Cashflow Quadrant: Where Does Your money Go?

Rich Dad's Cashflow Quadrant is the sequel to the New York Times bestseller Rich Dad Poor Dad. Whereas Rich Dad Poor Dad was more of Robert Kiyosaki's personal journey to financial freedom, Cashflow Quadrant shows the principles he used to reach that status. The book basically revolves on the picture you see on the cover which is the cashflow quadrant itself.

The cashflow quadrant is an illustration which shows the four ways people earn money. The first quadrant is through employment. This means that these people essentially trade in their time for money and work for somebody else.The second is through self employment. These typically include lawyers,doctors and accountants or in short professionals. They still trade their time for money but are usually higher paid than most and are not directly employed by a boss. They are independent contractors. They are also the small business owners who own mom and pop stores.The third are big business owners who run the big corporations. They are able to hire people and leverage off their time and efforts. Their money is not dependent on them but on their business systems. Examples are McDonalds, Procter and Gamble and Microsoft. Lastly there is investing in which there are investors. These people invest money to make more money. Examples are Warren Buffet and Bill Gates. They let their money work for them.

This book teaches us that the best way to gain financial prosperity is to go to the right side of the quadrant and have a big business or be an investor. These people pay less in taxes and work less yet earn more. A lot of the people in the left side of the quadrant work hard all their lives and end up with nothing.The book also teaches what assets, liabilities, income and expenses are.

Overall, the book is a joy to read as it uses layman's language and avoid financial jargon. When jargon is used, it is defined so as to smoothen the flow of reading. The author makes use of stories and illustrations to make his points clear. The book is recommended toeveryone who wishes to have financial freedom. This book indeed teaches you a lot of things that school does not teach.