One of the first eye openers for me is the Robert Kiyosaki’s Cashflow Quadrant. So far, it is the single and most powerful idea that I absorbed from Kiyosaki as it helped me improved my education on financial literacy.
There is no doubt that each one of us has interests in improving our financial situation. Before you can begin your journey to financial freedom, you need to figure out exactly where you are because if you don’t know where you are, you can’t know where you’re going. So, where are you in the ESBI Quadrant?
As a recap here are what the letters in each quadrant represent:
Employee: Employees earn income by working for other people.
Self-employed worker: Self-employed people earn income by working for themselves – they own their jobs.
Business owner: Business owners earn income from the businesses they own
Investor: Investors earn income from their investments – from money generating more money
Everyone is at least on one spot of the quadrant. Generally speaking, people in the B and I quadrants reach their financial goals more quickly than people in the E and S quadrants. The good news for you, if you inhabit the left side of the quadrant, is that you don’t have to be stuck there. You can move to the right side. Indeed, if you want to be financially free you have to move to the right side. Moving quadrants is a matter of choice and financial education.
Changing quadrants means altering who you are, how you think, and how you look at the world. The change is easier for some people than for others simply because some welcome change while others fight it.
Think about how you generate most of your income. In which quadrant do you primarily fall? Knowing the answer will help you chart your course into the future.
Where Did Robert’s Rich Dad & Poor Dad Fit In?Robert’s poor dad worked hard, but on the left side of the CASHFLOW Quadrant. By working hard, he got promoted and gained more responsibility, but as he climbed the ladder, although he earned a higher salary, he never had much to show for it beyond longer hours at work and higher tax bills.
Robert’s rich dad worked hard on the right side of the CASHFLOW Quadrant. He climbed his own ladder, and the higher he climbed, the more time he had for his family. When his 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. Most importantly, even as he made more money than Robert’s poor dad, he paid even less in taxes due the advantages on the B & I side of the quadrant.
If you’re like most people, you’re on either the E or the S quadrant. But the simple fact that you are reading this blog entry means you’re contemplating becoming a B or an I. You’re getting ready to move beyond what you think is job security and toward financial freedom.
So where are you in the ESBI Quadrant? As for me, I’m still in the E-Employee Quadrant but I’m also doing the S-Self Employed Quadrant. Occasionally, when opportunity arises, I also shift to the right particularly in the I-Investor Quadrant for my money to work hard for me. This is through investments in UITFs, stocks, and mutual funds. When time comes, I would like to devote more of my time in the left quadrant to have more free time and achieve financial freedom.
Source: Robert Kiyosaki’s Coaching Program