However, when it comes to paying off debt, such as home or car loans, having a clear monthly wage is critical. If you work as an employee, you know you’ll get paid as long as you keep working for the company, even though it’s not profitable. As a result, if a single customer or investment fails, you have a diverse revenue source from which you will not lose all of your earnings. If the bottom two quadrants are correctly designed, your earnings will come from a variety of sources. Your income stops if the company you work for goes bankrupt.Ĭertainly, if you’re in the “B” business owner quadrant and you layout your business property carefully, you’ll have different clients from various business sectors, reducing the risk of a single source of income. Because income diversity is minimal in the top quadrants, you face higher business and market volatility. The top two quadrants have your income from only one source, your job or your business. The playing field for the rich and financially secure is in the two quadrants on the right.Ĭapital, education, and a new mentality are required to move from the left to the right. It means you can make money by using the efforts of others.

Right quadrants:īusiness Owner “B” and Investor “I” are on the right side of the quadrant, and their wealth is regarded as passive. The playing field for the poor and middle classes is in the two quadrants on the left. You are paid for the number of hours you work in the quadrants on the left side. Your earnings are classified as earned income or active income in this case. The income generation quadrant’s left side holds quadrants E and S: Employee and Self-Employed, respectively. The letters “E,” “S,” “B,” and “I” stand for employee, self-employed, business owner, and investor, respectively.

Today, we will discuss each quadrant individually. Yes, we all can make money from even a single quadrant, or we can choose to make money with a combination of quadrants. We’ll look at how income is generated in each of the four quadrants in this post. Rich Dad, Poor Dad author Robert Kiyosaki utilizes the concept he calls the CashFlow Quadrant to describe the various ways in which people make income.

Cashflow quadrants