So here is a 3 minute primer on Cashflow Quadrant. Here how it looks like. What Kiyosaki suggests is that there are four completely different mindset and qualities that exist at the 4 quadrants of the CQ. And from his personal and empirical analysis, he has observed that people on the Right side are better off at escaping the rat race than people on the Left side.
Note that the arrows here are suggestive of how you can reach from the LEFT side of the quadrant to the right side. The directions are suggested so as to maximizing your chances of successfully reaching the 4th quadrant of Investor. This is suggested as
it takes changing or developing some of your deep seated attitudes before hopping to another quadrant. Just to add to this, no quadrant is, per se, better off than another when it comes to making money. A high paying employee may be sometimes better off than an average investor. But in order to achieve financial freedom, one must have active incomes from at least 2 quadrants. And as I mentioned in the previous blog (Rat Race), your PI > Expenses. So your income coming from quadrant where you active involvement is zero should slowly catch-up and then cross your expenses.Let me explain this with a simple example. Say your monthly expenses are 50K, so all you need to achieve first to get out of rat race is to generate 50K in passive income. Now you can make this with rents from property, dividends and interests from stocks and bonds, or best of all positive cashflows from your won business. I know it’s a tough call, but just imagine the results.
So I’ll leave that decision to you. I just wanted to introduce you all to the CQ. So if you want more juice, read the book. Else wait for my subsequent posts on money-making. Just to add a final note here. I have myself decided to be out of Rat Race by Dec 2011. So let’s race to hit the escape velocity.....
Happy Reading till next post.
1 comment:
I am so glad to have met Manpreet as my close friend and colleague. I found that enthusiasm in him the very first day I met him and in a few days I thought for myself is that passion which really drives people like him?
And when he suggested me I read this book by Robert T Kiyosaki I did not have a second thought for I believed that this is going to change the rest of my life.
Here I would like to mention few points from the Cash Flow Quadrant which I believe are core values which one should take in his/her life to really become successful.
"A journey of a thousand miles begin with a baby step" .The author explains - take the smallest step possible each time to achieve your goals. It is the most important thing to do to reach your set goals. He also tells us that there are no short cuts in making money fast. He gives us an indepth understanding on why a person indebted to somebody and in a very bad situation in his/her life cannot just lay a ladder in order to solve the problems he created in his past. He also goes on to explain that anything is possible in this world.
The author has gone over a subject in this book which clearly differentiates the way successful people are what they are and those who struggle hard to get there. That subject is called "FEAR". The author explains "FEAR" as the primary cause for so many people to hold them back in reaching their goals. Fear is common in everybody for it is a natural state of behaviour. But what really is important is the way we handle FEAR. It is said "The other side of a FEAR door lies gorgeous gifts". He helps us understand the root of the cause and how we condition our minds to handle it effectively.
There are also some good points in this book which is helpful for self development and leadership. The author explains that moving from one quadrant to another is like completely transforming yourself. Changing your thoughts and your actions. Challenging your own self. And the different ways of enhancing your inner self.
Lastly I would recommend this book to anybody in the "E" quadrant who wants to ultimately get to the "B" quadrant or the "I" quadrant.
Best Regards
Amith Kumar
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