Rich Dad’s Cashflow Quadrant by Robert T. Kiyosaki

Are you ready to transform the way you think about money, work, and financial independence? In this episode, we dive into Rich Dad’s Cashflow Quadrant by Robert T. Kiyosaki, the follow-up to his bestseller Rich Dad Poor Dad. 

Explore the four quadrants—Employee, Self-Employed, Business Owner, and Investor—and discover where you currently stand in the journey toward financial freedom.

Hosts Dave and Poppy break down Kiyosaki’s insights, offering actionable tips on shifting from working for money to making money work for you. Whether you’re looking to escape the 9-to-5 grind, build passive income, or take control of your financial future, this episode provides the tools to help you start.

Tune in and learn how to change your mindset, leverage opportunities, and step into a life of financial empowerment.

🎧 Don’t miss it—stream now on your favourite podcast platform!

Thank you for tuning in to this episode of Mind Set in Stone Podcasts. If you enjoyed our deep dive, be sure to subscribe and leave us a review! Share your thoughts with us on social media, and let us know which book you’d like us to explore next. Until next time, keep your mind set in stone and your curiosity open.

This has been a Big L Riz Media Podcast—where big ideas meet lasting impressions.

Transcript

Welcome to Mind Set in Stone Podcasts, where we dive deep into the most compelling books on the shelf. Join hosts Dave and Poppy as they uncover the stories, themes, and ideas that shape our understanding and inspire curiosity. Get ready to explore the big ideas that leave a lasting impact.

Let's get started.

Welcome to the deep dive. You wanted to explore financial education and entrepreneurship through Rich Dad Poor Dad, and you've sent over some excerpts, which is great because I really want to get into the beat of it. Right.

I thought a good place to start would be this.

Okay.

Have you ever felt like traditional education didn't really prepare you for the real world?

Absolutely. I think that's a common experience.

Yeah. Kiyosaki really hits on that.

Yeah.

He says schools focus mainly on developing your mind, but they often skip over the emotional and spiritual intelligence you need to really make it in the world of money.

Right.

He even talks about leaving his own traditional career path. Yeah. To become an author, an entrepreneur.

He even shares his experiences with homelessness, which I think shows that success with money isn't just about luck or privilege.

Exactly. It's about mindset, resilience and developing the financial intelligence that you don't typically learn in school.

Yeah. That's where the Cashflow Quadrant comes in.

Right.

This is one of the main ideas in the book. It's not just a diagram. Yeah.

It's a way to understand the fundamental differences.

Right.

In how people in different quadrants view and generate income.

He divides it into four quadrants.

Yeah.

Employees, self-employed business owners, and investors.

Yeah.

Each one represents a different mindset, skills, and relationship with money.

Okay. Let's break it down.

Okay.

We can use some of his words to illustrate. What he's talking about in each one.

Sounds good.

First, employees.

Right.

This is probably the one most people are familiar with.

Yeah. Kiyosaki describes employees as people who are looking for security, certainty. They value steady paycheck benefits, predictable schedule.

They often say things like, I'm looking for a secure job with good benefits.

Yeah. And there's nothing wrong with that.

Right.

A lot of people thrive in this quadrant. But Kiyosaki's point is you got to be aware of the trade-offs.

Right.

You're trading your time for money.

Yep.

And ultimately, you're relying on someone else for your income.

He argues that in this day and age, job security is kind of disappearing. Companies downsize; industries are always changing. The skills that are in demand today might not be tomorrow.

Right.

So next up is the self-employed quadrant.

Okay.

These are the folks who are their own boss, freelancers, consultants, doctors, lawyers. Yeah.

They often have a strong sense of independence, pride in their work. They like to be in control, make their own decisions. They're like, I'd rather work for myself than for someone else.

And this quadrant can be super rewarding.

Yeah.

You set your own hours, you choose your own projects, build something that you care about.

Exactly.

But it also comes with some challenges.

You often wear many hats. You're the CEO, the marketer, the accountant.

Customer service.

Right.

And your income is directly tied to how many hours you put in.

Kiyosaki points out that a lot of self-employed people.

Yeah.

Wind up working more hours than they ever did as employees.

Right. He calls it the self-employed trap.

Yeah.

You're free from a boss.

Right.

But you're still trading time for money.

Right. Okay. Now let's move over to the right side of the quadrant.

