Rich-Dad's-Cashflow-Quadrant summary

Rich Dad’s Cashflow Quadrant by Robert Kiyosaki [Actionable Summary]

This is a comprehensive summary of the book Rich Dad’s Cashflow Quadrant: Rich Dad’s Guide to Financial Freedom by Robert Kiyosaki. Covering the key ideas and proposing practical ways for achieving what’s mentioned in the text. Written by book fanatic and online librarian Ivaylo Durmonski.

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The Book In Three Or More Sentences:

А book dedicated to people willing to pay the price for reaching financial freedom. The Cashflow Quadrant is something like a follow-up guide to Robert Kiyosaki’s famous book Rich Dad, Poor Dad. Here he emphasizes, again, on the importance of becoming financially secure and extends on the philosophy shared in his first book.

The Core Idea:

The Cashflow Quadrant is a way to categorize people depending on how they make money. There are four sections according to the author: E for employees; S for small businesses or self-employed people; B for bigger businesses; I for investors. The quadrants are meant to show you where you are today in terms of personal finance and help you chart a course to where you want to be in the future. Spoiler alert: You should aim for either quadrant B or I. Only these two can bring you financial freedom.


  • School, good grades, and a safe secure job rarely lead to financial freedom.
  • Changing quadrants isn’t like changing jobs or changing professions. You need to change how you think and how you look at the world.
  • In order to become financially secure, you don’t have to overwork yourself. You simply need to build a system that can support you whether you work or not.

5 Key Lessons from Rich Dad’s Cashflow Quadrant:

Lesson #1: Changing Quadrants Is A Life-Changing Experience

So, here’s the categorization on how we can earn money presented in the book (a.k.a the four quadrants):

  • On the left side of the quadrant we have (average income):
    • E: Employees: Most of us are employees. We prefer the security our job offers over taking some sort of a risk. Or, we’re simply too lazy to do something on the side.
    • S: Self-Employed: Most small businesses are owned by the self-employed people. With the growth of their business, their involvement also increases.
  • And here’s what’s on the right side (big bucks):
    • B: Business-Owners: These people focus on creating a system that will potentially work without them being physically there.
    • I: Investors: Investors make their money work for them. At that stage of life, you become financially independent.

If you want to change quadrants, besides committing, you first need to start thinking and acting differently. To understand that things won’t go smoothly and that there will be some financial losses throughout the process. However, the real reason people can’t move across quadrants it’s because most people simply can’t handle the extra work when they want to move from E quadrant to B quadrant, for example. They lose it. Both emotionally and intellectually and return back to the quadrant they feel most comfortable in – the regular job.

Rich dad nodded his head. “When the fear of losing money and failing becomes too painful inside, a fear we both have, he chooses to seek security and I choose to seek freedom.” Robert Kiyosaki

Lesson #2: You Don’t Need a Regular Job

It’s not so hard to find a safe, secure, and high-paying job nowadays. Well, the latter is probably not that easy but it’s still within arms reach. Nevertheless, the main thing here is that you don’t actually need a job. At least that shouldn’t be your long-term plan. You need to build your own business while you still can.

Think about it for a moment. Your job is like renting an apartment. You don’t have to maintain the whole thing and at any given moment you can ditch it and look for the something better. However, when you’re old and wrinkled, you’ll still need to eat. And if your job is long gone because of AI or because you’re simply old, you won’t have a lot of options.

So, the solution here is the following: Slowly build your own system that can run itself – brick by brick. A lot of people call this earning a passive income. If you do your job properly, at some point you’ll have cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it. For instance, income from a rental property, ebooks, courses, etc.

Lesson #3: Passion Builds Businesses, Not Fear

We hear these all the time: Follow your passion; Find work you love doing; Work harder. Even though we know these things are true and that we should agree when someone mentions them, it’s super hard to keep doing something when there are no sights of progress. That’s when fear is taking over.

In such moments, we should do what the rich dad mentions in the book: “You’re more worried about your own personal survival than keeping your dream alive. Your fear has pushed aside your passion. The best way to keep going is to keep the flame in your heart alive. Always remember what you set out to do, and the trip will be easy.”

We start a passion project but when we face a few bumps on the road we usually quit and we go back to work a 9 to 5 job. We do this because of fear. Because we’re more worried about our current survival instead of thinking about what might happen if we do this a couple of years. Or in other words, we quit because we forget why we’ve started.

Times of unease will always come and try to sabotage your work. The best way to keep moving is to always remind yourself why you set out on this journey. Don’t allow fear to fill your head and hearth with bullshit excuses.

