Rich Dad’s Cashflow Quadrant is an eye opening book. If you are considering giving it a read, here is a very brief summary of what you learn.
I am a big fan of the rich dad poor dad book series. So far the most interesting one for me personally is Rich Dad’s Cashflow Quadrant.
It represents where people make their money from. Each quadrant has different people in them and while you can become rich in all of them, due to taxes, laws and other stuff it is easier to become rich on the right hand side, in the B and the I quadrants.
The first quadrant is the employee quadrant and that’s where most people reside. Employees get a pay check from a company and this is the status quo. The people here value security above anything else and are generally not risk takers. They have the worse deal in terms of taxes as income tax is one of the highest and takes a slice even before the person has seen their pay check.
The second quadrant is the s, which means self employed i.e. you run a business. These people take lots of risks but I would stay away from this quadrant because it is a tough life, with long hours approx. 70 hrs a week. The problem with people in the S quadrant is that they are integral to their business and if they left for a period of time there generally wouldn’t be a business to come back to.
The third quadrant is the business owner quadrant which means you own many businesses or a system. This differs from the S quadrant because the people here could leave their business and come back to them stronger and more profitable than ever because they own a robust, automated/self-regulating system. Franchises i.e. McDonalds are the perfect example of a business system. A person can purchase a tried and tested system and if they follow it to the tee they are pretty much guaranteed to make money.
The fourth and final quadrant is the investor quadrant, this is where you want to be if you are to become mega rich. These people make money work for them. They generally have owned businesses before and that’s why they have a good understanding of how a business actually is performing. They will have a team of advisors to help manage their money and only pick the best stocks, shares, houses etc.
I would strongly advise any entrepreneur to read this. To set up your very own online business click here.
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