Okay.

Where things start to get really interesting.

All right.

First up, business owners.

Okay. Business owners are those who have created systems that generate income even when they're not working. Right.

They built businesses that can run without them.

They might have teams of employees or contractors working for them.

Right.

And they focus on building and expanding their business, not just doing the work themselves.

Yeah. They say things like, I'm building a business that will work for me even when I'm not working.

And that's the main difference between self-employed and business owners. Right. Self-employed people are essential to their businesses.

Well, business owners have created businesses that don't depend on them.

It's about leverage. Yeah. Creating systems that can scale and generate income even while you sleep.

Okay. And finally, we have the Investors Quadrant.

All right.

These are the people who make their money work for them.

They might invest in stocks bonds, real estate businesses, or other assets that provide passive income.

Right. And their language might be something like, I'm looking for investments that will provide a steady stream of income without me having to work for it.

Right. And Kiyosaki argues that this is where true financial freedom is.

Yeah.

You're no longer trading time for money. Your money is working for you.

Now, I want to pause here and ask you a question.

Okay.

Which quadrant do you currently reside in?

Okay.

And more importantly, where would you like to be?

I like that question.

Yeah. Keep that in mind as we continue this deep dive. Because understanding the cashflow quadrant is the first step to taking control of your financial future.

I agree.

Kiyosaki doesn't say that one quadrant is better than another. What he stresses is the importance of awareness. Understand where you are now.

Understand what each quadrant is like. And then make conscious choices about where you want to go.

Right, because the path to financial freedom isn't always a straight line. You might move between quadrants, experiment with different things, learn along the way.

And speaking of learning, let's talk about Kiyosaki's views on financial literacy.

Okay.

He's really critical of traditional education, arguing that it doesn't prepare people for how money actually works in the real world.

He says that schools often instill a fear of failure, a need for security, a reliance on someone else to tell you what to do. Those are all great qualities for an employee, but not necessarily for an entrepreneur or an investor.

And he even argues that schools kind of program people to be employees, rewarding conformity and obedience over creativity and risk taking.

Yeah. And this goes back to the cash flow quadrant. If you're not financially literate, you're more likely to stay stuck on the left side, trading your time for money, relying on someone else for security.

What's the answer? Kiyosaki is a big fan of self-education. He encourages people to read books, attend seminars, and learn from mentors who have achieved what they want to achieve.

Right. He talks about becoming a student of money, understanding how it works, how to make it work for you, and how to use it to create the life you want.

And that brings us to one of the most controversial ideas in the book. Kiyosaki's view that your house is not an asset.

Right.

This is where a lot of people get tripped up. Yeah. So, let's break this down carefully.

Okay. It all comes down to his definition of an asset.

Okay.

He defines an asset as something that puts money in your pocket.

Right.

And a liability is something that takes money out of your pocket.

So, if you own a house you live in, and you're making mortgage payments, property taxes, insurance maintenance costs.

Kiyosaki would say your house is actually a liability.

It's costing you money every month.

Exactly.

Now this doesn't mean owning a home is bad.

Right.

It just means you need to be aware of the real costs, and not fool yourself into thinking it's a guaranteed path to wealth.

He contrasts this with owning a rental property that generates positive cash flow.

Right.

In that case, the rent from your tenants is covering all the expenses and putting money in your pocket.

So, the same property can be either an asset or a liability.

Right.

Depending on how it's set up and how it generates income.

It's an important difference.

Yes.

And it highlights the need to think differently about money and wealth.

Kiyosaki challenges us to question our ideas about what makes something an asset, and to focus on building a portfolio of income generating assets.

Right.

Not just collecting stuff that costs us money.

He uses the example of his first real estate investment.

A small condo that he got with no money down.

Wow.

That generated positive cash flow right away.

He stresses that it wasn't about getting rich quickly.

Right.

It was about understanding cash flow leverage and debt management.

And this connects back to the importance of financial literacy. Yeah. If you don't understand how money works, right.

you're more likely to make decisions that keep you stuck on the left side.

Of the cash flow quadrant.

Exactly. Okay.

And speaking of being trapped.

Yeah.

Let's talk about one of the biggest obstacles to financial freedom.

Fear.

Fear of failure.

Yeah.

Fear of losing money, fear of the unknown. These are all very powerful emotions that can keep people in jobs they hate, stop them from taking risks, and sabotage their dreams.

