What Is The “Cashflow Quadrant”?

When it comes to financial education, many of us have learned from a gentleman named Robert Kiyosaki.MillieLeung2014

Robert Kiyosaki is the best selling author of “Rich Dad Poor Dad”, the # 1 Personal Finance book in the World, and he has created the ‘Cashflow Quadrant‘ to easily breakdown the 4 types of incomes.

Now, before I start, I want to make it clear that it is NOT my intention to bash any quadrant over the other, but rather just to enlighten you with the differences (you can read my story here). As you read along, you may discover for yourself why some Quadrants are more attractive than the others.

I came across the teaching about ‘Cashflow Quadrant’ in Year 2011 when I first started my entrepreneurial journey. For some of you, the teachings of Cashflow Quadrant will be a review, but for some, this will be entirely new.  Regardless of your situation, my hope is that by understanding the sources of your income, you will begin your journey towards financial freedom.

What Is the Cashflow Quadrant?

In the ‘Cashflow Quadrant’ according to Robert Kiyosaki, you will find the 4 ways to generate incomes.

Cashflow Quadrant

On the left, you will find Employee (E) and Self-Employed (S).

On the right, you will find Big Business Owner (B) and Investor (I).

People in each quadrant have different core values and that is what separates them into different quadrants.


E for Employee

As an Employee, you have a Job.

This is the majority of the population. In this category, you trade your time for money, typically working 30 to 80 hours a week for a salary. For example, you could be a teacher, secretary, engineer, banker, pilot, nurse, doctor, lawyer or CEO of a company.

You can always tell who are the Employees by their core values and the words they use.
“I’m looking for a safe, secured job with benefits.”

The core value of employees is Security.

As an Employee, you will pay the most in taxes and you must continue to trade time for money. When you stop work, your salary also stops.

A few years ago, I was working in a corporate job. I found satisfaction in my job and I have worked hard for years to climb the corporate ladder. My salary was good (5 figure USD a month); but I was working 40, 50, 60 hours a week (sometimes more) with only a limited number of days off in a year. Often times I found that I had little time and energy left by the end of the busy workweek.

When I had my first child a few years ago, it was when I realized that I wanted to make a change; my time with my child is precious and I don’t want to have to trade my time for an income forever.


S for Self-Employed

As a Self-Employed, you own a Job. Real estate agents, insurance agents, doctors, lawyers, consultants and accountants with their own practice, photographers and graphic designers with their own studios and small business owners belong to this category.

In this category, you are still trading your time for money. In most cases, you may work even longer hours than the Employees and you have no paid vacations. When you stop working, your income drops or stops.

You can always tell who are the Self-Employed by their core values and the words they use.
“If you want it done right, do it by yourself.”

Self-Employed also pay heavily in taxes and they must trade their time for money.

Most big businesses start off as Self-Employed; as they put in a System and a Team, they have a chance to grow to become big businesses.

Now, let’s take a look at the Right Hand Side of the Quadrant.


B for Big Business Owner

“B” stands for Big Business Owner and Robert Kiyosaki defines big business as 500 employees or more.

For Big Business owners, they are looking for good Systems, good Network, and the smartest people they know to help run their business.

Unlike the “S”, they don’t want to run the company by themselves. They want to have a team of smart people run the company for them.

As a Big Business owner, they have people work hard for them. They pay the least in taxes and their business continue to generate a cash flow for them even when they sleep or vacation.

You can always tell who are the Big Business Owners by their core values and the words they use.
“Let’s have a System and put the best Team in place.” – System and Team are the 2 key elements to transition from Self-Employed (S) to Big Business Owner (B).

In this Category, you can work hard for a few years and, once your System and Team are in place, you could potentially earn passive income that keeps flowing to you for the rest of your life.

When I started my business in Year 2011, I had to put in many hours of hard work and learn some new skills that were not required in my corporate job. It wasn’t always easy and not everyone around me understood why I chose a different route because entrepreneurship was not common among my network. I had to get out of my comfort zone and faced my own fears.

Fortunately, my hard work paid off. With a Proven System and a Committed Team, my business has now expanded internationally and is now generating a multiple 5 figure USD Residual Passive Income for me every month regardless I am working or not.  I now have time to spend with my children, travel the World (click here for some of my cool adventures), give back to the society, inspire and touch the lives of tens of thousands – I totally LOVE my new life!  Read here on my Tips of how to become a successful entrepreneur and business owner.


I for Investors

Last but not least, “I” stands for “Investors”. These are the people who have money work hard for them.

Similar to “B”, Investors also pay less taxes than Employees and Self-Employed. With the right financial education, their assets could produce cash flows for them regardless of their presence.

The core value of those on the right hand side of the Quadrant (the “B” and “I”) is very different from those on the left hand side.

Big Business Owners (B) and Investors (I) value Freedom – they don’t want to have a job anymore (unlike “E”) and they don’t want to have to work for the rest of their lives (unlike “S”).


Security or Freedom?

Just look around the society, you will find that the majority of the population lies on the Left Hand Quadrants as Employees (E) or Self-Employed (S).  Some said this is 95% of the population and yet only 5% of the wealth.

As I always say, money is not everything; but without it, there are many constraints in life.

Most people trade their time the entire life just to provide for themselves and for their families; and… end up missing out on the most important things in life itself – time with loved ones, amazing friendships, seeing the world, giving back to the society and things you are meant to do and bigger impacts you are meant to make in this world.

So, where are you today in the ‘Cashflow Quadrant’?

Are you an Employee (E), a Self-Employed (S), a Big Business Owner (B) and/or an Investor (I)?

If you would like to have more Freedom and Abundance in life, then I would encourage you to learn how to build a business (click HERE to work with me) and learn how to invest properly so that you can move towards the Right Hand Side of the Cashflow Quadrants.


Success Is Not Guaranteed

80% of businesses start-ups never get to celebrate their 5th birthday.  And of those that have become successful, many successful “B’s” have lost their money through over-confidential forays in the “I” quadrant.

The attainment of financial freedom requires a high level of financial intelligence.  You need to be ready to move beyond job security (in the ‘E’ quadrant) in order to begin your journey towards financial freedom.

The most successful Business Owners and Investors are innately curious, knowledge-thirsty and uncompromising in the pursuit of their goals. They chose to learn through Mentors. They read voraciously, and attend training courses and educational seminars converting this knowledge into action.

Be under no illusions though – it can be a bumpy, windy road.

It is NOT for you if you want a secure, normal life. However, if you are prepared to make the leap, the prize at the end of this particular journey is Time and Money Freedom and, most importantly, become the person you are destined to be.  Click HERE to learn more about the book ‘Cashflow Quadrant’ by Robert Kiyosaki and find out the books that have impacted my life.

Start small and move onto bigger things, but have a goal to become a “B” or “I” on the right side of the quadrants.

Success won’t happen overnight, and it will be hard work (don’t give up!).  But if you are diligent and act despite your fear, you will find that there is a whole new world full of fun, freedom, fulfillment and abundance on the other side.  Download my eBook to learn more and on how YOU could get started today.

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With lots of love,

Millie Signature

About Millie Leung

Millie Leung teaches people how to Escape the Rat Race, Work Anywhere and Live a Life They Truly Love. Click HERE to get her FREE eBook 'Lifestyle Entrepreneur' (US$27 value).