Rich Dad's Cashflow Quadrant: Rich Dad's Guide to Financial Freedom

Rich Dad's Cashflow Quadrant: Rich Dad's Guide to Financial Freedom

Robert T. Kiyosaki, Sharon L. Lechter

INTRODUCTION

The author explains to the reader the different types of quadrants there are to making money. The reader can determine which quadrant they fall into. This represents the way the reader generates their income. This book also tells readers how they can go from one quadrant to another one. Kiyosaki is educating individuals how to become rich. The best way to become rich is through investing. I will discuss two points from Kiyosaki's Cash Flow Quadrant, The four quadrants and the seven levels of investors.

THE QUADRANTS

The first quadrant is the "E" quadrant. The E represents employee. The employee makes money for the business owner. The employee is concerned about security and benefits. To this type of person security is more important than money.

The second quadrant is the "S" quadrant. The S represents the self-employed. These people want to be their own boss. They don't want their income determined by someone else. Most people that fall into this category are professionals like doctors, lawyers, and accountants. Most people in this group feel that for the job to be done the right way, and then they have to do it themselves. Most of these people are perfectionists. These people are driven by their independence and freedom not by money.

The third quadrant is the "B" quadrant. The B represents the business owner. Business owners surround themselves around smart people. This group feels why do it yourself when you can hire someone to do it for you. This person can probably do it better than you. The business owner can take off for a year or more and the business will still be making money. This person needs to have leadership skill to bring the best out of people.

The forth quadrant is the "I" quadrant. The "I" represents the investor. Investors make money with money. This person doesn't have to work because their money is working for them. Most business owners are apart of this group. The rich become wealthy because their money converts into wealth.

THE SEVEN LEVELS OF INVESTORS

Level 0 of investors are those with nothing to invest. This level is people who spend all the money they make or they live beyond their means. More than 50% of the population falls under this category.

Level 1of investors are borrowers. This group solves their financial problems by borrowing money. Sometimes they invest the money borrowed. The things of value this group owns are attached to debt. Credit cards are paid off by accumulating more debt by obtaining a home-equity loan. This way they can pay off their bills and purchase more items. They feel if they work harder and make more money they will be able to pay the debt off. This is a misconception because this group spends more than they have and they continue the same cycle of borrowing to pay off debt.

Level 2 of investors are savers. Savers are people that take money and put it into savings accounts, checking accounts and/or certificate of deposit. They contribute to an IRA or mutual fund accounts. They believe it is safer to save than invest. They don't want to take the risk of losing money. They feel paying in cash and the bank account