Cashflow Quadrant: Understanding and the 4 Parts in It

Most people out there must be unfamiliar with the term cashflow quadrant. This term is very important to understand, especially for you a businessman. Why? Because this term plays an important role in achieving success in the financial sector of the company.

So, in this article, let’s discuss in full the meaning of the cashflow quadrant, and the four important parts in it.

1 Definition Cashflow Quadrant
2 4 Type Cashflow Quadrant

2.1 1. Quadrant E (Employee)
2.2 2. Quadrant S (Self-Employee Business)
2.3 3. Quadrant B (Big Business)
2.4 4. Quadrant I (Investor)

Understanding the Cashflow Quadrant

A writer and investor from the United States named Robert T. Kiyosaki was the one who first introduced the term cashflow quadrant.

He wrote the cashflow quadrant book and became very famous in various countries because of the concepts in it which explain the profession and finance which are considered to reflect the reality that occurs in society.

The simple aim of this book is to help each individual achieve financial freedom. With the realization of financial freedom, a person has the freedom of time and debt that can destroy, and is able to have a business that can bring big profits.

So, simply cash flow quadrant is a diagram that describes the way each individual earns income. This cash flow quadrant then has various ways of managing finances, including how to manage debt and also the assets of each individual.

4 Type Cashflow Quadrant

The following is an important explanation regarding the 4 types of cashflow quadrants :

1. Quadrant E ( Employee )

Quadrant E or quadrant employee or in Indonesian is the quadrant employees tend to choose security and comfort in earning income by working and getting a fixed monthly salary.

By becoming an employee or employee, and being able to meet various requirements and qualifications set in a company, it is certain that the job will help someone in the level of financial comfort as previously expected.

Those who are in the cashflow quadrant E type will generally be willing to trade all the time they have for work, or almost 60% of the time they have for work and the remaining 40% for themselves. If those who are in this type are not working, then they are not able to earn an income.

By having a clear career path, the hope is to have a much more decent type of standard of living. Those who are in the cashflow quadrant E are employees who feel comfortable because they definitely have a fixed monthly income or salary.

However, at the same time they also do not have the courage to take a higher risk in a job.

Those in quadrant E generally have the following mentality:

  • Tends to be reluctant to improve himself.
  • Get used to being in your comfort zone
  • More waiting to be told
  • Has no initiative.
  • More likely to rely on the ability of his brain or work smart.
  • More often think about himself

2. Quadrant S (Self-Employee Business)

The next type is Quadrant S or a self-employed business. In this case, S has meaning for those who already have and run their own business. Simple examples of the S quadrant are insurance agents, architects, designers, and doctors.

This type of work tends to have its own form of business management and cannot be separated from the business instantly. Those who are in this type of quadrant also certainly need hard work and business ideas from business owners.

It is almost the same as the cashflow quadrant E that we have written above together, to be able to get their finances, they must be willing to trade a lot of time for work.

If other people still have time to rest after working hours or office hours are over, then those in the cashflow quadrant S still have to manage their own business, and that’s what makes them have to work harder.

Those in the S quadrant generally have the following mentality:

  • Has a better level of mental quadrant E
  • Can delay comfort
  • Tend to have an effort to improve his quality and continue to learn.
  • Have high initiative.
  • Want to work harder and smarter
  • Can work independently but find it difficult to work in a team.
  • Always strive for initiative
  • Strive to always work hard and smart
  • They are also less able to manage or educate their subordinates if given the task of being a superior so that it will have an impact on less teamwork.
  • In addition, they also tend to only think about their own success.

3. Quadrant B (Big Business)

The level of seriousness of businesspeople in this type of self-employed business will continue to increase and bring them to the level of quadrant B or big business. Those who are included in the type of big business are business people from large companies which have more than 500 employees.

These business people will certainly be able to develop more if they have a strong intention to be able to work hard and start their own business from scratch.

They will also tend to be able to manage the resources contained within the company, such as materials or goods from the company, to the human resources or HR in it.

Those in quadrant B generally have the following mentality:

  • Has a better grade than the   S quadrant, even more so the E . quadrant
  • Willing to postpone the comfort
  • Has a hard effort to improve his quality.
  • Have a high level of initiative.
  • Can work hard and work smart.
  • Can work individually or in a team.
  • Can distribute work well to the team.
  • Able to manage and also provide good information to his subordinates in various ways to create a team that is compact and can continue to grow.
  • Can lead a team to achieve its goals
  • More likely to think about the success of the team and those around him than his own success
  • Humble, kind, honest, and also trustworthy.

4. Quadrant I (Investor)

The last type of quadrant contained in the cashflow quadrant is quadrant I or investors. Those who are in this quadrant I have a higher level than the previous three types of quadrants, where those who are in this quadrant type have achieved financial freedom as well as time freedom.

Those who are already in this quadrant also usually get their income from the results of the investments they have made.

Similar to quadrant B, those in quadrant I will not be directly involved in the activities of the company where they invest their capital. Those who are already in quadrant B will tend to try hard to get into quadrant   I because the value of income obtained in quadrant I is much greater.

Generally, their source of income does not only come from one source, but from various investment sources.

Those who are in this quadrant is the quadrant that many people dream of. At this level, they no longer need to worry about financial problems, because the income they can get is also very large.

They also generally don’t need to work harder and spend a lot of time working, but getting to this level requires a lot of effort and time. There are many sacrifices they have to make to achieve it.

Those in Quadrant I generally have the following mentality:

  • Has a higher level than other quadrants.
  • The whole mentality contained in quadrant B is also generally found in quadrant I. This is coupled with the ability to be able to create a system in the company in various ways so that the system it creates can run and also develop by itself.

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