What is the “Cashflow Quadrant”? Robert Kiyosaki Explains

Welcome to another Self-Development Saturday which is quite different from the past two weeks’ sharing.

Unlike the usual personal growth topics, I decided to include this as I found Robert Kiyosaki’s explanation of the cashflow quadrant to be one of the best financial education that gives an insight on the different way income is earned.

Everyone knows Robert Kiyosaki’s Rich Dad Poor Dad, the best seller in the personal finance genre.  Well, all the valuable information in that book is well summarized in his Cashflow Quandrant.

It reveals how some people are able to earn more while working less, achieving financial freedom faster.

There are 4 cashflow quadrant which explains the different ways of earning an income.

Now, before I continue, I would like to stress there is absolutely no right or wrong way.  This is just an explanation on how income is earned in different cashflow quadrant and this may be able to help you decide how you want to pave your way to financial freedom or even building a retirement fund.

Cashflow Quadrant

On the left, this is where 5% of total wealth is earned by 95% of the population.  One of the most prominent characteristics is the element of exchanging own time for money where income depends on individual’s active work on the concept of linear income.

Today I will do what others won't, so tomorrow I can accomplish what others can't. ~ Jerry Rice Click To Tweet

On the right, 95% of the total wealth is earned by 5% of the population.  There is an element of leverage and income does not depend on active work, which means having the source of residual income in these two quadrants.

Here is a 18 minute video which clearly explains the 4 quandrant by Robert Kiyosaki and he explained why the rich is getting richer, widening the income gap.

He talked about the business of the 21st century and encouraged people to go into business and move towards the quadrant on the right to achieve financial freedom.

Most people never get wealthy simply because they are not trained to recognize opportunities right in front of them. ~ Robert Kiyosaki Click To Tweet

Are you looking for security or freedom?

While money is not everything, but without it poses lots of constraints.

The way I have always look at things is that time is a valuable resource.  Everyone has that same resource of 24 hours a day.

It then depends on how you want to use it.  You have the option to sell off your valuable resources and get immediate income for it.

On the other hand, this same resource can be invested to build other streams of income, moving towards the quadrants on the right.

Moving towards the quadrants on the right is the way to financial and time freedom.  The earlier you invest your time building towards the right quadrants will help you achieve that faster.

Check out Cashflow Quadrant by Robert Kiyosaki as well as other favorite reads that have impacted me greatly!

Enjoyed this Cashflow Quadrant explanation by Robert Kiyosaki? If you find value in helping you understand the journey towards financial freedom, share this article with your friends on social media to help one another!

Let’s get connected on Facebook.