Cash Flow Quadrant: Everything You Need To Know!

What's up people?

Ok, so you somehow found the concept of making money by the cashflow quadrant from somewhere. And rn you are curious to know more about this concept.

In this article, I will tell you everything you need to know about the concept of Cashflow Quadrant by Mr. Robert Kiyosaki.

You will get to know about the full explanation about the ESBI Quadrant with diagrams and summary plus, how can this affect you in your daily life to achieve financial freedom.

Sounds Good? Let's get right into it!

Cashflow Quadrant

Cashflow Quadrant

Before you know the concept let's first get to know little about:

Basically, who is Mr. Kiyosaki and why should you listen to him?

So this concept is given to us by Mr. Robert Kiyosaki in their book The Rich Dad's Cashflow Quadrant. He is also the author of the no. 1 best selling book called Rich Dad Poor Dad from like dozens of years now.

When he was a small child, he saw everyone working really hard to make money. He has got 2 Dads, one is his original father and the other one is of his friends to which he calls his second Dad.

His own father has got a job and always working hard just to earn enough and has got a lot of degrees.

On the other hand, his friend's dad was a businessman who just never worry about the money and always was free from his head on the topic of finance particularly!

Mr. Kiyosaki has shared the wisdom of financial knowledge that he learned from his friend's Dad in this book called Cashflow Quadrant.

Mr. Kiyosaki has a net worth of approx 80 Million as of 2019 and he is in a business of Real Estate.

Understanding the Cashflow Quadrant in Detail

You may be right now in your life or in your surroundings may hear this saying that "money is really hard to earn" or "money does not grow on trees" etc.

Maybe you are in college and looking to earn some extra income.


Maybe you are working in a Job and looking at how can you become financially free?

In whatever stage of life you currently are but whatever you will read here will help you create massive wealth if you can understand the fundamentals of money given to us by Mr. Kiyosaki from the Book.

cashflow quadrant

So this is the complete diagram which has got 4 quadrants ESBI or EBSI in whatever sense you can understand.

All the people that you see around you that are making money will all be covered in these 4 quadrants.

And you will practically find all types of people in these quadrants in the sense like,

You may find a person around you making big money working in a Job!

You may find a person around you making huge chunks of money working as Self Employed!

And same for the other 2 remaining quadrants.

If you are right now making some kind of money, you will also come under one of these quadrants and it requires different-different skills and mindset to fit in certain quadrants.

Let's deeply understand what is the Cash Flow Quadrant is all about in deep details!

First Quadrant: "E" For Employees:

An employee is someone who is working for a salary in which he trades his time in exchange for money.

These are the type of people that you will see almost everywhere around you. They can be you Dad, Mom, Cousins, Sisters, relatives, acquaintances, etc.

I bet if you are above 16 or above 18, you have heard this advice from your parents and teachers while you are in schools and colleges that,

Go to school, study hard and always focus on scoring good marks so that you can pass more exams and get a lot of education qualification so that one day you can get a good, safe and secure job.

The more qualification education degrees you can get, the more you can earn, so work!

People in this quadrant do not want any kind of risks on their money and demand safety and security and benefits, health insurances, etc.

Second Quadrant: "S" For Self Employed:

Now, these are the people that run their own work by their own self and do not want anyone particular to interrupt them and want a full control for their money.

You will develop your own strengths and weaknesses in different quadrants.

You can look around your colony or society and will find various Doctors, Lawyers and C.A's and Certified professionals.

All these people do not work for anybody but they are their own boss but these guys do not own a team.

These guys want that:

If I'm working hard to earn money, I must get fully paid in full amounts without any deductions from any other person.

Also, these people trade their time for money as there is a single person working to make all the money and they just keep every skill to themselves.

Self employes people think that if they teach their work to people, more people will be there to compete us. So why build a Team?

So, these guys are one-man army and are happy to work for themselves!

Third Quadrant: "B" For Big Business Owners:

All the people in this quadrant is the exact opposite of Self-Employes people!

Business people think that why they have to learn each and every skill about each and everything so they just hire the best talents and make a team and build their business.

All the employees that are skilled work under them and build the main business so-called all the "inside work" is done by the team and the main business owner takes the leading decisions.

These business people usually got high-risk capacity and do not mind if they lose money here-n-there in business and are always working on building their financial skills.

Business people always focus on building a system so that the business can work on their own with the help of employees and they can build more business corporations and more systems just like this one!

These guys are usually entrepreneurs or mostly from college or even school dropouts that have high-risk taking capabilities and always thrive to become a leader.

Fourth Quadrant: "I" For Investors:

Now, pure investors are the type of people that just do not like to work for money.

Usually, these are the people that have already build a business system in place and now invest the money that they earn from business to different places.

Just for the sole reason that their money can earn even more money and earn compounding interest over time.

