of the CASHFLOW Quadrant. I will share more of my rich dad’s secrets on the skills required to be a successful B and I. It will help you choose your own path to financial freedom.
Throughout Rich Dad’s CASHFLOW Quadrant, I continue to stress the importance of financial intelligence. If you want to operate on the right side, the B- and I-quadrant side, you must be smarter than if you choose to stay on the left side, the E- and S-quadrant side. To be a B or I, you must be able to control the direction of your cash flow.
This book is written for people who are ready to make changes in their lives to move beyond job security and begin to build their own pipelines to achieve financial freedom.
We are in the Information Age which offers more opportunities for financial reward than ever before. Individuals with the skills of the B’s and I’s will be able to identify and seize those opportunities. To be successful in the Information Age, a person needs information from all four quadrants. Unfortunately, our schools are still in the Industrial Age and still prepare students for only the left side of the CASHFLOW Quadrant.
If you’re looking for new answers to move forward in the Information Age, this book is for you. It doesn’t have all the answers, but it will share the deep personal and guiding insights I gained as I traveled from the E and S side to the B and I side.
To someone who values a job, it’s difficult to explain why you might not want one.
In 1985, my wife Kim and I were homeless. We were unemployed and had little money left in savings. Our credit cards were exhausted, and we lived in an old brown Toyota with reclining seats that served as beds. At the end of one week, the harsh reality of who we were, what we were doing, and where we were headed began to sink in.
Our homelessness lasted another two weeks. When a friend realized our desperate financial situation, she offered us a room in her basement. We lived there for nine months.
We kept our situation quiet. For the most part, Kim and I looked quite normal on the surface. When friends and family were informed of our plight, the first question was always, “Why don’t you get a job?”
At first, we attempted to explain, but we usually failed to clarify our reasons. To someone who values a job, it’s difficult to explain why you might not want one.
We did odd jobs occasionally and earned a few dollars here and there, but we did that only to keep food in our stomachs and gas in the car. Those few extra dollars were only fuel to keep us going toward our singular goal. I must admit that during moments of deep personal doubt, the idea of a safe, secure job with a paycheck was appealing.
But because job security wasn’t what we were looking for, we kept pushing on, living day to day, on the brink of the financial abyss.
That year, 1985, was the worst of our lives as well as one of the longest. Anyone who says that money isn’t important obviously has not been without it for long. Kim and I fought and argued often. Fear, uncertainty, and hunger shortens the human emotional fuse, and often we fight with the person who loves us the most. Yet love held the two of us together, and our bond as a couple grew stronger because of the adversity. We knew where we were going. We just didn’t know if we would ever get there.
We knew we could always find safe, secure, high-paying jobs. Both of us were college graduates with good job skills and solid work ethics. But we weren’t after job security. We wanted financial freedom.
By 1989, we were millionaires. Although financially successful in some people’s eyes, we still hadn’t reached our goal of true financial freedom. That took until 1994. By then, we never had to work again for the rest of our lives. Barring any unforeseen financial disaster, we were both financially free. Kim was 37 and I was 47.
It Doesn’t Take Money to Make Money
I started this chapter with a discussion about our being homeless and having nothing in 1985 because I often hear people say, “It takes money to make money.”
I disagree. To get from homeless in 1985, to rich in 1989, and then to financial freedom by 1994, didn’t take money. We had no money when we started, and we were in debt.
It also doesn’t take a good formal education. I have a college degree, and I can honestly say that achieving financial freedom had nothing to do with what I learned in college. I didn’t find much demand for my years of studying calculus, spherical trigonometry, chemistry, physics, French, and English literature.
Many successful people have left school without receiving a college degree—people such as Thomas Edison, founder of General Electric; Henry Ford, founder of Ford Motor Co.; Bill Gates, founder of Microsoft; Ted Turner, founder of CNN; Michael Dell, founder of Dell Computers; Steve Jobs, founder of Apple Computer; and Ralph Lauren, founder of Polo. A college education is important for traditional professions, but not for how these people found great wealth. They developed their own successful businesses, and that was what Kim and I were striving for.
So What Does It Take?
I am often asked, “If it doesn’t take money to make money, and schools don’t teach you how to become financially free, then what does it take?”
My answer: It takes a dream, a lot of determination, a willingness to learn quickly, and the ability to use your God-given assets properly and to know which quadrant in the CASHFLOW Quadrant is the right one for you to generate your income.
What Is the CASHFLOW Quadrant?
The diagram below is the CASHFLOW Quadrant. The letters in each quadrant represent:
From Which Quadrant Do You Generate Your Income?
The CASHFLOW Quadrant represents the different methods by which income or money is generated. For example, an employee earns money by holding a job and working for a person or a company. Self-employed people earn money working for themselves. A business owner owns a business that generates money, and investors earn money from their various investments—in other words, money generating more money.
Different methods of income generation require different frames of mind, different technical skills, and different educational paths. Different people are attracted to different quadrants.
While money is all the same, the way it’s earned can be vastly different. If you begin to look at the four different labels for each quadrant, you might want to ask yourself, “Which quadrant do I generate the majority of my income from?”
Each quadrant is different. To generate income from different quadrants
