Small Business Success

Robert Kiyosaki's CashFlow Quadrant: The Common Denominator

Michael Rinaldi

Little did I know that what I thought was an entrepreneur (in my mind) was really being self-employed.

I remember reading this book and thinking "this makes sense."  I realize however there were a lot of books in the 1990s that had to do with self-improvement, personal finance, or had some secret on how to become rich in your own business or some other wild venture.

The thing about Cashflow Quadrant that seemed to resonate with me at the time was that it was written in a way that is very easy to understand and relate to from the perspective of someone who does not enjoy having had a prestigious pedigree.  It gives the above average Joe with a modest level of intelligence, desire, and an idea a sensible process of improving one's standard of living through the advancement of being an employee to one who invests assets. 

In essence he goes from working for someone else, to working for himself, to working on his business, and having his business work for him and finally, having his assets produce for him.

(A side note: on page 41 he states that "by a year 2020, there'll be 275 million Americans, with 100 million expecting some kind of government support." --I think they need to recalculate since the US celebrated a population of 300 million in November 2007.) 

In this article we'll take a look at each of the four sections of the Cashflow Quadrant and what I have experienced in making my way through the quadrant.

Employee.

At some point the vast majority of people who enter the workforce do so as an employee, regardless if they take advanced or entry-level positions.   Most college graduates yearn to find a job upon leaving college-one in which they would at least like if not make halfway decent money.  As most people out of con college know: this is not always the case. 

In my 3rd and 4th at year college I lived in a house shared by ten guys.  Out of all of us in the house, I was the only one with a pre-established career path, as I had been accepted and was certain to graduate with a degree in physical therapy.  I had my contract for work already signed well in advance of graduation.  The only other housemate of mind who had any semblance of a career path mapped out was one who would work for his father upon graduation.

It wasn't until most of them were in their 30s that their career paths became a bit more solid.  If the average individual works 40 years upon graduating from college it can take them ten years to get onto a career path that has a direction; but they've lost 25 percent of their work life essentially trying to position their career rather than building wealth.

(Incidentally labor and statistics released by the government for 2007 indicate that college graduates or those degreed in college have a median income two times those who do not have a college degree.  Also statistics report that median net worth is two times that of the non-college degreed individuals.) 

When I was employee I felt a general sense of duty to do well for my customers, my employers, my profession, and oddly enough, my family.  It was during my tenure as an employee where acquisition of information to improve my technical abilities was most important.

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