Robert and Kim Kiyosaki captivated by a speaker

The Leap from Left to Right

You are now free to move about the CASHFLOW Quadrant

Last week, I talked about how January is a time for new beginnings—a chance to chase big dreams and make changes that can positively impact your life. Hopefully you’re feeling inspired and ready to do things differently in 2018. Just like when the pilot flips the switch for the seatbelt light and announces that you’re now free to move about the cabin, I’m giving you permission to move about your life differently this year.

But maybe you haven’t quite put your finger on what you should focus on? That’s OK, I have an idea for you to consider. First, some background info:

There are four different ways to make money:

  1. Employee
  2. Small business/self-employment
  3. Big business
  4. Investing

If this philosophy sounds familiar, it’s a Rich Dad staple that’s called the CASHFLOW Quadrant. Every person who generates income resides in at least one of the four sections (quadrants), and where you are is determined by where your cash comes from.

Many people are employees who rely on paychecks. Others might be self-employed. Employees and self-employed individuals reside on the left side of the CASHFLOW Quadrant. The right side is reserved for those individuals who receive their cash from businesses or investments they own.

Cashflow Quadrant

While financial freedom can be found in all four of the quadrants, the skills of a B or I will help you reach your financial goals more quickly. Most notably, successful Es need to become successful Is to ensure their financial security during retirement and downturns in the economy.

In the B quadrant, people are working for you; in the I quadrant, your money is working for you. You are free to work, or you can choose not to. Don’t the B and I quadrants sound like a magical place to be? Trust me, they are.

The Definition of an Entrepreneur

While we’re on the subject, I want to share a pet peeve: People in the S quadrant like to throw around the term “entrepreneur” when describing themselves and the work that they do. Sorry, but I’m about to burst your bubble. If you spend your days (and nights and weekends) trading your craft (writing, designing, photographing, pet sitting, driving for Uber, selling multi-level marketing products, etc.) for money, then you, my friend, are self-employed. If you take the day off, you don’t get paid. It’s as simple as that. You’re working for your money; your money is not working for you. I’m not taking anything away from your ambition or work ethic or financial success—but those characteristics don’t make you an entrepreneur. True entrepreneurs would absolutely never consider taking a well-paid and “secure” job over chasing their own dreams to build something. In fact, the goal of a true entrepreneur is to build a company that will eventually produce revenue without them.

Transitioning to the Right Side of the Quadrant

So now the big question is: Do you want to change the direction of your financial future and operate on the right side of the quadrant (B and I)? Are you motivated by a dream of financial independence and prosperity? Good! It can be yours.

To be a B or I, you must be able to control the direction of your cash flow. Those with B and I skills will be able to more easily identify and seize opportunities for financial reward. B and I folks focus on creating assets to provide their income source using other people’s time and money. Above all, they value financial freedom.

Now, you may think you need to go back to school to pursue an MBA or some other degree that will help you figure out how to make more money or acquire the skills inherent in those who live in the B and I quadrants—but that couldn’t be further from the truth.

If you’re going to invest the time and money to learn something new, then focus on learning how to operate on the B and I side of the CASHFLOW Quadrant. No degree program will teach you how to be a successful investor. But you can teach yourself by reading Rich Dad’s CASHFLOW Quadrant and attending some of our workshops. Sure, an investment of time and money is required, but you’ll experience a much better return on your investment than you would with a traditional education.

So if you have decided that 2018 is your year to improve your financial situation, take all the steps you can toward the right side of the CASHFLOW Quadrant. Take off that restrictive seatbelt and make a right turn!

Original publish date: January 18, 2018