Kiyosaki recognizes that fear is normal.

Right.

But he says we can't let it control us. Exactly. He challenges us to face our fears, and to build the courage to step outside of our comfort zones.

He says that being financially uneducated is risky, because if you don't understand how money works, you're more likely to make bad decisions, fall for scams, or just see your savings disappear with inflation.

He's saying that knowledge is power when it comes to money.

Exactly. The more you learn, the more confident you'll feel about taking risks, that can lead to financial freedom.

It's not about getting rid of risk completely. It's about managing risk in a smart way.

Exactly.

That brings us to the five levels of investors, which is another key concept. These levels show different degrees of financial understanding. From those who avoid investing entirely, to those who create investments in businesses.

Let's go through them. Level 0 is the IAVOID investor. These are the people who avoid investing at all, often because of fear or lack of knowledge.

They might put their money in a savings account, but they're not actively growing their wealth.

Okay. Then we have level 1, the saver. They put money aside maybe in a savings account or a retirement plan, but they're not taking a lot of risks.

They're playing it safe, but they might also be losing purchasing power because of inflation.

Okay. Level 2, the I'm too busy investor.

Right. These are the folks who know they should be investing, but they feel overwhelmed or intimidated, so they hand it off to someone else like a financial advisor or a mutual fund manager. The problem is, they're not really in control of their own money, and if things go wrong, they don't have the knowledge to fix it.

Okay. Level 3 is the I'm a professional investor.

Right. These are the people who take a more active role. They might buy and sell stocks, trade options, dabble in real estate.

They're learning by doing, which is great, but they're often limited by their time and resources.

Then there's the top tier, level 4, the capitalist investor. These are who Kiyosaki calls the true sophisticated investors. They're not just buying and selling.

They're creating, they're building businesses, raising capital, creating opportunities. They get leverage. They understand risk management, and they're always thinking about the big picture.

Now, Kiyosaki doesn't say you have to reach level 4 to be successful, but he does encourage everyone to try to become more financially literate and keep moving up those levels.

It's about pushing your comfort zone, challenging yourself to learn and grow.

He observes that many people get stuck at level 2, trusting others to manage their money without developing their own financial smarts. This really connects with your wanting to learn thoroughly, take control of your own financial future, and not just rely on what others tell you to do.

Kiyosaki really stresses becoming financially intelligent, which is exactly what this deep dive is all about. It's about understanding the rules of the game, so you can play to win.

It's about realizing that the rules have changed when it comes to financial success. Right, the old advice of get a good job and you'll be set doesn't apply anymore; we're in a different age now. And it's about adapting learning and embracing new opportunities.

Okay, so let's get practical. Kiyosaki outlines seven steps to finding your financial fast track. These steps provide a map for moving from the left side of the cashflow quadrant to the right side.

He emphasizes that it's not just about external actions, but also about inner transformation. It's about developing the mindset, the skills, and the emotional intelligence to succeed as an entrepreneur or investor.

Okay, so let's dive into those seven steps one by one.

Sounds good.

First up, take control of your cashflow.

Right. This is about knowing where your money is going and making deliberate choices about how you spend it. It's not just about budgeting; it's about changing your mindset from scarcity to abundance.

Okay, next up, know the difference between good debt and bad debt.

Okay.

This is where Kiyosaki gets a little controversial. He's not afraid of debt. In fact, he embraces it.

Right.

But he's clear about the difference between good debt and bad debt.

Good debt is debt that puts money in your pocket, like a mortgage on a rental property that makes you money. Someone else is basically paying off your debt while you're building equity and making income.

Bad debt is debt that takes money out of your pocket. Like credit card debt with high interest or loans for things that lose value.

Right. This type of debt can trap you in payments and stop you from building wealth.

Kiyosaki tells us to become smart about debt, to understand how it works and use it to our benefit.

Step three, build a business system that can generate income without you directly working on it.

Right. This is key to moving from self-employed to business owner.

Right. It's about creating a system that works for you, not the other way around. It's about leveraging your time and energy, so you can focus on building and growing your business, not just working in it.

Kiyosaki makes it clear this isn't a get-rich-quick scheme.

Right.

It takes time, effort, and a willingness to learn and adapt.

He outlines three main ways to build a business system. C corporations, franchises, and network marketing.

