In reality, humanity is craving for freedom. Financial freedom is the way to freedom in life.

Financial Freedom has been a prominent highlight since the COVID-19 pandemic. However, it is clear that to achieve this form of freedom in life, cash flow plays a huge part in it all. The ‘Cashflow Quadrant’ is a simple yet powerful book written by American businessman and author Robert Kiyosaki. The author breaks down the concept of cash flow and shares his enormous wisdom on money. If this has piqued your interest, read on.  

Breaking down the quadrants

Kiyosaki states that the entire working population of the world fits into one or more of the four quadrants, depending on their source of income. 

A picture containing text

Description automatically generated

The Employee

Employees want to play safe with one constant stream of cash flow – salary. A typical employee will say something like, “I am looking for a secure job with good pay and excellent benefits.”

The Small Business Owner or Self-Employed

The Self-employed strive for independence and control. They have a ‘do-it-yourself’ mentality. Also, their specialized skills-set may force them to do the work themselves. For example – Doctors, Engineers, Lawyers, Singers, Musicians, Architects, trainers can’t delegate their work to someone else. 

A typical small business owner will say something like, “I am looking for a job where I can be compensated well for my skills and time. I want to be in charge.” These people price themselves for a specific task or on a time basis. To increase their income, they have to devote more time to their work or start charging more for their time invested. 

The Big Business Owner

Big business owners gain financial success through creating, owning and controlling a profitable business system. A typical big business owner will say something like, “I am looking for people that are smarter than me to run my business.” Through delegation of work, they are free to think and explore bigger opportunities. As Mr Ford once said, ‘Thinking is the hardest job. That’s why so few people engage in it.” 

The Investor

Investors make money with their money. A typical investor will say something like, “I am looking for an opportunity where my money can work most profitably.” 

You cannot jump into the investor quadrant without being successful in one of the three other quadrants. You have to first earn from other quadrants and then deploy your savings to build assets, which generate passive income through investments.

Summary of cash flow quadrants

The left-hand side majorly have/earn an active income through their hard work. They exchange money for their intellect and time. As time is limited 24 hours a day, they are limited in their earnings. 

A businessman exchanges products/services for money. Along with business profits, they also play valuation games. In fact, a businessman is not wealthy on the profits of the business, they are wealthy because of the valuation of the businesses they own.

The last category of the quadrant is investors, who get money on their money. In other words, money works for them. They build multiple streams of income through physical, financial and intellectual assets. They earn rental income, interest, dividend and royalty incomes; And, at times, capital gains on their investments.

The Forbes 500 list of the wealthiest people in the world is dominated by large business owners and few investors. Rarely would you see anyone from the left-hand side getting on this list.

It is not that people in a specific quadrant are better than the others. Indeed, all four quadrants have their own pros and cons. And, in every village, town, city and nation, there is a need for people operating in all quarters to ensure the financial stability of the community.

Other Key Takeaways from the book

You learn from your mistakes

Remember that anything important cannot really be learned in the classroom. It must be learned by taking action, making mistakes and then correcting them. That is when wisdom sets in. We learn the most about ourselves when we fail, so don’t be afraid of failing. Failing is part of the process of success. You can’t have success without failure. No matter what anyone is saying to you from outside, the most important conversation is the one you have with yourself.

The size of your success is measured by the strength of your desire, the size of your dream and how you handle the disappointments on the way.

Wealth is Product of a right Mindset

Money is essentially an idea that is visualized with your mind, not with your eyes. If money is not in your head first, it will not land on your hands. Since childhood, kids are conditioned to stay on the left-hand side as parents tell them to get educated to ensure they get a good job. Professionals want their kids to turn professionals to take their efforts to the next level. Educational institutions are preparing people for jobs, not entrepreneurship. The entire culture is about preparing kids to be job seekers, not job producers. No wonder ~95% of the population of the world lies on the left-hand side of the cash flow quadrant. 

The journey from one quadrant to the next begins internally first. It’s a transition from the old set of core beliefs and technical skills to a new set that helps you create wealth and ultimately changes your life.

Investing is both capital and knowledge-intensive

Many people invest because they want to get rich quickly. So instead of becoming investors, they end up becoming dreamers, hustlers, gamblers and crooks. Is investing risky? No. Being uneducated is.

Accepting financial advice blindly is like setting a trap for yourself. Your financial survival depends on facts and figures, not some friends’ or advisers’ opinions.

Doing what everybody else does will not make you wealthy. Common sense is uncommon when it comes to money. Working hard also won’t make you rich. The hardest workers are not the wealthiest people in the world. To become wealthy, you need to think independently. If you want to acquire great wealth, take on great financial problems fearlessly.

Build Assets not liabilities disguised as accounting assets

Learn to recognize the difference between an asset and a liability disguised as an accounting asset. In simple terms, assets should produce income or bring cash to your pocket. Assets, disguised as accounting assets, actually take the cash away from your pocket. Those expensive cars, farmhouses, beach houses, a second home, club membership etc. – they all take cash on a monthly basis on insurance, petrol expenses, drivers salary, maintenance charges, property taxes, utilities etc. Buying some expensive gifts such as jewellery or some other decorative art or item would also fall in this category of liability. 

Remember, “The best thing money can buy is more money. First, build your investment assets and then enjoy the fruits of it.”. You have to strive to reach such a stage where the income from your investment assets pays for your lifestyle. That’s when you attain Financial Freedom.

“Just as there are waves in the ocean, there are great waves of emotions in the markets – emotions of greed and fear.“

Wealth building is a long term project

True learning requires physical, mental and emotional learning. Wealthy people maintain long term vision, believe in delayed gratification and use the power of compounding in their favour.

It is not how much money you make that matters, but how long that money works for you and how much money you have as a comfortable reserve.

The idea of ‘eat, drink and be merry while we’re young’ abuses the power of compounding and leads to long term debt instead of long term wealth. These people want short term answers to the long term problem. 


Financial freedom is everyone’s birthright. However, you have to claim it through your disciplined actions.

Many people say “Money is not everything”. Right! It is not everything. But, can you enjoy anything without money? Is it a lie we are telling ourselves just to justify the current state of affairs? Or, are we covering our current situation by making this statement? 

Instead, let’s ask this question: “How can I become Rich?” Remember, if you were born poor that’s not your fault; but, if you die poor, that for sure is. There is a price to be paid for ‘becoming wealthy’– the Price of delayed gratification, discipline and patience.

How do you eat an elephant? One bite at a time. Similarly, you become wealthy step by step. Remember Nike’s slogan “Just do it”. Take that first step today!

Happy wealth building!

Further Reading Recommendations:

  • Stone soup, written by Marcia Brown
  • The millionaire next door written by Thomas Stanley
  • E-myth, written by Michael Gerber
  • Emotional intelligence by Daniel Goleman
  • The worldly philosophers by Robert Heilbroner
  • Unlimited wealth by Zane Pilzer 
  • The great boom ahead by Harry Dent 
  • The sovereign individual by Dale Davidson 
  • The Crest of the wave by Robert Prechter

By Manish Bansal

Manish is the Managing Director of SME Value Advisors, a platform that connects businesses with curated professionals who can deliver solutions. You can connect with him on

Leave a Reply

Your email address will not be published. Required fields are marked *