3 Steps That Will Move You To The Right Side Of The CASHFLOW Quadrant

Dear Reader,

Most of us have the potential to be successful whether we’re an employee, self-employed, a business owner, or an investor. It all depends on how determined we are.

As my rich dad said, “Passion builds businesses. Fear does not.”

The problem with moving from an employee or self-employed to a business owner or investor is often found in patterns formed through conditioning.

Many of us come from families where the emotion of fear was used as a prime motivator to get us to think and act in a certain way.

For example: “Did you do your homework? If you don’t, you’ll flunk out of school and all your friends will laugh at you.” “If you keep making faces, your face will get stuck like that.” And the classic, “If you don’t get good grades, you won’t get a good job with benefits.”

Well, today many people have gotten good grades, but there are fewer and fewer safe, secure jobs, and even fewer with benefits like pensions. Many people, even those with good grades, need to “mind their own business” and not just look for a job where they will mind someone else’s business.

Two Sides of the Quadrant

There are two categories of people in the world, those who see the world through the left side of Rich Dad’s CASHFLOW® Quadrant and those who see it through the right side.

On the left side of the quadrant are Es and Ss. They pay the most in taxes and trade their time for money. And each has a different mindset. On the right side of the quadrant are Bs and Is. They pay the least in taxes and create or invest in assets that produce cash flow for them even when they’re sleeping.

Employees greatly fear instability and demand stability from their employers. One of the reasons employees want more and more from entrepreneurs, even when the business isn’t doing well, is because they think money provides stability. The reality is that being an employee is highly risky. You have no control and you pay the highest in taxes. And if the business goes bad, you’re the first to be laid off—especially if you’re asking for more money at the time.

I still have some friends who seek security as employees or self-employed, the left side of the CASHFLOW Quadrant. If people could see what I see when I travel the world, they would not be looking for more security.

Security Is A Myth

The trajectory for employees’ incomes is not good. And when there are bad economic times, it’s the employees who lose their job, not the business owners. Learn something new, and take on this brave new world. Don’t hide from it.

It’s also risky for the self-employed. If they get sick or injured, their income is directly impacted. As I get older, I meet more self-employed people my age who are physically, mentally and emotionally burned out from hard work. The more fatigue a person endures, the less secure they become, and the risk of having an accident also goes up.

As the march of technology continues at an ever-increasing pace, employees and the self-employed have to constantly be trained to keep up and stay relevant in the job market. My thoughts have been, if you’re going to reeducate anyway, why not spend some time educating yourself on the skills needed to become a business owner or investor—the right side of the CASHFLOW Quadrant.

The Secure Side

The irony is that life on the right side of the quadrant, the one viewed by most people as riskier, is actually more secure. For example, if you have a secure system that produces more and more money with less and less work, then you really don’t need a job or need to worry about losing your job. To make more money, you simply expand the system and hire more people. That gives you the opportunity to expand your means so that you can enjoy all that life has to offer.

People who are high-level investors aren’t concerned about the market going up or down because their knowledge allows them to make money in either situation. If there are market crashes for the foreseeable future, which I believe there will be, many baby boomers will panic and lose much of the money they had for retirement.

If that happens in their old age, instead of retiring, they’ll have to work for as long as they can. How is that security?

Professional investors are people who risk little of their own money and yet still make the highest returns. The people who know little about investing take the risks and earn the least return. From my point of view, all the risk is on the left side of the CASHFLOW Quadrant.

Moving From The Left Quadrant To The Right Quadrant

If you want to move from the left side to the right side of the CASHFLOW Quadrant, I encourage you to begin changing your mindset.

A while back a study was conducted that showed the mindset of those who moved from poverty into wealth. Three things were seen to be a determining factor:

  1. They maintained a long-term vision and plan
  2. They believed in delayed gratification
  3. They used the power of compounding in their favor

They also looked at those who were wealthy that became poor. These were the three factors that came into play:

Very simply, the path to the right side of the quadrant starts with thinking in terms of acquiring assets that produce passive income rather than living in a pattern of paycheck to paycheck. Start small, have patience, and watch as your wealth grows over time.

  1. They had short-term vision
  2. They had a desire for instant gratification
  3. They abused the power of compounding

Very simply, the path to the right side of the quadrant starts with thinking in terms of acquiring assets that produce passive income rather than living in a pattern of paycheck to paycheck. Start small, have patience, and watch as your wealth grows over time.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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