![]() ![]() If designed properly, the bottom two quadrants have your income coming from multiple sources. Of course, if you are in the “B” business owner quadrant and you design your business property, you will have multiple customers from multiple business sectors so you can mitigate much of the risk associated with income coming from a single company. If the business you work for goes bust, your income stops. As such the top quadrants have limited income diversity and you, therefore, have a greater business risk and market risk. The top two quadrants have your income coming from only one source, your job or your business. Moving from the left side to the right requires capital, education, and a new mindset. The two quadrants on the right are the primary paths to financial freedom and the playing field of the rich and financially independent. This means that you earn income from the labor of others. On the right side of the quadrant are Business Owner “B” and Investor “I”, where your income is considered passive income. The two quadrants on the left are the playing field of the poor and the middle class. That is, for the quadrants on the left side, you get paid for the number of hours you work. Here, your income is considered earned income or active income. ![]() If you divide the quadrant of income generation in half vertically, the left side contains quadrants E and S: Employee and Self-Employed. “E” stands for Employee, “S” for Self-Employed, “B” for Business Owner, and “I” for Investor. The four quadrants are named E, S, B, and I. Of course, income can be earned from a single quadrant or from a combination of quadrants, but we will look at each quadrant separately. In this post, we will look at how income is generated in each of the four quadrants. Different methods of income generation require different technical skills, different educational paths, and different types of people. ![]() Robert Kiyosaki is a well-known personal finance author and speaker, best known for his book “ Rich Dad, Poor Dad.” In this book, Kiyosaki introduced the Cash Flow Quadrant, a framework for understanding how people make money and how they can improve their financial situation.Īccording to Robert Kiyosaki, The Cash Flow Quadrant represents the different methods by which income or money is generated. ![]()
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