RICH DAD'S

CASH FLOW
QUADRANT

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GUIDE TO FINANCIAL FREEDOM
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BY ROBERT T. KIYOSAKI
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 RICH DAD'S

CASH FLOW
QUADRANT
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GUIDE TO FINANCIAL FREEDOM
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BY ROBERT T. KIYOSAKI
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PLATA"
PUBLISHING

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This publication is designed to provide competent and reliable information

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legal, financial, or other professional advice. Laws and practices often vary

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from state ro state and counrry to country and if legal or other expert
assistance is required, the services of a professional should be sought. The

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author and publisher specifically disclaim any liability that is incurred from
the use or application of the conrenrs of this book.

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Copyright© 2012 by CASHFLOWTechnologies, Inc. All rights reserved.
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Except as permitted under the U.S. Copyright Act of 1976, no pan of this
publication may be reproduced, distributed, or transmiued in any form or
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by any means or srored in a database or retrieval system, without the prior

written permission of the publisher.
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Published by Plata Publishing, LLC

CASH FLOW, Rich Dad, Rich Dad Advisors, ESBI, and B-1Triangle are
registered trademarks of CASHFLOWTechnologies, Inc.
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"'� are registered trademarks of

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'S\' CASHFLOWTechnologies, Inc.

Plata Publishing, LLC

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4330 N. Civic Center Plaza

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Visit our websites: PlataPublishing.com and RichDad.com

Primed in the United States of America
052013

First Edition: 1998

First Plata Publishing Edition: 20II
ISBN: 978-1-61268-006-4
Cover phoro credit: Seymour & Brody Studio

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 BEST-SELLING BOOKS
BY ROBERT T. KIYOSAKI
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What the Rich Teach Their Kids About Money -
That the Poor and Middle Class Do Not

Rich Dad's CASHFLOW Q!uulrt�"t

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Rich Dad's GuiJe to [,vuti"g

What the Rich Invest in That the Poor and Middle Class Do Not

Rich Dad's Rich Kid Smtlrt Kid

Give Your Child a Financial Head Start

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Rich Dad's Retire You"g Retire Rich

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How to Get Rich and Stay Rich

Rich Dad's Prophecy

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Why the Biggest Stock Market Crash in History Is Still Coming ...
And How You Can Prepare Yourself and Profit from It!
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Rich Dad's Success Stories
Real-Life Success Stories from Real-Life People
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Who Followed the Rich Dad Lessons

Rich Dad's GuiJe to Becomi"g Rich

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Without Cutti"g Up Your Credit Umh

Turn Bad Debt into Good Debt

Rich Dad's Who Took My Mo,cyf

Why Slow Investors Lose and Fast Money Wins!
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Rich Dad Poor Dad for Teem

The Secrets About Money - That You Don't Learn In School!
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Esc11pe the Rll t Rllce

Learn How Money Works and Become a Rich Kid
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Ten Real-Life Lessons Every Entrepreneur Should Know
About Building a Multimillion-Dollar Business

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Rich Dad's Guide to Financial Education for Parents

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 My rich dad used to sa�
"You can never have true freedom without
financialfreedom. "

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He would go on to sa�

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"Freedom may befree, but it has a price. "

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This book is dedicated to those who are
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willing to pay the price.
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 Editor's Note
1he Times 1hey Are A-Changin'
There have been many changes in our economy and
the investing landscape since Rich Dad Poor Dad was
first published in 1 997. Fourteen years ago, Robert
Kiyosaki challenged conventional wisdom with his
bold statement that "your house is not an asset." His

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contrarian views on money and investing were met

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with skepticism, criticism, and outrage.
In 2002, Robert's book, Rich Dad's Prophecy, advised
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that we prepare for an upcoming financial market
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crash. In 2006, Robert joined forces with Donald
Trump to write Why � mznt You To Be Rich, a book
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inspired by their concern for the shrinking middle class

in America.
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Robert continues to be a passionate advocate for the

importance and power of financial education. Today,
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in the wake of the subprime fiasco, record home

foreclosures, and a global economic meltdown that is
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still raging, his words seem not only prophetic, but

enlightened. Many skeptics have become believers.
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In preparing the 20 1 1 edition of Rich Dad's CASHFLOW

Quadrant, Robert realized two things: that his message
and teachings have withstood the test of time, and that
the investment landscape, the world in which investors
operate, has changed dramatically. These changes have
affected, and will continue to affect, those in the I
(Investor) quadrant and have fueled Robert's decision to
update an important section in this book-Chapter Five:
The Five Levels of lnvestors.

