the same. Changing from quadrant to quadrant is like playing golf in the morning and then attending the ballet at night.
You Can Earn Income in All Four Quadrants
Most of us have the potential to generate income from all four quadrants. Which quadrant you or I choose to earn our primary income from is not so much dependent upon what we learned in school. It’s more about who we are at the core—our values, strengths, weaknesses, and interests. These core differences attract us to, or repel us from, each quadrant.
Yet, regardless of what type of work we perform, we can still work in all four quadrants. For example, a medical doctor could choose to earn income as an E and join the staff of a large hospital or an insurance company, work for the government in the public-health field, or become a military doctor.
This same doctor could also decide to earn income as an S and start a private practice, setting up an office, hiring staff, and building a private list of patients.
Or the doctor could decide to become a B and own a clinic or laboratory and have other doctors on staff. This doctor probably would hire a business manager to run the organization. In this case, the doctor would own the business but not have to work in it. The doctor also could decide to own a business that has nothing to do with the medical field while still practicing medicine somewhere else. In this case, the doctor would be earning income as both an E and as a B.
As an I, the doctor could generate income from being an investor in someone else’s business or in vehicles like the stock market, bond market, and real estate.
The important words are “generate income from.” It’s not so much what we do, but more how we generate income.
Different Methods of Income Generation
More than anything, it’s the internal differences of our core values, strengths, weaknesses, and interests that affect which quadrant we decide to generate our income from. Some people love being employees, while others hate it. Some people love owning companies but don’t want to run them. Others love owning companies and also love running them. Some people love investing, while others can’t get past the risk of losing money. Most of us are a little of each of these characters. Being successful in the four quadrants often means redirecting some internal core values.
You Can Be Rich or Poor in All Four Quadrants
It is important to note that you can be rich or poor in all four quadrants. There are people who earn millions and people who go bankrupt in each of the quadrants. Being in one quadrant or another does not necessarily guarantee financial success.
Not All Quadrants Are Equal
By knowing the different features of each quadrant, you’ll have a better idea as to which quadrant, or quadrants, might be best for you.
For example, one of the many reasons I chose to work predominantly in the B and I quadrants is because of tax advantages. For most people working on the left side of the quadrant, there are few legal tax breaks available. Yet legal tax breaks abound on the right side of the quadrant. By working to generate income in the B and I quadrants, I could acquire money faster and keep that money working for me longer without losing large chunks of it to the government in the form of taxes.
Different Ways of Earning Money
When people ask why Kim and I were homeless, I tell them it was because of what my rich dad taught me about money. For me, money is important, yet I didn’t want to spend my life working for it. That is why I didn’t want a job. If we were going to be responsible citizens, Kim and I wanted to have our money work for us, rather than spend our lives physically working for money.
That is why the CASHFLOW Quadrant is important. It depicts the different ways money is generated. There are ways of being responsible and creating money other than physically working for it.
Different Fathers—Different Ideas about Money
My highly educated dad had a strong belief that the love of money was evil and that excessive profit meant you were greedy. He felt embarrassed when the newspapers published how much he made because he felt he was overcompensated in comparison to the teachers who worked for him. He was a good, honest, hardworking man who did his best to defend his point of view that money wasn’t important to his life.
My highly educated, yet poor, dad constantly said,
• “I’m not that interested in money.”
• “I’ll never be rich.”
• “I can’t afford it.”
• “Investing is risky.”
• “Money isn’t everything.”
Money Supports Life
My rich dad had a different point of view. He thought it foolish to spend your life working for money and to pretend that money wasn’t important. Rich dad believed that life was more important than money, but that money was important for supporting life. He often said, “You only have so many hours in a day, and you can only work so hard. So why work hard for money? Learn to have money and people work hard for you, and you can be free to do the things that are important.” To my rich dad, what was important was:
• Having lots of time to raise his kids.
• Having money to donate to charities and projects he supported.
• Bringing jobs and financial stability to the community.
• Having time and money to take care of his health.
• Being able to travel the world with his family.
“Those things take money,” said rich dad. “That’s why money is important to me. Money is important, but I don’t want to spend my life working for it.”
Choosing Quadrants
One reason Kim and I focused on the B and I quadrants while we were homeless was because I had more training and education in those quadrants. It was because of my rich dad’s guidance that I knew the different financial and professional advantages of each quadrant. For me, the quadrants on the right side, the B and I quadrants, offered the best opportunity for long-term financial success and financial freedom. Also, at age 37, I had experienced successes and failures in all four quadrants which allowed me some degree of understanding about my own personal temperament, likes, dislikes, strengths, and weaknesses. I knew which quadrants I did best in.
Parents Are Teachers
When I was a young boy, my rich dad often referred to the CASHFLOW Quadrant. He would explain to me the difference between someone who was successful on the left side versus the right side. But being young, I really didn’t pay much attention to what he said. I didn’t understand the difference between an employee’s mindset and a business owner’s mindset. I was just trying to survive school.
Yet I did hear his words, and soon they began to make sense. Having two dynamic and successful father figures around me gave meaning to what each was saying. But it was what they were doing that allowed me to begin to notice the differences between the E-S side and the B-I side. At first, the differences were subtle. Then they became glaring.
