Let’s talk about Cash Flows. Don’t worry, This is NOT boring… In fact, this will probably be one of the most important things you read today. We are going to talk about how you can afford to take a vacation to Hawaii and make money while doing so.

If you have heard of Robert Kiyosaki, I’m sure that you have heard of his Rich Dad, Poor Dad Cash Flow Quadrant, and how all people fit into 4 different categories of financial liberty: on one side, Employees and the Self-Employed, on the other Big Business Owners and Investors.

“Investors don’t work for money, money works for them.” Investors is the quadrant that matters to me, and should matter to you.

How do you get from being stuck in an employment situation where you have to work, to fight, just to survive – where you live in fear of missing a payment or of losing work? On top of this pressure, the more you make, the more the government takes.

How do you escape from a situation where you are successful, but can’t afford to take any risks? You own a small business and things are going well, but if you take a much needed vacation or want to take your business in a new direction, you have to risk everything?

The answer, believe it or not… Cash Flows.

I recently wrote an article that introduces the process of building your own personal Cash Flow. It even includes a free template to get you started. Find it here.

The purpose of creating a Cash Flow Statement is to be able to see what you have available to work with so that you can start saving and maximizing the potential of your money.


Many of you are probably in a situation of employment where you work for a paycheck that pays (hopefully) for your bills and spending habits. This is a tough place to be in the long term because when something unexpected happens, your little equilibrium is thrown off. You don’t have enough saved up to get married or to make your car look respectable again.

This really limits your freedom.

The employee exists on the left side of Kiyosaki’s Cash Flow Quadrant. You want to get to the right side. You want to take control of your life and not rely upon external forces to determine your lot.

The reality of being in this quadrant is that your return is not proportional to what you put in. These people are often the hardest working in society, yet they can’t keep their heads above water.

They say things like: “I wish there was an easy way to make money”… or “I just need to catch a break”.

What this person needs to do is to keep working just as hard, but get smart. If you fit into this place, get your budget sorted out right now. This is what successful people do.

After doing this you will have taken to first step in addressing both of the quotes above. Taking care of the little things will ensure that the big things take care of themselves. You will save more money, have more money, start earning more money, and eventually start investing money.

Once you know what the heck is going on in your bank account, build a Cash Flow Statement to keep you accountable for your spending habits.

Getting out of the employee quadrant is only possible with a high degree of organization.


You may get to a point where you no  longer work for a company and trade your time for money. Maybe you start a small business or work as a free agent from home.

If you’re reading this article, you are probably the type of person who finds this attractive. This is the quadrant I’m in currently, and it’s not too shabby. We have got it better than a lot of people out there.

The problem is though, that a person here is still trading time for money. The business or the market or your customers still own you. You answer to them first before yourself.

You might not be able to take a vacation or take a few sick days because then the business or process would collapse. I don’t know about you, but this doesn’t sound like freedom.

In fact, for those of you reading this who are stuck in this quadrant right now, I would recommend reading the E-Myth by Michael Gerber. He goes into detail on escaping Self-Employment and moving on to the next quadrant.

The best advice that I can give here is to get all your ducks in a row. This is a very formative opportunity for anyone. I am learning more than I ever thought I would being a small business owner and I am gaining lots of wonderful things in life.

But, I need to figure out what I want in the long run. Do I want to run around like crazy for my whole life, fighting for every dollar I earn?  Or do I want to compound my efforts and experience to build and participate in something big?

Big Business Owner

This quadrant has some similarities to Self Employment. You may still own a business. You may still own the same business. The difference now though is that you own the business, instead of the other way around.

And by the way, “Big Business” doesn’t mean you need to have a company the size of Amazon or Google. It just means you’re making enough money to sustain yourself, and delegate the roles you had as a self-employed business owner. This is the stage where the business runs itself, without you having to be there.

This is the first quadrant on the right side. This is a very good place to be. In fact, this is the goal. With a big business, you can earn a (relatively) passive income and stop worrying about being able to survive through the end of the week.

You have enough cash reserve to cover losses or damages. You can afford to take time off of work to go to Hawaii, or to just read the book on your nightstand.

You own a real asset in this quadrant.

You have reached this level because of your financial organization and discipline. A big business does not find success and sustainability without accounting for every penny that passes through its accounts. Why should your personal finances be any different?

Well, if you are a big business owner, there won’t be any different because an undisciplined person at home will never be a disciplined person at work.

This life is pretty good! What could be better?


This is what’s better.

Alright, you’ve saved up enough money where you need to do something with it. Leaving it in the bank is no longer a responsible option. You have so many options, dare I say, you have a sense of freedom.

You are now at the point where you can let your money do the work for you. Your cash flow statement has become rather sophisticated now, and you think back to when you decided to make your first cash flow statement. You remember fondly, putting all of you expenses and income into one document that let you know… that you were broke.

Well, if you hadn’t done so, you wouldn’t have realized that there were places that you could cut down spending. You wouldn’t have decided until much later that your job wasn’t paying you enough. You wouldn’t have taken that first step toward becoming your own boss, to taking that risk.

Now you’re ready to take a risk of another sort. You’re about to invest in a Fortune 500 company. You’re about to buy a majority stake.

With this, you are putting your money in a company that you know is going places. You know this because you could read and understand their cash flow statement.

You now are sitting pretty in your Hawaiian bungalow not thinking about the business, but simply thinking about the freedom that you now feel.

No, in reality, you are now building next month’s budget. There’s plenty of time later for daydreaming.

If you haven’t already, download the free Cash Flow Calculator and become part of the Investor Quadrant faster.

I hope you enjoyed this article, and found some value in it. If you’d like to continue the conversation further, drop us a comment below!