Lesson #4: What You Do Today Will Determine Who You’ll Become in a Few Years Time

Obviously, your daily actions matter. If you eat burgers and fries regularly don’t get surprised when your clothes don’t fit. But there is also a flip side of this that goes something like this: If financial freedom is what you aim for, you may have to accept doing a shitty work or working for a shitty boss for some time of your life. But while you do that, you also need to work on your side project, daily. Create a simple plan for your future and strictly follow it.

It’s a tiresome process no doubt. During the day you’ll do something you don’t quite like, and when your shift is over, you’ll need to continue working. Few people can keep up with this way of living. Especially for a couple of years.

People nowadays are looking for shortcuts. They want instant fame and success. But quick get-rich-schemes don’t work. They’re created by people who are also looking for a shortcut. The only way you can create something that will last and that will bring you financial freedom is by going through the emotional, spiritual, and physical challenges. It’s a long process and it requires daily execution. But if you’re willing to commit to this, results will undoubtedly come.

Lesson #5: There is a Difference Between Being Rich and Being Wealthy

Your wealth is measured by the number of days you can survive without actually working and still maintain your current standard of living. Confusing, right? Let me give you an example:

Say you’re spending $5,000 a month and you have $30,000 in your bank account today. This will mean that you can live the way you live now, without working, for approximately 6 months. Or 180 days. “Wealth is measured in time, not dollars,” says Robert Kiyosaki.

You can be rich by the current social standards: have a big house, new car, nice clothes, but if you’re not retaining and investing most of your income into some sort of a long-term investment that will make you more money in the future you’re not really wealthy. You’re simply rich. But rich is a transition phase. Unfortunately, few realize this.

Instead of investing their money, most people will immediately buy a bigger house or a new car when they get a slight salary increase. But this type of behavior results in bigger monthly expenses and more hard work. They have nothing left to invest.

If you really want to be wealthy, your aim should be towards having enough money in your bank account so you can cover your current monthly expenses for as long as you’re alive.

Actionable Notes:

  • What do you want to be when you grow up? If you have kids, ask them this question as often as possible. Kids have to start thinking long-term from an early age. If you’re 30 or 40, it’s still a valid question. Don’t give up. It’s never too late to find financial freedom.
  • Calculate how much you’re worth: As mentioned above, wealth is measured in time, not in dollars. Calculate how much time you can live without working, this will be your wealth index. It’s a good exercise to realize your current financial situation and map out your future steps.
  • Change the way you think: A new set of golf clubs won’t make you a world-famous golfer. To improve your game, you need to first adopt the attitude, the mindset, and the critical thinking of a good golfer. Or as the author says, you need to Be, not just Do. Be a great athlete, don’t just go to the gym.
  • Learn new things: Though we seek security through a job, it’s not as safe as you might think. We need to constantly refresh our skills if we want to keep our job and keep climbing the corporate ladder. So, since learning something new is a must, why not spend some time educating yourself on the skills you need to move to a different quadrant?
  • Build a system around your passion: Create your own job, don’t look for another job. Getting a job is a good idea for the short term, but it is not enough for the long term. If you want to live a life on your own terms you need to create your own system that will earn you money.

Commentary And My Personal Takeaway

Though financial freedom can be found in all four quadrants, you want to operate on the right side, the B and the I quadrant side. You want to reach a point where it won’t matter whether you’ll be on your workstation or not.

Most people think that reaching financial independence requires long hours and no sleep, but most people follow the advice mentioned by the poor dad. They focus on finding a secure job, while the other few, build their own pipelines to achieve financial freedom.

The main point in the book for me is the following: We’re living in the information age which offers countless opportunities. You just need to find your spot and create a system that will earn you money while you sleep.

Notable Quotes:

Even though we’re all human beings,” said rich dad, “when it comes to money and the emotions attached to money, we all respond differently. And it’s how we respond to those emotions that often determines which quadrant we choose to generate our income from.” Robert Kiyosaki

Rich dad continued his lesson, “If you want to be successful on the right side, when it comes to money, you must know the difference between facts and opinions. You cannot blindly accept financial advice the way people on the left side do. You must know your numbers. You must know the facts. And numbers tell you the facts.” Robert Kiyosaki

When someone asks me, “What do I have to do to move from the left side of the CASHFLOW Quadrant to the right side?” my response is, “It’s not what you have to do that needs to change. It’s first how you think that needs to change.” Robert Kiyosaki

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