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Rich Dad’s Cashflow Quadrant Book Review

The Cashflow Quadrant book by Rich Dad provides all the information needed to achieve financial freedom and achieve your income goals.

From the author of one of the bestselling titles of all time, Rich Dad Poor Dad, comes this sequel of sorts that acts as a guide to understanding how to make more money in less time. As Robert emphasizes throughout the book, traditional educational systems barely provide us with the financial learnings required to thrive in today’s volatile and competitive world.

The basic premise of the book is straightforward. There are four types of people broadly when it comes to earning money, each type forming a segment in the cashflow quadrant. And where you are on the quadrant determines the kind of lifestyle you’re going to lead. Would it be a life where you live from paycheck to paycheck or a life where you’re financially free to navigate your life the way you want it to?


These quadrants represent more than just how you earn money. They represent your preferences, your fears, your comfort zone, and more when it comes to your finances. Kiyosaki mentions how you can move across these different quadrants and find the right path for your life if only you’re willing to undergo the harsh process of change. The four quadrants are further grouped into the left and the right side. Let’s first look at each of these four quadrants before we talk about them further:

1. Employee (E)

This is the top left quadrant, including everyone working under someone. This group generally represents people who prefer financial security and stability over risks and financial freedom. As per Kiyosaki, our conventional education system teaches us how to be good employees or good professionals (the next quadrant). Yes, you get some benefits such as a fixed income every month and free insurance, but being an employee also means that you’re always dependent on an organization to ensure that you and your family stay afloat.

2. Self-employed or Small Business (S)

This constitutes the lower half of the CASHFLOW quadrant and consists of those individuals who prefer working on their terms and conditions. This can include professionals such as doctors, engineers, mechanics, and more. It can also include people with their small ventures and businesses. They are usually people who’re specialized in their fields and often work in a demanding environment. Some benefits of this quadrant include independence and the flexibility to work as and when you want to. However, your business entirely relies on you, and therefore, any breaks mean a disruption in your income stream.

3. Big Business (B)

This group is made of people who hire people to work for them and use their energy and time to grow their venture. A critical difference between the S and B groups is that the latter uses someone else’s energy and resources to build their company. On the other hand, a small business or a professional is almost entirely dependent upon its owner. The owner goes, the business stops, and the money stops coming in. This is not the case with large businesses that are a system working independently of their creator. 

4. Investor (I)

And lastly, the group that uses their money to mint more money. This includes anyone who uses financial tools to invest their money and let it grow by itself. In this case, notice how you neither need to hire anyone nor do you need to spend your own time generating more wealth. However, to shift to this quadrant, you already need some level of success in the other three quadrants as it requires money to be invested. This quadrant ensures a steady stream of passive income that is generated without you having to work for it.

Left Side of the CASHFLOW Quadrant

The left side of the quadrant consists of most of our populations, simply because of how we’re all raised and educated to become. Most of us seek financial security over freedom and choose to keep working under someone and equate hard work with money. The more work you put in, the more money you earn. Right? Not quite.

Being on the left side of the quadrant means that a good part of your wealth goes to taxes and you miss out on the little joys of life, like attending your kid’s skit, or simply spending more time with your family. The biggest issue with this side is that the more success you achieve, the less time you have to spend on other aspects of your life. This is not to say that a lot of individuals prefer this side of the quadrant, but many don’t know much about the other side and are therefore stuck here.

Right Side of the CASHFLOW Quadrant

This side of the quadrant consists of those who want to gain true financial freedom in the shortest time possible. The more successful they are, the more time and energy they have each day. These are people who use assets outside of their own time and work to earn money for them, not to mention that they generally pay fewer taxes. For example, the owner of a business doesn’t have to work through the nitty-gritty of their company because they have more capable professionals handling those aspects. 

At the same time, the owner is the person who gets to keep the largest chunk of the profits. Similarly, the investor puts money into other people’s companies and stocks. This is the reason that the right side of the quadrant is the easier and quicker path to being financially free. Now as those companies earn profits, their stock value rises and the investor earns money. This brings us to the concept of OPT and OPM.


OPT and OPM stand for other people’s time and other people’s money respectively. The people who earn money exclusively through the left side of the quadrant have to either put in their time or money or both. However, the benefit of being on the right side of the quadrant is that you employ OPT and OPM to generate more money.

For example, an investor uses OPT to earn more money from their assets. They invest their money in a venture and from thereon, that venture and its business generate revenue for them. Similarly, a large business owner employs both OPT and OPM to earn more money. They use OPT by hiring other experts to handle different areas of their business. Similarly, they use OPM to their benefit by raising funds and selling stocks of their company. Using OPT and OPM to generate more revenue ensures sustainability and makes sure that you have free time and energy to spend on other things.

The Five Kinds of Investors

Depending on your financial knowledge and current circumstances, you fall in one of the five categories of investors below as per Kiyosaki. The last two stages are the ones you should be at if you wish to be a successful investor who’s on a path to achieving financial prosperity.

1. The Zero-Financial Knowledge Intelligence Level

These are the types of people who spend more than they earn. Most of the people in the world fall in this quadrant, barely being able to get through each day of their lives. Because of their lack of financial knowledge, they’re always deep down in debt and have nothing left to invest in, in the first place.

2. The Savers-Are-Losers Level

This level includes those who like to save their money. But unfortunately, in a market and economy where inflation is always on the rise and money is a depreciating asset, they’re effectively losing their money. This also includes people who invest in retirement plans where returns are too low and unpredictable or those who engage in purchasing bonds and other such commodities.

3. The I’m-Too-Busy Level

I’m sure we all know that person who’s too busy to learn about investing or might be that person ourselves. This level includes all those who give their money to so-called experts who sell them new schemes and deals all the time. There are two issues with this approach. One, you never learn from your mistakes. It’s always the fault of your government or the market or the advisor, never yours. Two, the advisors and experts always have their interests at heart, and never yours!

4. The I’m-A-Professional Level

This is the DIY level. People who decide to do it themselves. However, they have little to no knowledge about finances or investing. This might result in quite a few blunders if they don’t spend time learning or educating themselves in the matter of investing. Those who manage to invest in their financial education might move on to the next and last stage of investing.

5. The Capitalist Level

A good difference between this level and the previous one can be illustrated by the difference between a small business owner and a company owner. The first will have to invest their own money and time to gain returns while the other will simply use OPT and OPM and gain returns from there. This type of investor is the richest in the world and the most successful, and the level one should strive to reach in the end to attain financial freedom quickly.

How to Move to the Right Side of the Quadrant?

There are several barriers to moving to the other side if you lie on the left side of the quadrant. First, you have to go against your values and the instincts that are incorporated in you all your life. Most of us grow up being advised to study and get a job as soon as possible and are told to chase job security. But in a world where downsizing is a common phenomenon and the future is uncertain as the pandemic showed us very well, is it not riskier to stick to the left side?

When someone states that the right side is riskier, they forget the fact that you learn only through mistakes. If mistakes are the price you need to pay to be truly independent, isn’t that necessary? Even desirable? Not only do you get a more stable life on the right side of the quadrant, but you also obtain a more luxurious and comfortable one, where you have the time and energy to pursue everything you’ve ever wanted to.


The biggest takeaway from the book is that to be wealthy and secure, you need to take essential risks in your life. Not just that, you need to invest in your financial education to know just how to take those risks. Because our schools and institutions teach us to chase job security from a young age, it’s hard to break away from the mentality. But, in the end, as Kiyosaki argues, it’s crucial if you want to lead a happier and better life, a life devoid of financial insecurity.

Robert suggests that regardless of where one falls in the CASHFLOW Quadrant, everyone must dip their feet in the I quadrant. It’s our fear of losing money that prevents us from earning money and if we can get past that, there’s truly no stopping us. It’s not hard work that’s going to make you rich, but being smart and taking the appropriate risks in your life can give you true financial freedom.

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