant by Robert Kiyosaki is packed full of great ideas. ![]()
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