This Cash Flow Quadrant applies to Network Marketing System. To my rich dad that was bad advice and made no sense. So, why would you save something that loses money every year?Īnd what does this mean for you or for somebody on the retirement plans, if the value of the dollar goes down and your cost of living keeps going up after you retire? "When you take a look at this 40-year run on the dollar, the dollar is designed economically to lose money every single year. You work hard for a few years and possibly for the rest of your life that passive income keeps flowing to you."įrom 1960 to 2000 the value of the dollar has declined steadily.
So the beauty of building a business and learning how to invest is very simply that this is passive income.
They don't want to have to work for the rest of their lives. They don't want to have to work in a job anymore. On the right side of the Cash flow Quadrant the B and I people's key value, what they want is they want Freedom, financial liberty. On the left side of the Cash Flow Quadrant, these people work for security, they work for money also. So my rich dad suggested I learn how to be a business owner and learn how to be an investor. Whereas my poor dad said, "work hard." But my rich dad said, "Why would you work hard for something you'll never own, and you can get fired from it right away?" Again, that was the difference of values. Something you own, and something you pass on from generation to generation to your kids. He wanted a job security, promotions, steady pay check and all these.Īnd so it was my rich dad who said to me, "You know, Robert, if you really want to be rich, learn to build businesses." It made more sense to him to work hard to build a business. So, early on in my life it was my poor dad who always said to me, "You know Robert, go to school, get a high paying job." And so my poor dad's core value was to be an employee. And these people in the E & S Quadrant are the people who work hard for the rich here in the right side of the Cash Flow Quadrant, for the Bs and Is. These people in the B Quadrant have people work hard for them. These are people who have money work hard for them.
They want smart people run the company for them."Īnd then, the fourth of the Cash Flow Quadrant is the I. They'll say, "I'm looking for good system, good network, and the smartest people I know to help run my business." Unlike the S, they don't want to run the company by themselves.
For Bs define big business as 500 employees or more. And my rich dad said, "the B stood for big business, or like Bill Gates. THE CASH FLOW QUADRANT On the right side of the Cash Flow Quadrant are the Bs. Generally one person act, they operate by themselves. The other one of the four is the S for the small business owner or the self-employed and again their core values will cause them to use the same words which are, "If you want it done right, do it by yourself." S means they are also solo. The words are, "I'm looking for a safe, secure job with benefits." That's what makes them employees because their core value is security."
An employee with the president, the generator of the company, will always say the same words. And the employees, you can always tell who they are by their core values. So my rich dad said, "In the business world there are Es and E stands for employees. And the Quadrant is made of four different people who make of the business world. It was a diagram known as the Cash Flow Quadrant. "There was an important diagram my rich dad showed me when I was a little boy.
The Cash Flow Quadrant is an important diagram presented and explained by Robert Kiyosaki: