Rich Dad’s CASHFLOW Quadrant PDF Summary
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Rich Dad’s Guide to Financial Freedom
If you haven’t read the much-talked-about Rich Dad Poor Dad bestselling classic, then you’ve been missing out on a lot.
In this book, Robert Kiyosaki zooms in on the path you need to cross in order to achieve full financial freedom.
There are many hurdles to overcome, and the most prominent one of all is the education system itself.
Let’s dive right in.
Who Should Read “Rich Dad’s CASHFLOW Quadrant”? And Why?
The CASHFLOW Quadrant exemplifies the spirit and mindset of various groups of people.
It showcases how one must act to avoid being devoured in today’s digital age of information.
With that in mind, it’s clear as to why Robert prescribes “Rich Dad’s CASHFLOW Quadrant” to the general audience.
About Robert T. Kiyosaki
Robert T. Kiyosaki built a name for himself, after managing to climb the entrepreneurial world in quick succession.
Apart from having written a bestseller which has held a top spot on New York Times bestselling list for half a decade, he has also excelled as an investor, educator, and entrepreneur.
It’s also important to say that his teaching methods are not in line with conventional methods for improving one’s financial position.
Among other things, he also wrote the following books:
- Second Chance
- Why We Want You To Be Rich
- Why “A” Students Work For “C” Students
- The Business of the 21st Century
“Rich Dad’s CASHFLOW Quadrant PDF Summary”
Part One – The CASHFLOW Quadrant
Back in the days, when Robert still wasn’t geared up with the right mindset, he found that changing quadrants is anything but easy.
It’s certainly complicated to shrug off criticism, remarks, and words of discouragement coming from your closest circle.
That especially holds true if you “hail” from a family that embraces and nurtures the “Employee” quadrant (composed of highly educated individuals who prefer safety over freedom).
- What if you fail?
- What if you accumulate a substantial amount of debt?
- Why is money so important to you?
This is only a small list of questions, regularly delivered at Robert’s doorstep.
The circle-shaped diagram lays out the irrefutable truth regarding the failure of “A” students.
Let’s say that a person is highly educated by worldly standards, but it struggles to find emotional and spiritual balance. How will that reflect on its decision-making?
Probably by compelling him/her to enter into what is known as analysis paralysis.
The irony revolves around the following theory – this process is presented as an antidote or the formula behind making the right calls. Depriving yourself of real action sooner or later will prove to be self-destructive because people making the most mistakes are the ones winning on the long haul.
So, before we move on, let’s take a critical overview of the Four Elements within the Quadrant.
Where do you belong? – is the critical question.
It’s absurd to claim that you don’t fall into either of these categories because we all do.
Poor Dad will teach you to go to school, get a degree, get a nice job, and become a well-paid employee. While, Rich Dad (often less educated in the formal sense of the word) will advise you to absorb the benefits of state-controlled education, build a business and become an investor.
Let’s debunk the first myth – It takes money to make money.
In 1985, Robert and his wife Kim were at the brink of financial and emotional collapse. They lived in a small basement room for nine months; making a few dollars here and there to keep food on the table and fuel in the gas tank.
Their plight lasted for an entire year, while their friends and family relentlessly pushed the idea of getting a good job.
At the time, it was truly a challenge to remain true to their perspective.
In 1994, they finally achieved their financial freedom!
Rich Dad, unlike Poor Dad, doesn’t pretend that money isn’t important. On the contrary, he believes that achieving financial stability is the cradle of life itself.
The skills needed to excel on the right side of the Quadrant are by no means taught at school.
It’s foolish to think that some Quadrants are better than others because it’s beyond doubt that we need people to contribute from all parts of the financial spectrum.
With that said, you need a different set of characteristics and skills to flourish in each Quadrant.
In other words, it’s not whether you can create a better burger than McDonald’s; it’s about creating a system that serves customers.
- OPT – Other People’s Time
- OPM – Other People’s Money
According to Rich Dad – success is a poor teacher.
You need to experience loss, in order to get into the right frame of mind and hence climb the ladder of prosperity.
Part Two – Bringing Out The Best in You
While playing Monopoly with Rich Dad, Robert learned a couple of lessons that shaped his mindset:
- Investing is not risky
- Investing is fun
- Investing can make you very, very rich
- More importantly, investing can set you free
In the meantime, Robert realized that money or better yet “receiving money” is a drug like no other.
Rich Dad often said:
Once you get used to receiving it, that addiction keeps you attached to the way you got it.
For precisely that reason, Rich Dad puts emphasis on creating or building a system that makes money for you.
- An – E works for the system
- An – S is the system
- A – B creates, owns, and controls the system
- An – I invests money into the system
School days are gone; it’s time to build a system around your heart.
And, this what shocked Robert the most, because in the late 70s his wallet company collapsed due to competition and lack of passion.
After years of experimenting and monitoring, Robert Kiyosaki came to the conclusion that it’s safer being on the right side of the Quadrant than on the left.
So, how to get rich?
Above all else, this is not a get-quick-rich scheme that you ought to follow (no questions asked).
The sad reality is, people who work the hardest, are not the ones that get rich. Rich People are outliers; their out-of-box mentality is what distinguishes them from the mob.
Poor people believe that the goal is to work hard in order to buy things that make them look rich.
In fact, rich people want to get as far away as possible from the stream of liabilities.
Before we go any further, let’s have a gander at one completely neglected battlefield between the rich and educated.
Robert recalls one encounter with his Educated but Poor Dad who said:
“I have advanced degrees from prestigious schools. What does Mike’s dad have?”
Robert calmly replied: Money and free time.
It was a clear indication that playing it safe, and trying to be on the right side, was, in fact, the riskiest strategy one could’ve come up with.
To be successful, one must be emotionally neutral regardless of the outcome.
You have to understand that winning and losing is part of the process, and you mustn’t separate one from the other.
As you already know, Robert took the path less traveled.
The greatest transition was not the resignation letter, but the itchiness in embracing a full-scale alteration with regards to beliefs and mindset.
Truthfully, the main reason behind people’s lack of prosperity is not that they lack education or willingness to put up a lot of time and effort into something, but being guided by fear alone.
Often times, we hear people arguing that there’s some global conspiracy that keeps increasing the wealth gap between the rich and the poor.
But, is it beneficial to pass on the blame to some external phenomenon?
Give it a moment to sink in!
Part Three – How to Become Successful B and I
Robert starts the last section of this book, by pointing out that instead of looking forward to gigantic strides, just take the first baby step.
In order to get the ball rolling, you need to be wary of false narratives and misleading information that may stigmatize your endeavors.
After years of research regarding the transition from poor to rich, Robert found out that these people possess three qualities:
- They maintain a long-term vision and plan.
- They believe in delayed gratification.
- They use the power of compounding in their favor.
And the same applies (only reversed) for families who have lost their fortune in 2-3 generations.
To bring awareness to this issue, Robert asked students to fill in their financial statements. Those being on the verge of financial breakdown had an Industrial-Age mindset (or the no tomorrow mindset) which is predicated on the notion that the government should take care of you.
Although the rules have changed, these people still believe in hard work as if that will solve all of their financial problems.
The CASHFLOW of the rich starts at “Assets,” and it is steadily distributed to the first box “Income.” Unlike the middle-class dream, which only strives to cover expenses and liabilities by getting a good six-figure paycheck on a yearly basis.
Robert often gets asked – How to initiate this transition and start thinking like a Rich Person?
First off, it’s not wise to jump out of bed and start investing without any previous knowledge whatsoever.
So, the painless path is composed of reeducation, trial, learning-by-doing, and ultimately succeeding.
The only that ultimately matters is building up your Assets column, which in the Informational Age is of absolute importance.
Here is the seven-steps formula for achieving financial freedom:
- Step 1: It’s time to mind your own business
- Step 2: Take control of your CASHFLOW
- Step 3: Know the difference between risk and risky
- Step 4: Decide what kind of investor you want to be
- Step 5: Seek mentors
- Step 6: Make disappointment your strength
- Step 7: The Power of Faith
After getting to the bottom of the CASHFLOW Quadrant, a person or a group needs to find out where it belongs.
Upon illumination, it’s their job to decide their next move.
Are you eager to evolve, or stay put?
For those of you who are not quite convinced in Robert’s philosophy, continue reading and delving into the matter as much as you can.
But refrain yourself from making excuses such as:
- I have a family to look after
- My wife might not go along with it
- My husband doesn’t think it’s a good idea
- I have to bring food on the table
These are all legit reasons, but Robert argues that ascribing security to the left side of the Quadrant, is highly inaccurate.
It all boils down to the following statement:
These are truths, and they are also lies. If you lie to yourself, your journey will never be completed. My best advice is to listen to your doubts, fears, and limiting thoughts, and then dig deeper for the real truth.
Key Lessons from “Rich Dad’s CASHFLOW Quadrant”
1. Find your Cash-Cow
2. Change Quadrants if needed
3. Stay in the game
Find your Cash-Cow
Cash-cow is nothing other than a steady source of income or profits that eclipses all the money needed to initiate it.
It’s your job to find a steady stream of revenue by acquiring assets that will be the backbone of your financial liberation.
Stay on it!
Change Quadrants if needed
It’s not appropriate to advise or even to think that all people should move on the right side of the CASHFLOW Spectrum.
However, one must understand that security no longer comes from hard work.
Times have changed, and resisting this transition could be the instigator of financial malaise.
Stay in the game
Remember how Robert overcame the negative voice and dodged the meaningless questions crafted by those who have no financial education?
Well, you should do the same, because it’s not going to be all sunshine and rainbows.
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“Rich Dad’s CASHFLOW Quadrant Quotes”Thinking is the hardest work there is. That is why so few people engage in it. Click To Tweet Many people will not head down the street until all the lights are green. That is why they don't go anywhere. Click To Tweet Only fools expect everything to go the way they want. Click To Tweet You can always quit. So why quit now? Click To Tweet In my opinion, the reason most people stop and turn back from their dreams is because the tiny person found inside each of us wields more power than our bigger person. Click To Tweet
Our Critical Review
Robert T. Kiyosaki never disappoints, because he is always on the ball.
In this book, you’ll come across proven techniques to overcome this sense of fear and make a push towards increasing the quality of life and abandon the one you were dragged into.
Just a regular guy with a knack for writing, and digital marketing.
Emir is the Head of International and SEO at 12Min. In his spare time, he loves to meditate and play soccer.