First C corporations.

Right. This is the classic way of building a business from scratch. You make your own products or services, build a team, and scale your operations.

It takes a lot of work, but it can be incredibly rewarding.

Next up, franchises. This is good for people who want a more organized approach. You're buying into something that's already proven, so you don't have to start from zero, but you still need to be good at managing marketing and leading to make it work.

Okay, and lastly, network marketing.

Yeah, this can be controversial, but Kiyosaki likes network marketing when it's done right. He sees it as a way to build a business with low overhead and use the power of relationships. The key is to find a company with a good product or service, a good compensation plan, and a focus on personal and professional growth, because in the end, network marketing is about relationships, not just selling.

Now, beyond those specific business models, Kiyosaki gives some advice for anyone who wants to be an entrepreneur.

He stresses finding a mentor, someone who's already done what you want to do and can guide you.

Right. He also talks about always learning and growing, becoming a student of business, reading books, going to seminars, and networking with other entrepreneurs.

He also emphasizes mastering financial literacy, understanding financial statements, knowing how to analyze investments, and being comfortable with numbers.

He even encourages learning about taxes and how to use the tax code to your advantage.

Which is something they don't teach you in most schools.

Exactly.

Kiyosaki also talks a lot about building a strong team, because no one achieves great things alone. It's about being around talented people who share your vision and can help you make it happen.

Now let's switch gears and talk about Kiyosaki's views on investing.

Okay.

He doesn't just talk about what to invest in. He talks about how to think like an investor.

He's really big on shifting your thinking. From saving money to making your money work for you.

It's about understanding things like compound interest. Using debt wisely and making passive income.

He also stresses doing your homework. Researching investments before risking your hard-earned money.

He encourages people to think long term. Not to get caught up in get rich quick schemes, but to build a solid foundation for lasting wealth.

Now this is a lot to take in. Kiyosaki gives even more insights in his book. I think we've hit some of the main ideas that can really help people start to think differently about money and wealth.

I agree. It really is a whole different way of looking at things.

I think that's what makes Kiyosaki's book so powerful. He's not just giving financial tips. He's pushing you to really think about your beliefs, about money and wealth.

He does it by using his own life, both the good and the bad.

He's honest about his journey, which makes it easier to connect with.

One thing that set out to me was his focus on emotional intelligence.

Yeah. We talked about it a little before, but I think it's worth digging deeper.

He doesn't just say, think positive. He actually gives you a way to understand and manage your emotions, especially when it comes to money.

He talks about this inner conversation we have between the parent and the child. The parent is the logical voice, the responsible one that thinks about long-term stuff. The child is the emotional one, the impulsive one that wants things and now W.

He says a lot of our problems with money come from letting that inner child be in charge.

Yeah. We make impulsive buys. We avoid tough conversations and we get bummed out when things don't go our way.

He wants us to notice that inner conversation and start choosing the thoughts that are more helpful, the thoughts that will move us towards our goals. He wants us to develop that parent mindset, the one that can wait for things, manage risk and stay focused on the long game.

I really like that analogy. It's so simple, but so powerful. It shows how important emotional intelligence is for success with money.

It's not just about numbers. It's about handling your feelings, overcoming fear, and being able to bounce back from setbacks.

Talking about setbacks, Kiyosaki has an interesting take on failure.

Yeah, he doesn't hide from it. In fact, he embraces it. He encourages us to be lifelong learners, to never stop growing, and to always be open to new ideas.

That's one of the things I appreciate about his work. It's not just rules to follow. It's about giving you the power to think for yourself and create your own path to financial freedom.

Kiyosaki has some practical advice. He says, and I'm paraphrasing, knowledge without action is like a car without an engine. It has potential, but it won't get you anywhere.

So, the first thing is to figure out where you are now.

Yeah.

Which quadrant are you in? Where do you want to be in five years?

Once you have a clear picture of where you're going, you can start planning your route.

And remember those seven steps to financial freedom.

Yeah. Take control of your cash flow. Know the difference between good debt and bad debt.

Build a business system that makes money without you working directly on it. Those are all good places to start.

Pick one step and start doing something today.

Even small actions can add up over time.

And remember, this is a marathon, not a sprint.

Yeah, you're going to hit bumps in the road.

Right.

But if you stay focused on learning growing and expanding your financial intelligence, you can reach those goals.

