Robert Kiyosaki, the author of Rich Dad Poor Dad, uses a model he calls the Cash Flow Quadrant to explain the different ways income is generated. This week we will look at how income is generated in each of the four quadrants. Of course income can be earned from a single quadrant or from a combination of quadrants, but we will look at each quadrant separately in the coming days. The four quadrants are named E, S, B, and I. E stands for Employee, S for Self-Employed, B for Business Owner, and I for Investor. If you divide the quadrant of income generation in half vertically, the left side contains quadrants E and S: Employee and Self-Employed. Here, your income is considered active income. That is, for the quadrants on the left side, you get paid for the number of hours you work. The two quadrants on the left are the playing field of the poor and the middle class. On the right side of the quadrant are Business Owner and Investor, where your income is considered passive income. This means that you earn income from the labors of others. The two quadrants on the right are the playing field of the rich and financially independent. Moving from the left side to the right requires capital, education, and a new mindset. What side of the quadrant do you want to earn your income from?
Follow us on Twitter @SteveImke