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 Acknowledgments

The phenomenal success of Rich Dad Poor Dad

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has brought millions of new friends from all
over the world.

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Their kind words and friendship-and their
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amazing stories of perseverance, passion, and
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success in applying the Rich Dad principles to their
lives-inspired me to write this book:
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Rich Dad's CASHFLOW Quadrant

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Guide to Financial Freedom

So to my friends, old and new, for their

enthusiastic support beyond my wildest dreams,
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I say thank you.

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 Contents
INTRODUCTION

Which Quadrant Are You In? ................................... 1

PART I
THE CASHFLOW QUADRANT

Chapter One
Why Don't You Get a Job? 13

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.....................................

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Chapter Two
Different Quadrants, Different People 29
Chapter Three at ....................
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Why People Choose Security over Freedom ............ 75
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Chapter Four
The Three Kinds of Business Systems 1 05
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...... ..............

Chapter Five
The Five Levels of Investors .................................. 1 23
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Chapter Six
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You Cannot See Money with Your Eyes ................ 1 57

PART II
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BRINCINC OUT THE BEST IN YOU

Chapter Seven
Becoming Who You Are ........................... ............ 1 97
Chapter Eight
How Do I Get Rich? ............................................ 219
Chapter Nine
Be the Bank, Not the Banker .... . . . ............ ............. 249

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 Contents
PART Ill
HOW TO BECOME A SUCCESSFUL B AND I

Chapter Ten
Take Baby Steps ............................... ..................... 289
THE SEVEN STEPS
TO FINDINC YOUR FINANCIAL FAST TRACK

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Chapter Eleven

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Step 1 : It's Time to Mind Your Own Business ...... 309
Chapter Twelve
Step 2: Take Control ofYour Cash Flow
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...............

Chapter 1hirteen
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Step 3: Know the Difference

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Between Risk and Risky ....................................... 325

Chapter Fourteen
Step 4: Decide What Kind
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of lnvestor You Want to Be ................................... 33 1

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Chapter Fifteen
Step 5: Seek Mentors ......................... ................... 343
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Chapter Sixteen
Step 6: Make Disappointment Your Strength ....... 355
Chapter Seventeen
Step 7: The Power of Faith .................................... 363
Chapter Eighteen
In Summary ......................................................... 37 1

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 Preface

WHAT IS YOUR
LI FE'S COAL'?

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"What do you want to be when you grow up?"

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That is a question most of us have been asked.

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I had many interests as a kid, and it was easy to
choose. If it sounded exciting and glamorous, I wanted
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to do it. I wanted to be a marine biologist, an astronaut,
a Marine, a ship's officer, a pilot, and a professional
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football player.
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I was fortunate enough to achieve three of those

goals: a Marine Corps officer, a ship's officer, and a pilot.
I knew I did not want to become a teacher, a writer,
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or an accountant. I did not want to be a teacher because

I did not like school. I did not want to be a writer
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because I failed English twice. And I dropped out of my

MBA program because I could not stand accounting.
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Ironically, now that I have grown up, I have become

everything I never wanted to become. Although I
disliked school, today I own an education company.
I personally teach around the world because I love
teaching. Although I failed English twice because I could
not write, today I am best known as an author. My
book, Rich Dad Poor Dad, was on the New York Times
best-sellers list for over seven years and is one of the top

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Preface

three best-selling books in the United States. The only

books ahead of it are The Joy ofSex and The Road Less
Traveled Adding one more irony, Rich Dad Poor Dad
and my C4SHFLOWboard game are a book and a game
about accounting, another subject I struggled with.
So what does this have to do with the question:
"What is your goal in life?"
The answer is found in the simple, yet profound,

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statement by a Vietnamese monk, Thich Naht Hahn:

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"The path is the goal." In other words, finding your
path in life is your goal in life. Your path is not your
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profession, how much money you make, your title, or
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your successes and failures.
Finding your path means finding out what you were
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put here on this earth to do. What is your life's purpose?

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Why were you given this gift called life? And what is the
gift you give back to life?
Looking back, I know going to school was not
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about finding my life's path. I spent four years in

military school, studying and training to be a ship's
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officer. If I had made a career sailing for Standard Oil

on their oil tankers, I would never have found my life's
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path. If l had stayed in the Marines or had gone to fly

for the airlines, I would never have found my life's path.
Had I continued on as a ship's officer or become
an airline pilot, I would never have become an
international best-selling author, been a guest on the
Oprah show, written a book with Donald Trump, or
started an international education company that teaches
entrepreneurship and investing throughout the world.

