Brief Commentary
The Cashflow Quadrant is a follow-up to Robert Kiyosaki’s famous book Rich Dad, Poor Dad. I find this book superior to the original because it contains a lot more meaty ideas. Some of the ideas I first read in this book have nourished and sustained me as an entrepreneur for many years.
I love the simplicity of Kiyosaki’s visual explanations. The core symbol of the book – the cash flow quadrant – can become a symbol and a map for your entire wealth building journey. It serves as a powerful explanation of the different methods of earning cash flow.
If you want to achieve financial freedom, it’s made clear in this book that you should study and move towards the right side (B-business owner and I-investor) and away from dependence on the left side (E-employee and S-self-employed) of the cash flow quadrant.
I often hear complaints about Kiyosaki’s books that they lack practical tips and tend to be repetitive. But I don’t share that complaint with this book. I found it a high-level, principle-based guide to financial freedom. If you absorb the big ideas, they can serve you well as you continue your education in the more practical aspects of business and investing.
Here is a list of my favorite big ideas from the book. I’ll unpack each one in a separate short article. Some are ready immediately, and others will be written at a later date.
My Favorite Big Ideas From the Book
- Cash Flow Quadrants – How You Earn Your Income Matters … (See My Article)
- How to Achieve True Financial Security … (See My Article)
- How Money Supports Life … (See My Article)
- The Power of Business Leverage – OPM and OPT … (See My Article)
- Case Study of Rich Dad’s Path to Financial Freedom
- Financial Statements – How to Be a Financial Fortune Teller
My Favorite Quotes From the Book
Man is born free; and everywhere he is in chains. One thinks himself the master of others, and still remains a greater slave than they.”
Jean Jacques Rousseau (quoted inside the front cover of the book)
Security is a myth. Learn something new and take on this brave new world. Don’t hide from it.”
Success is a poor teacher … We learn the most about ourselves when we fail … so don’t be afraid of failing. Failing is part of the process of success.”
You can do anything you like, go as fast as you like, make as much money as you like, but you have to pay the price. You can go quickly, but remember there are no shortcuts.”
The hardest part about moving from the left side to the right side is the attachment you have to the way you have been earning money … it’s more than breaking a habit; it’s breaking an addiction.”
The fact is, people who work the hardest do not wind up rich. If you want to be rich, you need to ‘think.’ Think independently rather than go along with the crowd.”
Thinking is the hardest work there is. That is why so few people engage in it.”
Leadership … is the ability to bring out the best in people.”
If you want to be a leader of people, then you need to be a master of words.”
If You Liked This Book, You Might Also Like:
- Rich Dad, Poor Dad by Robert Kiyosaki ( Print | Ebook | Audiobook)
- Your Money or Your Life by Joe Dominguez and Viki Robin (Coach’s Notes | Print | Ebook | Audiobook)
- The Millionaire Next Door by Thomas J. Stanley and William D. Danko ( Print | Ebook | Audiobook)
- Think and Grow Rich by Napoleon Hill (Print | Ebook | Audiobook)
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Agree that this is a very good book for those looking to understand the wealth building process. It definitely challenged assumptions I had and made me approach wealth building much differently. The biggest impact for me was understanding the massive tax advantages available to those on the right side of the quadrant compared to the left.
I also agree that once you’re on the left side of the quadrant (where I’ve made my living) it is a bit of an addiction and the feeling of security of a paycheck makes it difficult to go to the right side. Understanding this caused us to set hard deadlines to leave jobs to start our transition from primarily employees who invest to investors who may dabble in part-time employment or business ownership.
Thanks for pointing out the tax advantages of the right side. That was a big part of the book, and I did not mention it. It’s not guaranteed to last forever, but for now income on the right side has a much lower tax impact (capital gains or sheltered rental income, for example). Plus there are handy deferral tools in real estate investment like an installment sale and a 1031 tax free exchange.
The psychology of a paycheck is a big one. The uncertainty of entrepreneurial income can be unsettling. I like your approach of setting deadlines. It forces you to make a change that you know you need to do.
I really like all the Kiyosaki books, but I would have to say the “Cashflow Quadrant” is probably one of my favorites just because it really opened my eyes up more than most of the others.
I agree that we hear criticism about his books not being specific, but that’s not the point of them. The books are meant to be idea-generators and get you to know there is more to life than working a 9-5 every day and legitimate ways to make that happen.
— Jim
Agree, Jim. Some books are manuals, others are paradigm shifters. The first few books by Kiyosaki do the latter very well. I’d venture to say Kiyosaki has woken more people up from the rat race grind than any other educator or writer out there. From that perspective, he’s done a huge service to us all.
I read Rich Dad back in high school and think it had a pretty profound effect on me. I didn’t know it at the time though!