There is no certain rule that you can only fit in just one quadrant rather you can come in other quadrants at the same time.

These investors invest their money in other business or they themselves become a silent partner so that they themselves do not have to work but the money cut can come every month!

Investments in big real estates and stock markets are the playgrounds for investors to make big money.


If all the money that the Rich Guys have in the entire world is somehow from some magic distributed to all the Employees then,

After some time, all this money somehow will get back to all the Rich Guys again because whenever the employees work, the Rich Guys get paid just because they know the rules of the Game!

And that's why book like cashflow quadrant come in the market that gives everyone a fair share to learn the rules and create a wealthy mindset.


After understanding, I can guarantee that if you are making any kind of money, you will be falling in any of these 4 categories. Will talk about in a second how can you shift from one quadrant to another but here are some learnings you need to consider.


After knowing all these 4 ESBI Quadrants, you cannot go the next day from one quadrant to the other just like that, people in each quadrant has it's own mindset.

And if you do not change the mindset first and try to enter in some other quadrant, you will always fail as it is a quadrant rule, Period!

How This Concept Be Your Guide To Financial Freedom?

Cashflow quadrant

What Mr. Robert Kiyosaki is basically saying that if you want to make money and become financially free, you have got to shift from the Left Side[Employee and Self Employed] to the Right Side[Business and Investors] to make everything work.

Look At This Way:

If you are an employee or a self-employed person, you have got only 24 hours in a day as everyone else.

Now, just because of the reason that you are a single man army working, you cannot work full 24 hours a day, 12 months a year.

And you have got a limit to a certain amount of income that you can earn per hour. Isn't it?

For example,

Like 10$ per hour means 120$ in 12 hours and at a stretch of 18 hours a day, you will only get 180$ per day.

Basically, you have got a limit to what you can exactly earn. Doesn't it?

If you are an employee or a self-employed, you can only work:

50 Hours/Week + 4 Weeks/Month + 12 Months in a Year + For almost 40 years of life.

= Which means 96,000 hours in total work for an entire lifetime.


If a business has 1000 employees and they are working 10 hours a day then a business owner will get work done of approximately 10,000 hours.

And in 10 days, the business owner will get the work done of almost 100,000 hours!

Did you get that?

An employee is working their entire life and getting work done of 96,000 hours and the business owners are getting the same amount of work done in 10 days.

Now wonder who will make more money?

This is the exact reason why business people makes more money and this is why the rich are getting richer as time is passing day by day.

That's why the Rich Dad's Guide To Cashflow Quadrant is suggesting everyone for a shift from Left Quadrants to Right Quadrants!

Active Income VS Passive Income


I will not go in-deep for this as these are very simple to understand and do not require so much understanding as the other things require but for the knowledge purpose.

Active Income

Active income is something that you earn by actively working on something and the next day you have to do the same thing and then earn some more.

It's like, you have to start fresh each day and each day you start from zero.

Both the Employees and the Self Employed are covered in this active income as they do not have any investment plan or anything like that.

Passive Income

Passive income is something that makes you money over money again-n-again without actively working for them.

Now, it is not like you do not ever have to work for this.

Mostly passive income requires you to work really really hard as an entrepreneur on something and then after putting systems in place and everything, you can earn passive income without actively working on them.

You should always look for opportunities that can help you build more and more passive sources of income, Period!

If you are someone who is going to school or college or even doing a job and struggle financially, I highly recommend watching this complete video if you would like to know some secrets of the wealthy.

I showed this exact same video to some of my friends and you know what they replied?

Almost all of them said that they learned more in this video than their entire college years.

Tell me in the comments what do you think?

My Take On It

I genuinely believe that everyone is destined to be rich and wealthy and famous and all these principles and concepts that the cash flow quadrant showed is really valuable!


It is not the case for each and everyone for us! The reality is, not everyone is going to be successful as success is not particularly any guaranteed for no-one.

It takes a lot of effort, failures, and determination in the right direction under a mentor or guide who can show you the way.

These concepts definitely do help but it is just fundamental for all. You, after reading or understanding these things, must look for things and business and really custom made for yourself.

Every time in real life and practicality, you always have to tailor-make things on your own based on these fundamental principles given by the rich.

Although these things make you ahead from a lot of people and most people are not going to do anything even after knowing all these things.

Also, it is somewhat difficult if you are not privileged of any family wealth or you have your whole family in careers of jobs where massive taxes are imposed!

That's why I always say:

"Apply what you learn and learn from what you have applied!"

In The End,

If you are someone who has no directions and genuinely looking for guidance that can help you make money.

I would highly recommend going through this entire course on how you can build an online business and make money this way.

This course is completely free of cost and will teach you how you can build a profitable business from scratch.

Check here-

Do let me know what you think about this article in the comments. Share this so that information like this can reach to a number of people that would make the effort worth.

That's it for this article on Cash Flow Quadrant!

Until then

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