Book Reviews

Rich Dad 2: The Cashflow Quadrant

Author: Robert Kiyosaki


  • A detailed overview of the 4 main ways to generate cashflow, with a lovely generous lemon twist of the necessary psychological character strengths, skills and personality profiling garnished throughout this excellent introduction to taking financial responsibility.


Robert Kiyosaki continues in this successful theme (his best-seller Rich Dad, Poor Dad is a must-read for anyone new to the business world) on how to gain financial freedom.

This is a terrific overview of the four main ways to generate cashflow – but in fact, it’s been a seminal book for me personally in the sense that some of the things he (so aptly described by his not-so-ghost writer Sharon Lechter) writes about have really switched the light on in some up-to-now darkened corners of my mind.

The Four Types of Cashflow Generation

Specifically, Robert shows what skills and mental attitudes are needed to move from one type of generating cashfow to another. He overviews the four main areas (as taught by his rich dad) as:

  • Employee (E)
  • Self-emplyoyed (S)
  • Business owner (B)
  • Investor (I)

In his opinion, he believes that the vast majority of employees never make the transition into being finiancially responsible, remaining trapped in a continuous cycle of pay -> spend -> debt.

Seven Steps to Financial Freedom

The ways he outlines on breaking out from this debt trap are tremendously useful for anyone who hasn’t yet got the luxery of being able to chop up their credit cards. He primarily focusses on the practical steps needed to fast-track your life into financial freedom. Specifically:

  1. Mind your own business
  2. Take control of your cashflow
  3. Know the difference between risk and risky
  4. Decide which of 3 kinds of investor you want to be – (i)Those who seek problems, (ii)Those who seek answers, or (iii)Those who don’t know what to do & they hire others to help
  5. Seek mentors
  6. Make disappointment your strength
  7. The power of faith – ie believe that you can change things, if you believe in yourself.

Other themes discussed

Robert Kiyosaki details the three main types of businesses & the differences between them. He strongly differentiates between the self-employed sole-traders (sometimes known as small business owners) & true business owners in this major regard: If a sole-trader leaves the business alone for 6 months, it will collapse, but if the same person lets a real business run on its own, it will carry on without his/her direct intervention.

This is the important concept of building business systems – ie self-sustaining organisms in which people (who are employees) work for the system you’ve set up. He also calls this a pipeline – I won’t say why (read the book!) – but it’s an analogy he returns to throughout the book, and a theme in which I’m increasingly wanting to plan into realisation myself.

Network Marketing – an ideal transition mechanism

Of the three business types, Robert maintains that the one which most easily enables the transition from S -> B casfhlow generation is Network Marketing.(or “NM”).

Needless to say, this was music to my ears, as someone who has recently started out in NM. But before you decide that the book has nothing to add to your knowledge – remember this: Robert talks as much about Mindset as he does Methodoloy, so by reading the book you are faced with the opportunity to gain a whole new set of attitudes essential for business survival & growth.

You can tell that I highly recommend this book – so why don’t you try it out for yourselt too – if you’re ihe UK, click on the Amazon link above & make this small investment towards your future success.

Dez Futak