What advice does Robert Kiyosaki, best-selling author, entrepreneur, and investor, give about financial freedom? Kiyosaki states that most people lack financial literacy and thus the notion of financial freedom is out of reach. He states that due to the school system, we were taught to live a life of working for “security” as opposed to learning how to become financially free (money making money). In his book, Kiyosaki talks about the different ways of making money (Employee, Self-employed, Business owner, and Investor) and how those with their primary source of income on the left side of the quadrant (E,S) will never have freedom unless they transition over to the right side of the quadrant (B, I). Throughout his book, he addresses the importance of becoming an investor or business owner in order to become financially free. Here are some points to the book:
1. Everyone has the ability to make money in all 4 quadrants. Each quadrant has it’s pros and cons but ultimately everyone can do it. This is exactly what Warren Buffett has stated about money and the path to financial freedom. He said, “Never depend on single income. Make investment to create a second source.” For those of you who rely solely on a single source of income, really consider getting a second source, or more, as you’ll never want to end up in a position where that one source that you greatly depend on is sucked dry. I personally have various streams of income, both passive and active, because I never want to rely on just one source as I believe that we no longer live in a world of financial security. “Most of us have the potential to generate income from all four quadrants. Which quadrant you or I choose to earn our primary income from is not so much dependent upon what we learned in school. It’s more about who we are at the core-our values, strengths, weaknesses, and interests. These core differences attract us to, or repel us from, each quadrant. Yet, regardless of what type of work we perform, we can still work in all four quadrants. For example, a medical doctor could choose to earn income as an E and join the staff of a large hospital or an insurance company, work for the government in the public-health field, or become a military doctor. The same doctor could also decide to earn income as an S and start a private practice, setting up an office, hiring staff, and building a private lists of patients. Or the doctor could decide to become a B and own a clinic or laboratory and have other doctors on staff. This doctor probably would hire a business manager to run the organization. In this case, the doctor would own the business but not have to work in it. The doctor also could decide to own a business that has nothing to do with the medical field while still practicing medicine somewhere else. In this case, the doctor would be earning income as both an E and as a B. As an I, the doctor could generate income from being an investor in someone else’s business or in vehicles like the stock market, bond market, and real estate. The important words are ‘generate income from.’ It’s not so much what we do, but more how we generate income.”
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2. One of the reasons why I believe financial freedom is so important is because I personally never want to be in a position where I have to choose/decide between working for someone and something else. In the future should something bad happen to a family member or if I get seriously injured and can’t work, I at least have fewer worries to think about. I once read somewhere how this man had loved his job and didn’t care about adopting an investor mentality until someone brought to his attention that he may one day get into a severe accident that could put him out of his job. This then got him realizing the importance of financial freedom. The same thing can happen to me, you, or anyone else so just be prepared for it. “My rich dad had a different point of view. He thought it foolish to spend your life working for money and to pretend that money wasn’t important. Rich dad believed that life was more important than money, but that money was important for supporting life. He often said, ‘You only have so many hours in a day, and you can only work so hard. So why work hard for money? Learn to have money and people work hard for you, and you can be free to do the important things that are important.’ To my rich dad, what was important was:
Having lots of time to raise his kids.
Having money to donate to charities and projects he supported.
Bringing jobs and financial stability to the community.
Having time and money to take care of his health.
Being able to travel the world with his family.
‘Those things take money,’ said rich dad. ‘That’s why money is important to me. Money is important, but I don’t want to spend my life working for it.’ ”
3. Adopt an investor mentality, not just with money but also with knowledge. As a true investor, don’t just think about how much of a return on your investment will be, but also think about the return on your information. Knowledge and education will always yield you a good return. As you learn more, that knowledge will have a compound effect on your life. Just as Warren Buffett has stated, ‘The more you learn, the more you’ll earn.” “Your best ROI is not a return on your investment, but a return on your information. This is why a financial education is essential, especially for the uncertainty of the world ahead. Remember this about the word ‘education’: ‘Education gives us the power to turn information into meaning.’ In the Information Age, we are drenched with financial information. Yet, without financial education, we cannot turn information into useful meaning for our lives. In closing, I say the I quadrant is the most important quadrant for your future. No matter what you do for a living, how well you do in the I quadrant will determine your future. In other words, even if you make very little money in the E or S quadrant, financial education in the I quadrant is your ticket to freedom and financial security.”
By Ryan Timothy Lee
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