Tag Archives: financial freedom

THE THREE KINDS OF BUSINESS SYSTEMS

Posted on by under Bibliophile: Cashflow Quadrant

When we have to choose the B quadrant then we have to create a system and people will work for that system.

In the B quadrant, we need to know both system and people. It can be possible that our initial business might not work but we just have to focus on improving ourselves, our knowledge of the system, and people. Improvement in our knowledge only brings success in front of us. And it’s essential to get failure in initial business because if not then we will end up with big blunders later on. So, success is a poor teacher and failure teaches us a good lesson. Welcome failure, not run away from it. Learn from it and grow well.

If both the people and the system are leaky, the chances of failure are great. Sometimes it’s hard to know whether the problem is the person or the system that is failing.

There are few ways by which we can get support for starting a business

  • Find a mentor

A mentor who has operated his own business, not an advisor who has not operated any business. We need to learn from a mentor. Mr Sanjeev Bhikhchandani (Founder of Naukri) has supported Zomato.

We have to become a leader, not a manager. A manager sees subordinates as inferior but the leader appreciates smarts and brings them with him.

  • Buy a franchise

Franchises are a proven system. So here we are directly buying a system, not building our own. Now, we have to work as an E and follow what they told us to do. Because they have done it rightly, we should follow it right to get succeed. Investors or bank would lend money to a system rather than to a product.

  • Get involved in network marketing

Here also buy the existing system at a reasonable value and build own business. We get infrastructural benefits from a network marketing company. It’s a kind of buying a personal franchise.

For becoming a successful B, we require to have a few things to keep in mind

  • Don’t be fearful

People feel fear of what others say to them. Feel fear of getting a rejection.

  • Have to work with different kinds of people. For becoming successful, we need to learn to work with different kinds of people, lead them.

The system is only going to help us to drive successfully towards the B quadrant from the E or S quadrant. Building a system and working with people is lifelong learning for becoming successful in the B quadrant.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for development of Lucky Idiot website.

WHY PEOPLE CHOOSE SECURITY OVER FREEDOM

Posted on by under Bibliophile: Cashflow Quadrant

Why we seek job security over freedom? Because we taught in such a way at school as well as at home. Our mindset has to get developed in a similar way where we seek security first. So, E & S quadrant people are motivated by security whereas B & I quadrant people are motivated by freedom.

Similar to the debt trap, there is a very interesting success trap. When B quadrant person gets success, they expand their system, then hire new talent, they work hard. B quadrant person also invests and when it meets succeed, they reinvest it. So that as time passes, they attract more success and which results in the freedom of time. They have time for family, for their hobby, etc.

Financial intelligence does not mean by how much money we make but it’s how much money we keep and that work for us. Also, money keeps working for how many of our generations.

Rather than this, what middle-class people do it. They work hard for a paycheck then they make a plan to save tax, take a home loan to write off interest to save tax. So, they again work hard to pay bills. When people get a job with a high paycheck and benefits, they work hard more to pay bills and increase more liabilities which increases more bills. They jump from one job to other to get a higher amount of paycheck with job security.

S quadrant is the riskiest and needed huge efforts. As they have to do it by themselves so for achieving success and keeping it, they have to work harder.

Many of the E quadrant people start a business by deploying their lifelong savings, borrowing from friend’s family to start a business. And after 2-3 years when the business starts generating cash flow then they have to pay debt first. ~99% of the business getting disappeared in the first 10 years of establishment.

B and I quadrant person also legally take tax advantages compared to the E and S quadrant person. Most people do not focus on the asset column to generate more income but they focus on income and increase in liabilities. Knowledge is a power which used by B and I quadrant people to grab opportunities when it arises. This also gives them confidence. So, if we are into an E quadrant and simultaneously learn about the I quadrant then it will help us to get financially free, also make us confident. Few people are good with both the side of a quadrant, they get a good paycheck, security as an employee and also invest to create more wealth. People those do not have investment knowledge, then they tend to park money in FD or other deposit which is good compare to people who do not save or invest. But this investment does not help us to fight against inflation. If we rely on our employers that they will make us rich then it’s not to be their responsibility. Their responsibility is to provide a steady paycheck to us. It’s our responsibility to create investment to become rich. When we have an abundance of money and time then we directly jump to the I quadrant. But if we do not have time and money then we have to follow the safer path.

Investing is also an investment into the business so it’s advisable to understand businesses. Investing is capital and knowledge-intensive so we have to ready with both for being successful in it.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for development of Lucky Idiot website.

Different Quadrants, Different People

Posted on by under Bibliophile: Cashflow Quadrant

People of different quadrants have fear, doubts, beliefs, strengths, and weaknesses, but all people respond to them differently.

We all have acquired technical skills but we have to learn emotional abilities as well. Also, when we faced difficulties then how we respond to them, will decide our future. When we face difficulties then either we go back to our comfortable quadrant or face it and choose to be free. This ability is much needed to become successful in our life.

Even though we’re all human beings. when it comes to money and the emotions attached to money, we all respond differently. And it’s how we respond to those emotions that often determines from which quadrant we choose to generate our income.

Changing quadrants is often a change at the core of who you are—how you think and how you look at the world. The change is easier for some people than for others simply because some people welcome change and others fight it. And changing quadrants is most often a life-changing experience.

When we belong from the E quadrant then we talk about safety, security, good paycheck, etc. E quadrant people prefer to get a certainty, extra benefits. They have security is more important rather than money.

S talks about their commission on an hourly basis or percentage of the entire project etc. These people prefer to be their boss, like to do their work, like independent rather than money. In many respects, they are true artists with their style and methods of doing things.

B quadrant people talk about hiring new talent, new president etc. for business. They are the opposite of S; they hire people rather than do work themselves. They like to delegate works; they keep thinking to produce better growth. Business requires leadership skills that help us to bring out the best from people.

And I quadrant people talk about the rate of return, risk-adjusted return etc. For the understanding core of the people, we need to be a listener. This helps us to understand the core of people and we can lead them.

People think that they only get financial security by establishing a business. So, for that many starts from Employees to self-employed and then transfer to business. Many from self-employed to business. And many employees to business but not all can achieve success because each quadrant requires a different type of human and mental skills. When S goes for a B then first has to learn to prepare the system and hire competent staff. As he as a system in S quadrant.

When people try to shift from E or S quadrant to the B quadrant then they have such thoughts in the mind. The people who try to shift from E or S to B then they think to have a better product or services compared to XYZ but the B quadrant requires a better system.

I quadrant is the last quadrant where we can able to convert our money to wealth.

For creating wealth, we require Other People’s Time and Other People’s Money. So, E and S quadrant people are other people and B and I use their time & money to creating wealth.

When we compared the cash flow of rich person and middle class than rich have the majority of ~80% income from investment and ~20% as wages. Whereas the middle class have reversed to it, their ~80% of income comes as wages or commission and ~20% from investment. And for becoming wealthy, we need to get passive cash flow from different assets.

The definition of wealth is the number of days you can survive without physically working (or anyone else in your household physically working) and still maintain your standard of living.

When we do not focus on this part then when we have an extra income, we buy liability from it and liabilities will result in the expense. This is a wrong practice. We also make some wrong practice of making an investment which generates income after completion of our working years. We need to focus on making an investment that generates income during our working years and help us to becomes Financially free.

People avoid investment due to risk but there are possibilities to earn a decent return by lowering risk. We have to learn it. Those who want a safe return, avoid taking a risk but rather to avoid taking a risk, we need to learn to manage it. When we able to learn such skills then the “I” quadrant always welcome us.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for development of Lucky Idiot website.

Why Don’t you Get a Job? – Cashflow Quadrant

Posted on by under Bibliophile: Cashflow Quadrant

With the continuation of the “Rich Dad, Poor Dad” series, I am hereby starting a series from the book “Cashflow Quadrant” which help us identify our core competencies and which area is suitable for us. And help us to achieve our financial freedom.   

The author explains that when he was homeless, unemployed with his wife and living in the car. Both of them did not get any job but they tried to do some work so that they get money at least for food and fuel their car. It’s always been important for such situations to have job security, steady paycheck. They were graduated and have a good skill set, but they have decided to achieve financial freedom so that they don’t have to work for the rest of their life. The author has achieved the initial part of freedom in the 4 years and remaining in the further five years.

We feel that we need money to make more money but we can see that author got financially free from being homeless once upon a time (Rags to Riches). Then we might have a question in our mind that what is needed to become financially free? The answer is – we require to have a dream, determination, willingness, skill to learn quickly, ability to use our skillsets.

Where we fall under the quadrant, that will identify the way cash flow comes to us.

We have seen in series of rich dad poor dad that – What our schools and poor dad teach us is to get good employment or self-employed. They don’t teach us to do investment. While rich dad advises us to go to school, graduate, build a business and become an investor. This book is for those who are E or S and want to achieve B and I. This is not an easy journey to shift from steady paycheck to volatile paycheck of B and I.

Different quadrant requires a different skillset, different psychological requirements. Employees and self-employed are low with risk-taking behaviour whereas B & I are known for their risk-taking behaviour. B & I require to have a vision (not a Vision from WandaVision ?) that enhance their future success. 

For example – a doctor can be work at a private hospital as an employee or start a private practice as self-employed or open a clinic & hire other doctors as an employee to become a business owner or make an investment in other businesses.

We can become a millionaire or go broken in any of the quadrants, no quadrant gives grantee of financial freedom. Many of us show off due to social fear that money is not at all important for them. But we are working a whole life for the money and then showing off that it’s not important then it’s a wrong thing to do.

Rich dad believed that life is more important than money, but money is important for supporting life. For doing many things in life, we require money. We cannot buy happiness through money but what we need to make us happy is bought through money so that money is important. The major thing upon this all is we have to learn that money work for us, rather we work for money.

For knowing which quadrant suitable for us, we need to work in all four quadrants. These help us to know our temperament, likes, dislikes, strengths, and weaknesses. So that we can choose our suitable quadrant.

If we try to understand that financial freedom is a freedom of time. Getting time available with family, for health, for well-being. Not anyone quadrant is better than others but it’s upon us which one suitable to us. But if we choose to opt for B or I then we need to put a huge effort because the skills required in B and I do not teach us during our school days.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for development of Lucky Idiot website.