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One of the books I consider my personal favorite as regards personal finance is being offered for free — legally!

Robert Kiyosaki, world-renowned personal finance guru and author of the top-selling “Rich Dad, Poor Dad” books is giving away one of his ebooks, the Cashflow Quadrant, for free.

Free ebook download: Robert Kiyosaki Cashflow QuadrantThe Cashflow Quadrant book has been my personal guide as regards goal setting and personal finance management since the first time I heard of the concept years ago.

I have always planned on retiring early and to live on passive income for the rest of my life, that’s why, guided by the Cashflow Quadrant, my goal has always been to move from the left-side quadrants to the right-side quadrants.

Basically, the book is a detailed discussion about four quadrants categorizing people and their sources of income. These quadrants are the E, S, B and I quadrants.

The “E (Employee)” and “S (Self-Employed)” quadrants are the Active quadrants, meaning people have to spend time and effort in order to earn, while the “B (Business Owner)” and “I (Investor)” quadrants are the Passive quadrants, wherein, income is not directly proportional anymore to the time and effort spent.

We briefly explain each quadrant below.

The E (Employee) Quadrant

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The E quadrant is the “Employee” quadrant and people in this quadrant make money by “working for other people”. They usually go to the office everyday, work at least 40 hours in a week, and depend on monthly salary as primary source of income. Typical characteristics of the “Employees” are:

  • They desire security and they seek out a lifestyle that will provide them with this;
  • They seek out benefits with their jobs; and
  • They shy away from risk and subsequently see no need to become educated in the tools of finance.

Although this is not bad per se, Employees rely on effort and time to make a lot of money. That is, to earn more, they need to work more and spend more time on work. If your goal is to retire early, this might be difficult to achieve if you belong in the Employees quadrant.

The S (Self-Employed) Quadrant

People who typically have professions and “own a job”, instead of working for other people, belong to the S or “Self-Employed” quadrant. Doctors, lawyers, and other professionals who “work for themselves” and not as employees of other people are examples of the Self-employeds. Their typical traits include:

  • They do not like their income to be dependent upon other people;
  • They often have a hard time finding good work because they have high standards;
  • Independence is very important to them.

Most Self-employeds do make a lot of money but, like the Employees, their income is directly tied to how much they work, so the moment they take a vacation or stop working, they practically do not earn at all.

For people who are aspiring to achieve financial independence, they must work to move from being part of the left-hand quadrants (E and S) to the right-hand quadrants (B and I) where income is not directly proportional to the time, effort, and money they spend. The B and I quadrants are explained below.

The B (Business Owner) Quadrant

Those belonging to the B (Business Owner) quadrant “own a system” instead of merely “owning a job”. They set up a way that makes money for them even if they do not spend that much time in the business anymore. They achieve this by hiring Employees (who belong to the E quadrant).

Of course, when entrepreneurs start a business, they have to spend a lot of time building it. In due time, though, when the system is properly set up, the “system” is said to be working and the entrepreneur can now spend less time managing the business and yet his income is not reduced.

Typical characteristics of the Business Owners are:

  • They hire competent talent and delegate as much as possible;
  • They recognize their own inability to perform all tasks well, so they hone their ability of finding and cultivating talented people to work for them;
  • The Business people know that even if they left, they could come back to the business and find it more profitable and better running than before.

Being a successful Business Owner requires ownership or control of systems and the ability to lead and manage people. They know how to run a system that works by delegating tasks and responsibilities to competent employees. Thus, even if they do not spend a lot of time in the business anymore, they still get to earn from it.

The I (Investor) Quadrant

The Investors are usually:

  • Most adept at making money work for them; and
  • In some cases, they even use other people’s money to make more money.

The Investors mostly do not “work” at all , that is, they do not rely on their personal time and effort to make money. They usually turn to stocks, fixed income securities, real estate, and other investment assets that produce income through capital appreciation, dividends, rental income, etc.

Sometimes they even use leverage — or use other people’s money — in order to increase their investments which would further increase their wealth.

Robert Kiyosaki Free ebook download Rich Dad Poor Dad

The Cashflow Quadrant author, Robert Kiyosaki, is giving this ebook for free. Of course, the catch is that you need to sign up in his website and leave your email (which would mean a few emails from them once in a while). But if you’re willing to trade that for a free copy of his ebook, head over to this download link. (Legal link there, don’t worry!)

Free download is available until May 11 only.

Just to see which quadrants most of our PinoyMoneyTalk readers are in, answer our poll below!

Where do you belong in the Cashflow Quadrant? (Choose all that apply!)

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Image Credits: Robert Kiyosaki Network Marketing, Amazon

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