The Cashflow Quadrant™ – Part 3

Today I am going to talk about two of the quadrants from Robert Kiyosaki’s book – the E and S.

E –employee
Most of us grew up hearing advice that we should study hard and get a good job.  In his  book the Cashflow Quadrant™ Robert Kiyosaki describes the E (employee) as someone who seeks security and benefits. He says for employees the idea of security is often more important than money.

It is common for people to work hard to try and increase their salaries. They often study to get some extra qualifications also with a goal of increased income. They count on their retirement fund (superannuation) as the nest egg that will provide them with a living when they no longer can pick up a pay check.

Many people consider having a job as the only way to make money. The GFC seemed to come from no where for the majority of people.  It shook the core belief of security for  employees as jobs were lost around the globe. Retirement funds also plummeted putting in question the whole system.

The Cashflow Quadrant™ was written in 1998 and since that time I have heard Robert Kiyosaki predict the events that eventually did happen at the end of 2008.

The concept of a job for life has gone. Employees need to think of other ways to build their nest egg and have security.

S – Self –employed
Robert calls them the “do it yourselfers”. These people often do not like their income to be dependent on other people. They like to take control of their finances by doing it all on their own. This group of people is very wide and includes professionals such as accountants, doctors and lawyers as well as tradespeople, hairdressers and many others.

They often think no one can do things better than them. They usually work very hard and are often perfectionists.

In my experience, having been one and knowing many,  I think it is perhaps the most difficult quadrant. Self employed people do not get sick pay, holiday pay or the other benefits that go with being an employee. They often work longer hours and take few holidays. It is a very difficult way to get ahead and they often kid themselves they are building a business.

Advice for E and S
It is possible for anyone working as an E or S to get ahead if they build a business or investments alongside their E or S income. They must be building a passive income.