![]() Below is a simple illustration for educational purposes only. You can’t, for example, deduct the expense of your personal car from your taxable income. Kiyosaki points out that the reason as to why most E quadrant workers pay around 40% of their income in taxes (as shown in the diagram above) is simply because most personal expenses aren’t deductible. An employee’s financial freedom is dependent upon the success of the employer and the ability to show up to work and exchange time for money. The lack of control over income is a serious consideration of the E quadrant and something I became intimately aware of when I worked in the oil industry and layoffs began to occur around 2015. The employee exchanges his or her time, energy, and skills to an employer in exchange for a paycheck and often other benefits such as healthcare coverage and/or a retirement account match.Įmployees can make a little or a lot of money, but when an employee stops working, or if the business goes under, the income stops. The job itself is owned by a business, which could be a single person or a large corporation. This is the quadrant where most people earn their income. Let’s Explore Each of The 4 money quadrants: E – EmployeeĪn employee earns income via a job. If you haven’t checked out this book, it’s a worthwhile read. The majority of the Cashflow Quadrant book is about the unique skills and mindsets required to succeed on this path. The two ebsi quadrants on the right side (B and I) are the primary paths to financial freedom. There are advantages and disadvantages to each quadrant. Some people earn money in only one of the ebsi quadrants, while some earn money in multiple quadrants. Additionally, this book has single-handedly helped me save thousands in taxes over the years.Īs you can see in the diagram above, each quadrant (E, S, B and I) represents a different way to generate income. ![]() It’s a powerful book that helped guide me to become a full-time investor and to make financial freedom a top priority. This was uncovered when I read the book, “Cashflow Quadrant” by Robert Kiyosaki. One of the most life-changing discoveries came to me years ago when I realized I was earning income the wrong way. ![]()
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