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Cashflow Quadrants and How to Change Quadrants



“Giants often trip and fall, but worms don’t because all they do is dig and crawl.” – Rich Dad

Robert Kiyosaki is one of the world’s most respected experts in Business, Personal Finance and Investing. As a follow up to his book Rich Dad Poor Dad, Robert writes the book CASHFLOW Quadrant as a powerful guide to anyone seeking financial freedom. This article will discuss what the CASHFLOW Quadrant is and how to change Quadrants.

The CASHFLOW Quadrant references four different types of people who make up the world of business. Each of us resides in at least one of the four Quadrants of the CASHFLOW Quadrant. We are all located in different Quadrants based on where our cash comes from.

E: Employee, You Have a Job
S: Self-Employed, You Own a Job
B: Business Owner, You Own a System & People Work for You
I: Investor, Money Works for You

The letter in each Quadrant represents the Employee, Self-Employed, Business Owner, and Investor. The CASHFLOW Quadrant represents the different methods by which income or money is generated. Many people rely on paychecks and are therefore employees, while others are self-employed. Employees and self-employed individuals reside on the left side of the CASHFLOW Quadrant. The right side of the CASHFLOW Quadrant is for individuals who receive their cash from businesses or investments they own.

In order, to generate income from different Quadrants it requires different skills and different personalities, even if the person found in each Quadrant is the same. Going from Quadrant to Quadrant is like cutting your grass one day and attending the symphony the next day.

No matter what you do professionally, you can still work in all four Quadrants. For example, a cosmetologist may work in a salon or barbershop, work for a spa, or work for a hotel in the hospitality industry, or join the staff of a resort needing a cosmetologist on it staff. This same cosmetologist could choose to generate an income as an “S”, a self-employed person, and start a salon, setting up a location, hiring a staff and building a private list of clients.

As another choice, the cosmetologist could decide to become a “B” and own a franchise or string of salons and have other cosmetologists on staff. Probably this cosmetologist would hire a business manager to run the organization. In this case, the cosmetologist would own the business but not have to work it.

Also, the cosmetologist could decide to own a business that has nothing to do with the personal appearance field, while still being a cosmetologist somewhere else. In this case, the cosmetologist would earn income as both an “E” and as a “B.” As an “I”, the cosmetologist could generate income from being an investor in someone else’s business or in vehicles like the stock market, bond market and real estate.

The Quadrant we choose to earn our primary income from is not so much what we learned in school; it is more about who we are at our core values, strengths, weaknesses and interests. It is these core differences that attract us to or repel us from the four Quadrants.

Which Quadrant are you in? Is it the right one for you? Are you ready to change Quadrants? This article is especially for individuals who are currently in the “E” and “S” categories and are contemplating becoming “B’s” and “I’s.” It is for people who are ready to move beyond job security and begin to achieve financial security. Creating your lane to the right side of the Quadrant is not always easy but the reward at the end of the trip is worth all the effort you can muster. Essentially, it is the lane to your financial freedom.

So what does it take? It takes a vision, a lot of resolve, an eagerness to learn without delay and the ability to use your God given talents appropriately and to recognize which part of the CASHFLOW Quadrant to generate your income from. To find success in the “B” or “I” Quadrant involves more than simply educational or practical knowledge. It often requires a change in our core – emotions, thinking, feelings, beliefs and attitude. Creating your own lane to the right side of the Quadrant takes positive human zeal, zeal in trust, faith, courage and an association with like minded people. You may have to take risk. This risk will lead you to mistakes and these mistakes will lead you to wisdom and knowledge. The disappointment would be to let fear win, so you have to be willing to move forward with little in guarantees. See failure is a part of the process of success.

Creating your own lane from one Quadrant to the next is an internal voyage. It is a voyage from one set of core beliefs and practical skills to a new set of core beliefs and a new set of practical skills. To a great extent, the process is like riding a bicycle. At first you fall down frequently and normally it’s discouraging and embarrassing, especially if your friends are watching. But after a while, the falling stops and the riding becomes habitual. If you fall down again, it’s not that big of a deal because, internally, you now know that you can get up and ride again. The process is the same when going from an emotional mind-set of job security to the emotional mind-set of financial freedom.

The main reasons so many people struggle to create their own lane to financial freedom are not because of the lack of good education, or not working hard enough. It’s because they are afraid of losing. If the fear of losing stops you, then you have already lost.

Decide to win. Decide to chart your voyage today; thereby, “Creating Your Own Lane” in business success.


Source by Arthur Horton


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