The Cash Flow Quadrant is a concept created by Robert Kiyosaki
The quadrant explains the process it takes to be wealthy or remain an “averager”.
Dividing the quadrant into 2 halves to the left and to the right
The left side has the EMPLOYEE and the SELF-EMPLOYED portion while to the right for the BUSINESS ONWERS and INVESTORS
The cashflow quadrant is explaining why no one can ever become wealthy as an employee or a self-employed
As an EMPLOYEE , you trade your time for money and the likelihood of you becoming wealthy in this zone is very very slim, if not zero.
Being SELF-EMPLOYED simply means you run your own business yourself. Maybe you sell products, you render service and stuffs. You do this yourself. No staff, no worker, nothing. Which simply means you have to be present to run that business. If you’re not available the business is not functioning.
BUSINESS OWNER; one major difference between self-employed and business owner is the structure you put in place in your business, whereby the business does not even need you to be present to run effectively. Now you see where I’m coming from when I say you can only build wealth being a business owner or an investor.
As a structured business owner, your business gives you the freedom to do several other things while people run it for you in your absence. Your are the CEO/MD but you have staffs unning the business for you and money keeps coming in either your on ground or not.
More to discuss here but I’ll stop for now.
Lastly, being an INVESTOR simply means you put your money somewhere to work for you. Investment has proven to be the best way multiply money.
Warren Buffet would say, “if you don’t make money while you sleep, then you’ll be poor for the rest of your life”. This means you can’t attain real wealth of you don’t have an investment portfolio that generates for you passive income on a steady.
Thats not the end of the Cash Flow Quadrant analysis
In order for you to escape the rat race trap of being an EMPLOYEE and SELF-EMPLOYED and move to the wealth zone of being a BUSINESS OWNER and an INVESTOR, below is what you should do:
As an employee, you should rather not think of quitting your job to start a business (become self-employed). The best you should do is while you keep you 9 to 5 job, be an investor. Doing this gives you streams of income apart from you salary.
Secondly, if you’re self-employed, you can start working towards having a more structured business where you can afford the freedom to explore other things while people work for you. It’s easier for you to become an investor as a business owner than as a self-employed.
There’s more to discuss about cashflow for more clarity and better guidance to building wealth using the cashflow quadrant.
As for now, let’s digest the little shared
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