Main lesson of the book: Know where you stand in the world of finance and how to move into a better position.
This entire book is based on the following concept:
This very simple concept encompasses the possible positions one can hold in life with regards to how they make their money. Cashflow Quadrant takes its time to slowly break down the benefits and risks of each side. Discusses the possible transition from one side to the other. The beautiful point this book makes is that each side and each position will come with its own source of valid information. So what works for an Employee will never work for an Investor and vice versa. This of course also applies to how they spend their money and how they will most likely view money.
I have been reading these books and have allowed them to alter my perception of money and how I view the world in general. This of course means that I am slowly trying to transfer from the Employee side of things to the Investor side of things and of course the Business owner side of things. As I am preparing my mind and trying to change my reality I find myself discussing these topics with those around me. It took me but two conversations to learn that it was not a good idea to do so. Because when dealing with peoples perception of money you are often directly offending their position in life and how they got there. And when you tell them that being an E (Employee) is not really a good thing and it comes with more risks and pitfalls than being an I (Investor) they get extremely defensive. Because not only am I telling them that how they are living their lives could be possibly wrong, I sound like an arrogant know it all who thinks he is superior because I read a few books.
These people will vehemently defend the concept of E as being a good thing. Because it offers security, it offers stability, it offers a chance at occasional vacations and heck it even offers the chance at saving your money to buy something they would like. What in the world could be “bad” about that? Yes, it took me but two conversations to learn that you cant give someone information they have no need for. Those who are content in their position within the quadrant will most likely never want anything else. And if you, the reader are going through this book, it means you’re one of the few who wants to move into the right side of the quadrant and gain financial freedom. That is what this book is all about.
It breaks down the myths that surround being an investor, the scary tales that people use to make sure those around them never take the first step towards financial freedom are revealed to be mere lies. An E will forever work for a boss. And there is nothing wrong with that, but please keep in mind that a boss’s responsibility is to pay you for the work you do and not to make you rich. I remember those good old days where I was an S (Self Employed). I struggled to sell my books, I would make my way to each stage I could find to perform my poems. Paying for my own transport to the venue and my own drinks once I got there, Poetry isn’t the most profitable of businesses one can find themselves in. But I learned a valuable lesson from my days as an S, and that is that no matter how much I work, it wont always translate into money. Talent and discipline will allow me to create an amazing product but that doesn’t mean a thing if I don’t have a system in place to sell it.
And that is what a B is all about. A Business owner has a System in place where others work for him and he delegates the tasks to make sure the work gets done. While an S will do all the work himself, because well … that is the only way to make sure it’s done right. I was without a doubt an S who frustrated with the lack of cashflow, so I did all I could to get more paying projects and more exposure. But through this book I learned that my mistake was, that I didn’t set up a system that could function even if I wasn’t present. That is what a business system is. Even if the owner isn’t present the business will still flourish and be profitable. And my business was solely dependent on me and after I left, it went away with me.
By reading all these books, my goal is to gain a Financial IQ that will allow me to gain financial freedom. My eyes have been set on Real Estate as the means with which I wish to do this. But Cashflow Quadrant showed me that even Real Estate should be used as the foundation for setting up a solid business system. To ensure that my cashflow will remain untouched by Taxes and other greedy hands that will want to lay their hands on my good fortune. Real Estate will still however be my first step into Investing. Since starting this journey I have started trading stocks to get a feel for it and learn the market. The fact that these stocks and bonds are based on perception and people’s opinion of them, makes them extremely risk filled in my eyes. Whereas real estate is a fact that I can rely on regardless of the fluctuations the market might experience or the crashes the economy might go through. But without a doubt, the book states, and as have several other books, that financial freedom is not to be found while remaining an E or S. The only way you or I can obtain wealth and experience a life where we don’t have to work but work because we want to work is if we step into the B or I side of the Cashflow Quadrant.
I am slowly making my way there, I hope to see each and everyone who reads this book there. Freedom starts from within never from outside. By reading these books, I am educating myself and by writing this book I hope to educate you.