There are so many great books out there to get into, study, and explore to enrich your knowledge and craft as a real estate agent and as a business professional in general, but Robert Kiyosaki’s Cashflow Quadrant is definitely one of the best! That said, not everybody has the time, energy, or, frankly the interest to be able to go cover-to-cover on books like this, and that’s understandable. That doesn’t mean you should be barred from gaining and applying this knowledge, however. Here’s a quick, no-nonsense overview of what you need to know from one of Kiyosaki’s best.
The cashflow quadrant refers to a four-way division of what income streams look like. Picture a big plus sign with an E in the top left corner, a B in the top right, an S in the bottom left, and an I in the bottom right. Here, E stands for employee, S stands for self-employed, B stands for business owner, and I stands for investor.
The difference between employee and self-employed simply comes down to who you work for. Either you work for yourself, or you work for somebody else. The similarities between these two, however, is why this side of the quadrant is not where you want to be. The main drawback here is that, on this side of the quadrant, your income equals your work put in.
While that might not seem horrible, it also gives you little to no flexibility or stability. You may be living paycheck to paycheck, and without a good amount of savings, any vacation decision or similar can be a gamble at your bank account. You’re working and making money but, ideally, your money should be working for you.
On the other side of the quadrant, we have a business owner and investor. The common thread here is that you have an income stream that is more or less independent from your own work and time. As a business owner, such as an independent broker with agents, those deals where your agents close land money in your bank account whether you’re in the office or on the beach. As an investor, even better, the money you’ve invested practically multiplies itself (as long as you’ve made wise investments).
This is where we all want to be. This is a large step away from paycheck-to-paycheck, and a comfortable step towards “passive” income streams that allow you to have more flexibility and more freedom in your everyday activities and expenses. Getting your money to work for you one way or another is the goal, and it’s as simple as staying on the right side of the quadrant.
Easier said than done, right? Actually, in the real estate industry, you aren’t too far from achieving this yourself already! Getting to the “B” on the quadrant can mean opening your own independent brokerage, and getting to the “I” can mean investing in properties with the expertise you already have. With a few classes and the right content to learn, you’ll see that you’re only a few steps away from this proper Cashflow: