Page 56 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

Making More Money

Putting the financial statement and the CASHFLOW Quadrant diagrams
together, you may get a clearer picture about your choices for financial IQ
#1: making more money.

What this diagram explains is that E’s and S’s work for money. They

work for a steady paycheck, for a commission, or by the hour. B’s and I’s
work for assets that produce either cash flow or capital appreciation.
One of the reasons I make more money than my classmates who sailed
ships or flew planes is because they worked for paychecks. I on the other
hand wanted to build assets as an entrepreneur and acquire assets as an

investor. In other words, E’s and S’s focus on the income column of the
financial statement, and B’s and I’s focus on the asset column.
One of the hardest things to get across to an E or an S is that a B or I

doesn’t work for money. A B or I technically works for free, which is a
tough concept for many to grasp. E’s and S’s work to be paid, and they must
be paid before they work. Working for free, possibly for years, is not in
their emotional or professional makeup. E’s and S’s may volunteer for
charities, or work pro bono for worthy causes, but when it comes to

personal income, they work for money. As a general rule, they do not work
to build or acquire assets.
In accounting terms, an E or S works for earned income, and a B or I

works for passive or portfolio income. In the next chapter on financial IQ