Money Archives

The 4 Different Types of Income—Explained

What types of income are there? Which income categories provide more job security? Which ones require more risk yet yield higher rewards? According to financial educator Robert Kiyosaki, there are four different types of income which he calls “cashflow quadrants”: 1) employees, 2) the self-employed and small business owners, 3) big business owners, and 4) investors. People who choose to be in the first two categories value security above freedom, but generating income by being an employee or a small business owner are dead ends on the road to wealth. Keep reading to learn about Kiyosaki’s four types of income

The Wealth Quadrant: Why the Rich Get Richer

Which cashflow quadrant are you in? Do you generate income from the work you do (E and S quadrants) or from the assets you own (B and I quadrants)? Which quadrant is the most conducive to building wealth? Robert Kiyosaki uses the concept of the ESBI quadrant to categorize different ways of generating income. The first two quadrants, employees (E) and the self-employed and small business owners (S) are usually dead-ends on the road to wealth. The other two quadrants, big business owners (B) and investors (I), are the most conducive to accumulating wealth because those are the categories in

The Big Short by Michael Lewis: Book Overview

What is Michael Lewis’s The Big Short about? What is the key message to take away from the book? In The Big Short, Michael Lewis takes us inside the madness, corruption, and greed at the heart of the 2007-2008 financial crisis. It tells the story of an eccentric collection of investors who saw the folly of the subprime mortgage-backed securities market—and found a way to bet against it. By focusing on individuals who saw these securities for what they truly were, the author forces us to seriously question the wisdom (and motivations) of the financial elites who wield so much

Robert Kiyosaki: The Key to Financial Freedom

What does it mean to be financially free? Do you think you have what it takes to achieve total financial freedom? To Robert Kiyosaki, financial freedom means never having to work again. In his book Rich Dad’s Cashflow Quadrant, he says that everybody should strive to transcend job security and achieve financial freedom. However, he admits that not everybody is ready for the risks and the sacrifices the path of financial freedom demands. Here is what Kiyosaki has to say about financial freedom.

Michael Burry’s “Big Short” of the Housing Market

Who is Michael Burry? What was his involvement in the housing market crash? Michael Burry is the founder of the hedge fund Scion Capital. In 2007, Burry saw a rare opportunity in the subprime housing bond market. He was skeptical (to say the least) about the confidence with which Wall Street sold mortgage-backed securities. He realized that these securities were extraordinarily overvalued because they were backed by questionable loans to uncreditworthy Americans. So, Burry decided to short the housing market. Here goes the story of Michael Burry’s “Big Short.”

Robert Kiyosaki: Cashflow Fundamentals

What is cashflow? What are the different types of cashflow channels? Cashflow is the total amount of money you earn and spend, and is the total of your income, expenses, liabilities, and assets. According to Robert Kiyosaki, cashflow is the central difference between generating income in the E (employee) and S (small business owner) quadrants and the B (big business owner) and I (investing) quadrants. Here is how cashflow looks like in the E and S quadrants vs. the B and I quadrants.

The Fear of Money Is the Biggest Obstacle to Wealth

Does thinking of and handling money make you nervous? Why do people fear money, fear spending it, or fear not having enough? The fear of money haunts many people. After all, money is core to survival, impacts virtually every part of our lives, and is the difference between freedom and freefall. So, the fear of money makes sense. But if you want to change your financial situation, you need to overcome your fear of money and develop a healthy relationship with it. Here is how the fear of money impairs your financial progress.

Ethical Wealth: Is It Good to Strive for Riches?

Is there such a thing as ethical wealth? In other words, do you think it’s moral to strive to be wealthy? Some people argue that wanting wealth and taking part in our capitalist system is immoral. According to financial educator Robert Kiyosaki, wealth is just a means to an end, the end being the freedom to do what you want with your time. While the means by which wealth is acquired can be immoral, wanting wealth in itself is not—no one can be blamed for wanting freedom. Here is why it’s good to want wealth, according to Kiyosaki.

Robert Kiyosaki’s B Quadrant and How to Break Into It

What is the B quadrant? How does one break into Kiyosaki’s B quadrant from the E or S quadrants? According to Kiyosaki, the B quadrant (big business owner) is a far likelier path to wealth than working in the E or S quadrants because you can take advantage of other people’s time to generate wealth. Kiyosaki says you have two choices when trying to establish yourself in the B quadrant: create your own business system, or buy one that already exists. Kiyosaki offers four routes to owning your own system in the B quadrant. Here is how to break into the B

Robert Kiyosaki’s ESBI Quadrant Explained

What does the ESBI quadrant represent? What does each letter stand for? Can you be in more than one income quadrant simultaneously? Robert Kiyosaki’s ESBI quadrant represents four ways of generating income: E (as an employee), S (as a self-employed or a small-business owner), B (as a big-business owner), and I (as an investor). The way you generate income defines your quadrant, not what you do to earn it. You can, and in many cases should, generate income in multiple categories. Keep reading to learn about the key characteristics of each quadrant.