One thing that really hit me was Kiyosaki's view on money.

Oh, yeah.

He says money is an idea.

And if you change your ideas about money, you can change your financial reality.

It's a crazy thought, right?

It is.

We often see money as something real.

Yeah.

Something we can't control.

Right.

But Kiyosaki challenges us to see it as a tool.

A resource. That we can use to build the life we want. And if we change how we think about money, yeah.

we can change our financial reality.

That's a really powerful idea.

It is.

It means we're not limited by what we have now.

Right.

By our income or our past.

We have the power to create a new financial future.

And that brings us to a question.

Okay.

That Kiyosaki doesn't directly answer in the book, but I think it's worth thinking about.

Okay.

If money is an idea, what new ideas about money are you ready to explore?

Are you willing to challenge what you think about wealth?

Yeah.

Risk and what's possible for you?

Because in this day and age, the only limit is your imagination.

I like that.

So, keep learning, keep growing. Yeah, it's true. We can get stuck in those thoughts about money.

Right. Without even realizing it.

Yeah.

Telling ourselves, I'm not good with money or I'll never be rich or investing is too risky.

And then those beliefs kind of make themselves come true. Yeah. If you think you're not good with money, right, you're not going to want to learn about it or make smart choices.

Yeah.

If you think you'll never be rich, right, you're not going to set big goals or go after opportunities that could lead to wealth.

Kiyosaki wants us to question those beliefs and replace them with ones that are more helpful.

He encourages us to have a growth mindset.

Right.

To believe that we can learn and get better at managing money over time.

Yeah. And he reminds us that financial success isn't a finish line.

Right.

It's a journey.

There will be good times and bad times, wins and losses. The important thing is to keep learning, keep growing, and keep moving forward.

One of the things I like about Kiyosaki's style is that he doesn't just tell you what to do. He explains W-H-Y.

Yeah. He helps you understand the basic ideas behind money and wealth.

Right.

So, you can make good choices that match your goals and what's important to you.

He's not just giving you a fish. He's teaching you how to fish.

Exactly.

And that's the real power of financial education.

Right. It's not about memorizing rules. It's about developing the thinking skills to navigate the complicated world of money.

Okay. So, as we wrap up this deep dive, let's go back to the Cash Off flow Quadrant.

Okay.

We've talked about what each one is like, the mindsets of the people in each one, and the pluses and minuses of each. But how do you actually move from one to another?

Kiyosaki has a lot of advice in the book.

Right.

But I think it comes down to a few things.

Okay.

First, you got to learn about money. You need to know how it works, how to make it work for you, and how to protect it.

This means learning about things like budgeting, saving, investing. Yeah. Managing debt and figuring out where to put your money.

Second, you need to develop your entrepreneurial skills. Okay. This means learning to spot opportunities, create something valuable.

Yeah.

Market your stuff and build a team.

Okay. Third, you got to work on your emotional intelligence.

Right.

This means learning how to control your emotions, get over your fears, and be resilient.

Kiyosaki stresses that it's not just about doing things differently, it's also about changing on the inside.

It's about developing the mindset, the skills, and the character that will make you a successful entrepreneur or investor.

He reminds us that it's a journey. Yeah.

It's not about getting rich quick. Right. It's about building wealth that lasts, creating a life of financial freedom and abundance.

It's about using your money to support your dreams, your passions, and your purpose. Kiyosaki really emphasizes that money is a tool.

Right.

It can be used for good or bad.

Yeah. It can be used to build or destroy.

It's our choice how we want to use it.

He wants us to use money to make a positive impact, to help causes we believe in, and leave a legacy that's bigger than ourselves.

I think that's a really important message.

Yeah. It's not just about getting rich for ourselves. Right.

It's about using our wealth to make a difference.

So, as we finish up this deep dive, I want to leave you with this thought.

Okay.

Remember that money is an idea.

And ideas can change the world.

What new ideas about money are you ready to explore?

Yeah. What new possibilities are you ready to create?

That's it for this deep dive.

Thanks for having me.

We'll see you next time.

We hope you're leaving with fresh insights and a spark of inspiration. Remember to subscribe, leave a review, and check back for more episodes as we dive into new worlds of thought, one book at a time. Until then, keep your mind set in stone and your curiosity open.

This has been a Big L Riz Media Podcast, where big ideas meet lasting impressions.