![]() ![]() Over time, you build a lifestyle that must be maintained by either getting a higher paid job or working longer hours. Hey are continually trying to keep up with the Joneses. This is what rich dad called the "working-class dream.” But really, it’s just the Rat Race.Īfter putting aside some money into a 401(k), the middle class cash flow pattern involves using spare money for all sorts of toys and liabilities that don't put money in your pocket but instead take money out. After all, the people who have this pattern probably have high-paying jobs, nice homes, cars, and credit cards. Their pattern on the cash flow statement is considered typical and smart by our society. This is the cash flow pattern of the middle class: ![]() The middle class also often live paycheck to paycheck, but for different reasons and in a different way. Rich dad’s cash flow pattern of the middle class Often the results are financial devastation. If a poor person loses a job, they have little-to-no cushion to carry them. They are hard workers, often doing two jobs just to make ends meet, but they have a hard time getting ahead because they’re simply treading water.Īs the image of the cash flow statement shows, money comes in and immediately goes out the door to pay for expenses. You'll often hear those who struggle mightily when it comes to finances say, "I'm living paycheck to paycheck." The unfortunate reality for those who are poor is that they hardly make enough to pay their monthly expenses. Those of the poor, the middle class, and the rich.īecause he liked to show things as simply as possible, he created simple examples of cashflow statements in the form of illustrations, which we’ll share in this article. Rich dad taught that there are three cash flow patterns. If you’re going to be financially secure, however, you need to learn to have more cash flow into your pockets. Today, many people are in financial trouble because they have too much cash flowing out of their pockets and very little money flowing into their pockets. Now you know the importance of cash flow. If that income went away, what would you do? What would happen to you? Then cover up all the income that doesn’t come in the form of cashflow, and see how many beats your heart skips. Cash flow is money that flows into your pocket, automatically, on a regular basis.Īn enlightening exercise is to list out all your expenses in one column and your income in another. ![]() Cash flow is not the extra money you make busting your butt on the weekend driving people around for Uber. Money you don’t have to work for by trading your time. You can determine the financial health of a business or a person, by first assessing their cashflow.īy cashflow, we mean passive income that comes through business or investments. But if you don’t have cashflow, you’ll quickly lose it all. You can have an impressive balance sheet. You can have the best ideas in the world. Rich dad said, “The most important words in business and investing are ‘cash' and 'flow.’” Learning how to control your cashflow requires patience, and due diligenceĮstablishing the right cashflow pattern provides limitless opportunities for passive income I've been 3 out of 4.Īfter watching this video explanation of the cashflow quadrant, please comment below and let me know which you prefer to be and why.There are three different cashflow patterns the one you follow determines your financial future None of them are bad and really depends on where you want to be in your life. Robert Kiyosaki explains that there are four types of people in the cashflow quadrant and all of them have a pro and a con. The best definition I can share with you is from Robert Kiyosaki's cashflow quadrant. I get a lot of questions asking me to define what the difference is between being an employee, being self-employed, being a business owner and being an investor.
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