#4 CASHFLOW QUADRANT HOW TO#

Within this quadrant, the income is completely passive. As an investor, you own assets that can produce an income for you. Investors can be found on the lower right side of the quadrant. That means that they are still receiving an income even if they stop working. When a business owner stops working, the business can continue to run without them. Many of the wealthiest people in the world are business owners. A successful business is one that can run without the business owner’s continual presence in the process. As a business owner, you own a system and hire employees to work for you.

On the top right side of the quadrant, you’ll find business owners. When a self-employed individual stops working, they no longer have an income. Although this can lead to a higher income in the present, it may lead to burnout in the long run. With self-employment, many feel the pressure to continue pushing themselves harder. Plus, many self-employed individuals earn a very good living. With that comes more freedom and flexibility. In this quadrant, you are in charge of your own job. Instead, you own the job that you are doing.Ī few examples of a self-employed individual include a freelancer, handyman, insurance agent, and more. As someone who is self-employed, you are not working in a traditional job. With that, your financial freedom and security are dependent on the job that employs you.īelow the employee quadrant, you’ll find the self-employed quadrant. With that, you are at the whim of your employer to continue working and earning an income. But if you stop working for your employer, then your paycheck will stop as well. In this quadrant, you may earn a high or low income. In exchange, you receive a paycheck and possibly additional perks. You spend time and energy helping your employer accomplish tasks that further their business goals. When you are an employee, your job is owned by the company you work for. Many people are employees at some point in their careers, and many stay in that upper left corner for their entire career. EmployeeĪs an employee, you are in the upper left corner of the quadrant. Let’s take a closer look at the quadrants.Īs you are working to build a solid financial foundation, the cashflow quadrant can help you set up your income in the most productive ways. With more passive income, you can start to enjoy more financial freedom. The reasoning behind the shift is that you want to move from an active income source to a passive income source. But the goal is to move towards the right side of the quadrant. Most of us start on the left side of the quadrant. Different types of income result in different forms of financial stability.

The cashflow quadrant is a concept to help you visualize where your income is coming from. Let’s take a look below: Employee (E)Ī concept of the cashflow quadrant is a guide to maximize your cashflow success. The quadrant is a table divided into four corners. The cashflow quadrant is a concept that Robert Kiyosaki shared in his book Cashflow Quadrant: Guide to Financial Freedom. Here’s what you need to know about the cashflow quadrant.

#4 CASHFLOW QUADRANT HOW TO#

One of the best ways to use your income efficiently is to eliminate your housing expenses through the power of house hacking? Learn how to harness this powerful tool in our free House Hacking Quick Start Guide. As you are working to build a solid financial foundation, the cashflow quadrant can help you set up your income in the most productive ways. A better understanding of the cashflow quadrant can help you achieve financial success.

4 cashflow quadrant