Second Lesson: Cashflow Quadrant

In the first lesson, Kiyosaki talked about three kinds of education. In that lesson Kiyosaki speaks about one of the most important fundemantal ideas of his teachings: the Cashflow Quadrant.

There are four basic ways that  money can come to you (cashflow)

E B
S I

The left side of the rectangle

  • E- Employee – You work for someone else and get paid
  • S – Self employee – You think that you are your own boss, maybe you have some employees but the business is you.  The idea is that you must be in your business, if you leave the business it will collpase.

In that left side of the rectangle, you work per hour (or per project which depends on the hours you are actually working). The idea is that you must work for your money.

The right side of the rectangle

  • B- Businesses that work by themselves. The idea is that you initiate a business that in time runs itself. In those  businesses you do not need to be physically present in the business to earn money, those kinds of business produces money for you. (sometimes those businesses are called “Passive Income”).
  • I – Investment. The idea is Smart Investment. Usually the investors (I) buy Businesses (B). Just to be in the safe side: when I write investment I (almost always) do not refer buying mutual funds,  ETF’s etc.


The idea of the rectangle has a lot of layers which will be discussed in the following posts