12/29/2023 0 Comments Rich dad poor dad cashflow chart![]() ![]() Then cover up all the income that doesn’t come in the form of cash flow, and see how many beats your heart skips. Cash flow is money that flows into your pocket, automatically, on a regular basis.Īn enlightening exercise is to list out all your expenses in one column and your income in another. Cash flow is not the extra money you make busting your butt on the weekend driving people around for Uber. Money you don’t have to work for by trading your time. When I want to assess the financial health of a business or a person, I look first at their cash flow.īy cash flow, I mean passive income that comes through business or investments. But if you don’t have cash flow, you’ll quickly lose it all. You can have an impressive balance sheet. You can have the best ideas in the world. Rich dad said, “The most important words in business and investing are ‘cash flow.’” The book sells for something like 8 bucks on Amazon, so its a cheap read.Īs always, if you are interested in starting any new business venture be sure to do your research before investing money or time.New Rule of Money #3: Learn How to Control Cash Flow Either way it has inspired people to strive for more, to develop “cashflow” (or passive income) and ultimately reach financial freedom.įinally, the Cashflow Quadrant is fully explained in Robert Kiyosaki’s book by the same name, Rich Dad’s CASHFLOW Quadrant: Rich Dad’s Guide to Financial Freedom. Others look at it as a simple break down of the business world. Many people look at the cashflow quadrant as a road map to financial freedom. The cashflow quadrant breaks down the flow of income and which businesspeople are more likely to make more cash than the others. Now that you know the different parts of the cashflow quadrant, what does it do? Well, the answer isn’t all that simple. Any of these investment options will allow your money to make money for you. Open a life insurance policy, IRA or 401K. The best investment you can make is an investment in yourself though. This can mean that you have a diversified stock portfolio, stock in a specific company or even placing your money in gold or oil. You can also be an investor and continue belonging to other parts of the quadrant. ![]() People generally work their way up to the investors spot in the cashflow quadrant. Anyone who doesn’t rely on their own work (or the work of others, in a business owner’s position) to earn money. The main difference between being a business owner and being self-employed is that the money a business owner earns doesn’t come from any work they did personally (similar to passive income but a bit more hands-on). Business owners are similar to self-employed individuals in that they crave freedom but business owners crave both financial freedom and want to have their free time as well. You get to decide your schedule for the most part and you basically get to decide how much money you earn.įollowing the self-employed section of the quadrant are business owners. Many people remain employees for the security but being self-employed can provide you with great freedom. Becoming self-employed is a great decision for many people but it is not for everyone. The next quadrant is the self-employed quadrant. Employees are also generally looking for security in their job and there is much less “security” in the other three quadrants of Kiyosaki’s. An employee is usually paid hourly or paid a salary. This, as stated before, stands for employees. Practically everyone starts out in the “E” section of the quadrant. They are represented by letters in the quadrant (E, B, S, I). These parts are labeled employee, business owner, self-employed and investor. The cashflow quadrant was published in 1996 (the second in Kiyosaki’s “Rich Dad, Poor Dad” series) and shows people who to work less and earn more but how does it work? How to Read the Cashflow QuadrantĪs mentioned above, there are four separate parts of the cashflow quadrant. It is separated into four parts (employee, business owner, self-employed and investor). Using the quadrant he was able to break down different career paths and help others visualize what makes each part of the business world attractive. The cashflow quadrant was created by Robert Kiyosaki. The four-part flow chart has been helping entrepreneurs for years but what is the cashflow quadrant and how can it help businesspeople? What is the Cashflow Quadrant? If you are involved in business you have probably heard of the cashflow quadrant.
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