Self Improvement : RDPD : CashFlow Quadrant

Section E :

Being an Employee. Work for money. No work no money.

Section S :

Being Self Employed. Work for money. No work no money.

Section B :

Being Business Owner. Work for money plus using manpower work money for you. No orders no money.

Section I :

Being an Investor. Using money to work for you.

There is two group of people which is E to S, and B to I. Oneself must feel secure, comfortable, and rich.

 

From what I would say is, if you want to play with money, basically making money work for you, you have to know about the


a) the product of MONEY. Bonds, Unit Trust, Shares, Insurance, Overdrafts, Credit Cards, financial products and etc...


b) the basic flow of MONEY. Money flow in from where, and money flow out where.


c) Control the flow of MONEY. Maximize input, Minimize output.

 

d) The clear view of Asset and liability concept.


e) The stage of being a secure, comfortable and rich. or being a rich, comes with comfortable and secure in the end.
If you invest MONEY, it gives you some return. So what are the returns measured at?
So by far what does it mean by When the economy is up, you definitely make money, and when the economy is down, you definite also make money? So what are the products available when the economy is down?

Asset is something that generates income, such as your work, full time, part time, freelance, business. Asset would not be an asset if you stop doing your work, full time, part time, freelance, business. Asset would turn into liability if you could not know what to do with your work, your freelance, and your business. (out of control - the common mistake is to keep old stock, damage stock into your savings (profits))

 

 

 

 

Liability is something that you need to pay, such as car (9 years installment),

house (25-30 years installment).
Liability changes into assets when you have settle all, and you own the thing.

Everybody know how to spend actually. But does anybody know how to generate income? Graduates from Diploma, Degree, and Master, Phd, know how to generate own income without depend on other people?

Being in the E section

Everyone would come to this stage : to work for somebody. The money that you save might not be called an excessive money. If you are saving for the future, you are making losses due to the inflation rate of the food, transport, and especially medical expenses for the future. If you have bought car, and house at this stage, you could have been tied up with the E section forever, because you need to work more in order to pay more. If you stuck in the E section, so with your little son and daughter, since you are unable to teach any thing from the B section, they most probably follow your step which is to work for somebody. :(


 Being in the E section into S Section or B Section
Once you have decide to open a business on your own, you might be at the age of >40 years old. This I normally called a Self-employed S Section. This is the stage you use the E section savings in order to build a business. This is a very quite sad, because you are waiting everything to be ready in order to do the business, in other words, you have taken 20 years to learn about working, but non for business experiences, such as the risk and the pressure being an employer. It would make your savings lost all at one time of your age, if you are too careful and not careful enough. You have to know about the Risk games.

When we say B section, you need to earn your education (practical & theory), experience (yours or people) through the E section, and build the excessive cash in the B section. Doing E section (full-time) and building B section (part time) at the same time. At this stage you are able to learn the business risk, experience, education at the same time through the age of 20 years old into 30 years old (10 years should be enough) to know what is risk, and to know your desire to achieve better income.

Even though the writer has mentioned that you should start with B section directly rather than E section, but if you look closely in the book, his son Mike is in charge of the investment [I section] rather than the business [B section], the rich dad himself is in charge of the business. So why his son Mike doesn't need to fully in charge of the business, since business section create excessive cash?

That's why somebody have read the book find it hard to do business based on Rich Dad and Poor Dad inspiration story, and leave the book as an motivation story.

 Being in the S section
"Considering just enough to survive", this happen to most small business owner, same condition as E section. The difference is the status of being a worker and the status of being a boss. At the final, both also say "just enough". :(

 Being in the I section
15% of the book content, is about how to do a business, and the balance 5% to use it wisely on investment.


In order to become rich, you have to go through the B section for an excessive cash, and making the I section work for you.


If you have passed the B section with flying colors (making profits), then you need to work out for the I section, whereby the I section returns better than the B section in the long run.