All the earning people can be categorized into four quadrants according to this concept of Robert T. Kiyosaki’s (who is an author, businessman and a financial advisor) book Cashflow Quadrant.
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| Cashflow quadrant |
First Quadrant(Employed):
In this quadrant, we find people who are employees. They always work for others. They have fixed working hours for their work in which duration they do the job. If they do overtime, then only they can earn an extra amount. They work for fulfilling the dreams of the business owner. The much time they give for work, the more they earn. An example is a person who works for fixed duration generally 8:00 am – 6:00 pm.
Second Quadrant(Self Employed):
People of this quadrant, do not work for others. they work for themselves. small business owners, entrepreneurs fall into this category. They are independent. They have to work hard to make their business run. If they take and off from their business, their income stops. So, they also depend except the fact that one works for others and the other works for self but here as the person is working for self so, there is no time boundation, sometimes they work even more than an employee. The moment both stop working, their income stops. An example is a person who works for 8:00 am – 12 night.
Third Quadrant(Business owner):
People in this quadrant create a business framework that generates them money. They employ smart people who work for them and grow their business, who make money for the owner. And the Business owner generating more money from the business employs more people who further works more to enlarge the business. People in this quadrant are generating passive income because their income doesn’t stop when they stop working. People are already working for them. They are secure and generate wealth in the process. They work for their dreams.
Fourth Quadrant(Investors):
People in this quadrant don’t work for money, they work for their dreams. Their money works for them. They have invested in successful business and their businesses generate a continuous flow of income. They achieve their financial goals easily. They have achieved financial freedom.
DILEMMA
Here, the dilemma is that almost each of us wants to come in third and fourth quadrant but actually in real life, 99% of us are in the first and second quadrant.
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