Where does your money come from? Robert Kiyosaki, author of Rich Dad Poor Dad, wrote a follow-up book built around one simple picture: the cash flow quadrant. In this lesson of Mondosol’s Make Money course, Kofi explains the four ways of earning it describes, and what each one means for your time, freedom and risk.
Read the article, watch the video, or press play and listen.
In this article
What is the cash flow quadrant?
The quadrant is a square split into four boxes. Each box is a way of earning money, named with one letter: E, S, B and I. The left side (E and S) is mostly about trading your own time for money. The right side (B and I) is about owning systems or assets that earn money without you doing all the work.
The four quadrants
E: Employee
You work for someone else and get a salary. Examples: a nurse, a teacher, a shop assistant, an engineer. Benefits: steady pay, often holiday pay and a pension. Limit: your income depends on your hours and your employer.
S: Self-employed
You work for yourself. Examples: a hairdresser with her own salon chair, a freelance designer, a plumber. Benefits: more control and you keep the profit. Limit: if you stop working, the money usually stops too.
B: Business owner
You own a business that runs with other people and systems, so it can earn money even when you are not there. Benefits: income is not limited to your own hours. Limit: building it takes time, money and skill, and many businesses fail.
I: Investor
Your money works for you through investments like funds, shares or property. Benefits: income from what you own. Limit: you need money to invest, and investments can lose value.
Quick comparison
| Quadrant | Who works? | Typical risk | Main thing you need |
|---|---|---|---|
| E · Employee | You, for someone else | Lower | Skills and a job |
| S · Self-employed | You, for yourself | Medium | Skills and customers |
| B · Business owner | A team and systems | Higher | Systems, people and capital |
| I · Investor | Your money | Varies, can be high | Money, patience and knowledge |
Mixing quadrants: an example
You do not have to pick just one box. Most people who move toward the right side do it slowly, while keeping a job. Meet Sara (made-up numbers):
- E: she works as a nurse and earns 32,000 kr a month after tax.
- S: she sells her photos online and earns about 1,500 kr a month.
- I: she puts 2,000 kr a month into a low-cost fund for the long term.
Her job pays the bills, the side income adds a little extra, and her investing builds slowly in the background. Over years, the share from the right side can grow.
Is one quadrant “better”?
The book encourages readers to move toward B and I. That idea can be useful, but here is the balanced view:
- Every quadrant is valuable. Society needs employees, and a good job is a great base for saving and investing.
- Moving right means more risk. Business owners and investors can lose money, sometimes a lot.
- Be careful with “get rich” offers. Some schemes use the quadrant idea to recruit people into paid seminars or pyramid-style selling. If you must pay a lot to join or recruit others to earn, walk away.
- The real goal is choice. Having some income that does not depend only on your hours gives you more freedom and safety.
Watch: the quadrant explained
Video: “How to Get Rich using the ESBI System – Cashflow Quadrant Explained by Robert Kiyosaki” by Practical Psychology, on YouTube.
This video is made by an independent channel. Remember the risk points above while watching.
Try it: map your income
- Draw a square with four boxes: E, S, B, I.
- Write every source of money you have now in the right box (pocket money, a summer job, selling old things, savings interest).
- Which box is empty? Write one small, realistic step toward it, such as starting a monthly saving amount or learning a skill you could sell.
- Check back in three months.
FAQ
What does ESBI stand for?
Employee, Self-employed, Business owner and Investor: the four ways of earning in the cash flow quadrant.
Is it bad to be an employee?
No. A stable job is one of the best foundations for building savings and investments over time.
What is the difference between self-employed and business owner?
If the business stops when you stop working, you are self-employed. If it can run without you through a team and systems, you are a business owner.
Can young people be investors?
Yes, often with small monthly amounts and help from a parent or guardian. The earlier you start, the more time your money has to grow.
Keep learning
- Practise it: open the interactive Make Money lessons in your learning journey.
- Previous lesson: Make money work for you.
- Next lesson: Assets vs. liabilities.
- Related: Earning vs. spending and Rich Dad Poor Dad: key ideas.
This article is educational and is not financial advice. It summarises and comments on ideas from a published book; Mondosol is not connected to the author or publisher. Kofi is a character from Mondosol’s story cast. Example numbers are made up to show how the idea works.
