2023-06-09 06:17:27
The 4 Quadrants of Money
The Money Flow Quadrant is a concept created by the famous businessman Robert Kiyosaki, which details four ways to make money in today's society.
The author and investor explains the four ways of obtaining income. While two are effective, the other two are very limited.
These quadrants are:
The Employee Quadrant.
The Self-employed Quadrant
The Owner Quadrant
The Investor Quadrant.
The employee
They make up the majority of the world's population in the workplace. Why? Individuals seek economic stability in their lives, even though this means having the same salary for many years.
People in this quadrant exchange time, knowledge, and skills for money. Under this premise, they need to work to satisfy their needs.
Advantages:
The company holds all legal expenses for their employees: paid vacations, retirement, health insurance, etc.
They have a regular money income. An employee receives a salary fortnightly or monthly for sure. They don't have to worry about covering their basics.
Also, there is a fixed schedule so that employees can divide work time with free-time time.
Disadvantages:
On different occasions, their salary can only cover basic needs. Once they retire, the money they receive continues to cover only the basics.
The chances of scaling are sometimes slow or simply not there.
Their work is usually repetitive, without any learning or new challenges.
The fear of being fired.
The self-employed
They are freelancers. They are people who carry out their work independently and are paid depending on the project. Several people are inclined to this path to seek greater autonomy and manage their own time without dealing with office hours or bosses.
Advantages:
They are free to manage their times and processes as they see how they fit.
The personal and professional growth of those who work as freelancers is continuous. Each project has new challenges, so every day has new learning.
Disadvantages:
Making contacts is one of the biggest challenges that a professional can have.
They do not have legal benefits such as health care or paid vacations, so they must manage their income very well to cover these expenses.
The Owner
They are people who own one or several companies. They understand the market very well, know financial profitability formulas, and receive large incomes.
Employees help entrepreneurs to generate that income.
Advantages:
When a company is settled, profits are usually fixed and come in large amounts, so money is not a concern for the entrepreneur.
Leadership, knowledge, and good decisions can lead the owner to generate more wealth.
Disadvantages:
Most people fail to own a business. Building a successful business from scratch can take a few years.
The Investors
They identify investment opportunities, so their money works for them. Today, with little capital, anyone can be an investor.
Those who want to enter this part of the quadrant must take into account that they should develop financial intelligence to find the best investment opportunities at all times.
Advantages:
Investors don't need to make big investments to get started.
You can make investments of different types and analyze where there is a better return on profits.
Investors can manage their own time and spend fewer hours working. Unlike freelancers, they receive money more consistently.
Disadvantages:
Taking risks: many times, people are not careful in the investments they make and can end up losing much of the investment, or even all of it.
Conclusion
Knowing this theory of the four quadrants can be very useful. This chart helps us review our financial activity. We can rethink our situation and see if we want to live this way. The main difference between employees and self-employed persons from one side and investors and owners in the other is the time they have to spend doing the same activity.
Money Planet helps you by providing the best investment opportunities and analysis to help you achieve financial independence and be successful in the investor quadrant.
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