Cashflow Quadrant Book Review

This is a review of the Cashflow quadrant book written by Robert T. Kiyosaki. It provides a simplistic and visual map on how you can go from the “left side of the quadrant” where you are involved in earning to survive to the “right side of the quadrant” where you generate income that ultimately gives you financial freedom.

This book, the second from Kiyosaki seems to contain more grit and sound financial insights than the first one, Rich Dad, Poor Dad which was also a hugely successful material on financial education.

In practical steps, Cashflow Quadrant shows how you can go from being an employee to becoming self-employed and growing further, or crossing over, to being a business owner and ultimately reaching the level of investing in businesses that bring you passive income.

Summary of cashflow quadrant book

The book has seventeen chapters that are conveniently divided into three parts, with part one consisting of the first six chapters, while part two continues from chapter seven to nine, part three contains the remaining eight chapters.

The first chapter quickly introduces you to the Cashflow Quadrant a simple cross-like figure with four compartments that gives a general view on how everybody makes money. The upper left corner is represented by an ‘E’ for employees, the lower left has an ‘S’ for self-employed.

The middle partition separates these from the right side which has the upper right corner occupied by a ‘B’ for a business owner and the lower right by an ‘I’ for an investor.

Having a good understanding of this chart gives you a good insight to what the whole book is about as all subsequent chapters usually make reference to it.

Chapter two goes deeper to show the distinguishing factors between these four compartments of the quadrant and advising those that want to become wealthy to focus on the right side of the quadrant.

Chapter three of the cashflow quadrant book explains why people prefer to choose security over freedom, a decision that restricts a majority of the populace to the left side of the quadrant as either paid employees or struggling business owners.

In Chapter four, the author recommends the three types of business systems that support a transition to the right side of the quadrant, they include traditional C-corporations, franchises, and network marketing, he gives particular preference to network marketing.

Chapter five gives an in-depth explanation of the seven levels of investors, starting from level 0 (those who have nothing to invest) to level 4 (the long-term investor, who invests primarily in mutual funds) to level 5 (sophisticated investors who can make their own investments) and to level 6 (capitalists, who create investments like businesses and sell them to the market), finally ending with 7 which is a note on why it is important to go from level 4 before progressing to 5 and 6. This then brings us to the conclusion of the first part of the book.

The second part of the book focuses on ‘Bringing Out the Best in You’ as the author starts chapter seven on a highly motivational tone.

Chapter eight takes on the mental state needed to attract financial growth, while the ninth chapter gives a rundown on some individual figures that played certain roles either good or bad during the past financial crises. The author then advises that readers stay up-to-date on tax laws and use them to your advantage.

Chapter ten of the cashflow quadrant book brings you to the last section of the book which is on thinking like a ‘B’ or ‘I’ individual. It gives an interesting narrative on how to change thought patterns that transform you into the mold of a rich person.

Each chapter from eleven to seventeen comprises of seven helpful steps to propel your move towards financial freedom.

Robert Kiyosaki ends the book with a table of comparison of the Broke Masses, Successful Middle-Class Investors, and the Rich, using features such as investment vehicles to the resources that they employ.

Having a copy of cashflow quadrant book will surely be a plus to building your library of financial literacy, you can get to learn something new. At least I got to know the real difference between being self-employed and being a business owner from reading this book.

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