The Right Path To Financial Freedom

October 30, 2009 by Tyrone
Filed under: Entrepreneurship, Investments

In one of my old posts, I gave some steps that you should take in your journey to financial freedom. Having financial freedom gives us the liberty of doing the the things that we enjoy without having to think too much on where to get the next meal that we would feed to our families.

You may be familiar with Kiyosaki’s Cash Flow Quadrant where he divided people depending on where their income flows. It is the famous ESBI which stands for E-Employee, S-Self Employed, B-Big Business Owner, and I-Investor.

The path that Kiyosaki recommended is through the B and I quadrants. Why? Because in the B quadrant, people would be working for you, and in the I quadrant, your money would be working for you. The person who has knowledge in these two quadrants achieves what most people throughout history have yearned for: freedom from work.

Here’s what the path looks like:

According to Kiyosaki, many of the super rich follow this path—people of legendary status such as Bill Gates, Warren Buffett, and Ross Perot. Can you? Yes, if you’re sufficiently equipped with knowledge, experience, and determination.

A word of caution, however: The B quadrant is very different from the I quadrant.

Many successful Bs sell their businesses for millions and then let their newfound wealth go to their heads. Convinced that their dollars are a measure of their financial IQs, they go swaggering into the I quadrant and then lose everything. Kiyosaki said that anyone can go bankrupt in the I quadrant just as easily as in the E, the S, or the B—and more quickly.

Which quadrant should you go first: Is it the B or the I quadrant?

Kiyosaki recommends to go first into the B quadrant before going to the I quadrant. However, he further added that if you have plenty of money, financial intelligence, and free time, then by all means go straight to the I quadrant. But if you don’t, the path Kiyosaki recommended is safer.

There are two good reasons to enter the B quadrant first:

Succeed as a B and you have a greater chance of developing into a powerful I. After all, investors invest in businesses. Once you gain experience in the B quadrant, you’re better positioned in the I quadrant to identify businesses that would make good investment opportunities.

If you have a business that’s up and running on its own—that doesn’t require your babysitting—then you’ll enter the I quadrant with two prerequisites: the free time to hunt for good opportunities, and the cash flow to support the ups and downs of investing.

Rich Dad Tip:

“On the right side of the quadrant, you gain time and therefore freedom—to make money, to give it away, and to be with your loved ones.”

Most of us are working on the left side of the CASHFLOW Quadrant. By working hard we get promoted and gained more responsibility, but as we climbed the ladder we had less and less time to spend with our family and loved ones. On the left side of the quadrant, increasing success brings you less and less time.

The right path to financial freedom is by working hard on the right side of the CASHFLOW Quadrant. We should climb our own ladder, and the higher we climbed, the more time we had for our family and loved ones.

Kiyosaki relates that when his Rich Dad’s business reaped profits, he expanded the business and simply hired more people to do the work. If his investments did well, he reinvested the money and made more money. He then have a lot of time to spend with his son and with Robert.

This is a major difference between the left side and the right side of the CASHFLOW Quadrant: The right side gives you time. And time is freedom—freedom to make more money, to give it away, and to be with your loved ones.

The path to freedom is open to you. You can be a worker bee, buzzing around till the end of your days, barely noticing those around you, or you can be a free spirit, with plenty of time to seize the day and tend to your family. Freedom is yours for the taking.

Let’s all achieve financial freedom! I am happy that this blog has helped a lot of people as they track steps in their journey towards financial freedom.

Source: Robert Kiyosaki’s Coaching Program

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Comments

4 Comments on The Right Path To Financial Freedom

kenyantykoon on Fri, 30th Oct 2009 2:57 pm

i have read most of robert kiyosaki’s books and he has a real talent of snapping an ignorant mind out of financial complacency in a way that makes finances and investing seem simple

[Reply]

Financial Samurai on Fri, 30th Oct 2009 8:29 pm

Ahhh the great enterprising Kiyosaki who got rich from selling books and marketing himself. Genius.

I’d build your real estate empire now. If I don’t buy another rental property in the next 20 months, I know I’ll be kicking myself in 15 years. The math makes total sense!

[Reply]

CarloBlogg Online 3.0 on Fri, 30th Oct 2009 9:21 pm

I believe that the “B” should be the start too. Personally, I’m trying hard to build my “B” from the ground up.
Correct me if I’m wrong but are we Filipinos “built-in” with the idea to strive for the “E” and “S”? just a thought =D
I’m thinking of going for the “I” too, but personally I really don’t know how to do it or where to start. haha, maybe your blog will help me =D
really nice post sir!
Thanks for visiting my blog by the way =D

[Reply]

Drogomoss on Sat, 31st Oct 2009 7:26 am

I’ve read about this quadrant in Robert Kiyosaki’s book. But well it’s easier reading it than really giving it a go. To many paradigms trap me into moving flawlessly to the best quadrant.