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 CASHFLOW Quadrant

Finding lOur Path

This CASHFLOW Quadrant book is important
because it is about finding your path in life. As you
know, most people are programmed early in life to
"Go to school and get a job." School is about finding a
job in the E or S quadrant. It is not about finding your
life's path.
I realize there are people who know exactly what

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they are going to do early in life. They grow up knowing

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they are going to be a doctor, lawyer, musician, golfer

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or actor. We have all heard about child prodigies, kids
with exceptional talents. Yet you may notice, these are
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professions, not necessarily a life's path.
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So How Does One Find 1heir Path in Life!

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My answer is: I wish I knew. If I could wave my

magic wand and your life's path would magically
appear, I would.
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Since I do not have a magic wand nor can I tell

you what to do, the best thing I can do is tell you what
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I did. And what I did was trust my intuition, my heart,

and my guts. For example, in 1 973, returning from the
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war, when my poor dad suggested I go back to school,

get my higher degrees, and work for the government,
my brain went numb, my heart went heavy and my gut
said, "No way."
When he suggested I get my old job back with
Standard Oil or fly for the airlines, again my mind,
heart, and gut said no. I knew I was through sailing
and flying, although they were great professions and
the pay was pretty good.

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Preface

In 1 973 at the age of 26, I was growing up. I

had followed my parent's advice and gone to school,
received my college degree, and had two professions:
a license to be a ship's officer and a license to fly. The
problem was, they were professions and the dreams
of a child.
At the age of 26, I was old enough to know that
education is a process. For example, when I wanted to

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be a ship's officer, I went to a school that turned out

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ships' officers. And when I wanted to learn to fly, I went
to Navy flight school, a two-year process that turns
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non-pilots into pilots. I was cautious about my next
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educational process. I wanted to know what I was going
to become before I started my next educational process.
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Traditional schools had been good to me. I

had achieved my childhood professions. Reaching
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adulthood was confusing because there were no signs

saying, "This is the way." I knew what I didn't want to
do, but I did not know what I wanted to do.
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It would have been simple if all I wanted was a

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new profession. If I had wanted to be a medical doctor,

I would have gone to medical school. If l had wanted
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to be a lawyer, I would have gone to law school. But I

knew there was more to life than just going to school to
gain another professional credential.
I did not realize it at the time, but at 26 years of
age, I was now looking for my path in life, not my
next profession.

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 CASHFLOW Quadrant

A Different Education
In 1 973, in my last year of active duty flying for
the Marine Corps when I was stationed near home in
Hawaii, I knew I wanted to follow in my rich dad's
footsteps. While in the Marines, I signed up for real
estate courses and business courses on the weekends,
preparing to become an entrepreneur in the B and I
quadrants.

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At the same time, upon a friend's recorrunendation

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of a friend, I signed up for a personal-development

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course, hoping to find out who I really was. A personal­
development course is non-traditional education
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because I was not taking it for credits or grades. I did
not know what I was going to learn, as I did when I
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signed up for real estate courses. All I knew was that it

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was time to take courses to find out about me.

In my first weekend course, the instructor drew this
simple diagram on the flip chart:
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Preface

With the diagram complete, the instructor

turned and said, "To develop into a whole human
being, we need mental, physical, emotional, and
spiritual education."
Listening to her explanation, it was clear to me
that traditional schools were primarily about developing
students mentally. That is why so many students who
do well in school, do not do well in real life, especially

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in the world of money.

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As the course progressed over the weekend, I

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discovered why I disliked school. I realized that I loved
learning, but hated school.
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Traditional education was a great environment
for the ''A" students, but it was not the environment
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for me. Traditional education was crushing my spirit,

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trying to motivate me with the emotion of fear: the

fear of making mistakes, the fear of failing, and the fear
of not getting a job. They were programming me to
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be an employee in the E or S quadrant. I realized that

traditional education is not the place for a person who
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wants to be an entrepreneur in the B and I quadrants.

This may be why so many entrepreneurs never
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finish school--entrepreneurs like Thomas Edison,

founder of General Electric; Henry Ford, founder of
Ford Motor Company; Steve Jobs, founder ofApple; Bill
Gates, founder of Microsoft; Walt Disney, founder of
Disneyland; and Mark Zuckerberg, founder of Facebook.
As the day went on and the instructor went
deeper and deeper into these four types of personal
development, I realized I had spent most of my life

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