Rich Dad, Poor Dad – Cashflow Quadrant review
Robert Kiyosaki’s Rich Dad, Poor Dad book is a very popular book in the business world and it’s understandable why; it’s a very well written book, explaining the lessons he learned from his ‘two’ dads. One poor and one rich dad. Kiyosaki is the author of many other great books, such as – The cashflow quadrant.
The Cashflow Quadrant book highlights the advantages a person has if he or she invests in their financial education. Robert Kiyosaki (The author) explains how people’s understanding of money plays a monumental role in how that same money is used/spent. The theme Kiyosaki uses explain this point is by introducing the 4 different sections of the cashflow quadrant that represents the four different types of people there are, the four sections are as follows:
The Cashflow Quadrant:
E – Employed
Earns money through a job, working for a boss/ company. Typically their cashflow follows Income → Taxes → Expenses.
S – Self Employed
Earns money by working for themselves and can include a small business with a very small number of employees.
B – Business Owner
Earns money through owning a business that makes money.
I – Investor
Earns money from their various investments; essentially their money makes more money.
A good analogy for explaining the cashflow quadrant is:
“An employee represents a cog in a machine. A self employed person is the machine. A business owner owns the machine and pays someone to operate it and an investor pays to keep the lights on”.
Robert Kiyosaki tries to explain that whilst every section of the cashflow quadrant has its advantages and disadvantages and there is no section better than any of the others, without financial education you will always struggle with your finances.
Another key theme Kiyosaki introduces in the book is the idea that it doesn’t matter how much you earn, but how much you keep. Most people focus on income rather than assets. The book explains that some of the richest people in the world spend all their time acquiring assets that produce positive cashflow.
Kiyosaki challenges what people think the ‘rat race’ is. Most people think about the rat race as just having a 9-5 job, whilst Robert does agree with this to some degree he thinks it has more to do with people’s relationship with money rather than the 9-5 job itself. He explains that people have a tendency to spend all of their income on general expenses such as a car, a phone, rent and so on. This is where Robert points out the problem. When you spend everything you earn each month, it requires you to go to work the following month in order to pay your bills again. It’s this that Robert describes as “living on your financial red line” and thus results in being in the rat race.
The CEO club’s thoughts:
In our opinion Robert Kiyosaki’s Cashflow quadrant is a must have for anyone interested in getting started as an entrepreneur. Understanding how money works can be the foundations for any successful entrepreneur. The book also covers how to manage risk, understanding how to leverage money, the basics of how money works and most importantly the differences between assets and liabilities, all of which are essential for becoming a great entrepreneur!
Honestly, out of all the books we will be reviewing this one takes the top of the list as the best we have read, we don’t think any review can do it justice. It is a very well written masterpiece yet again from Robert Kiyosaki.
If you interested in reading any other books from Robert Kiyosaki, we recommend Rich Dad, Poor Dad; another brilliant book in which Robert takes us back to the very beginning of his entrepreneurial journey and shows you the lessons and knowledge he has learnt along the way:
Our CEO score: