On Finances: My Thoughts Explained

Ways To Have A Source Of Income.

One of the most read and familiar economist book by the name “Rich Dad Poor Dad” presents a clear concept referred to as the cash flow quadrant where it illustrates four major ways in which people generate a source of income; employees, case of small business owner, big business owner and the investors. It regard this four categories as one of the main sources of income. In order to learn more about these issues, you may need to view a website page.

People who have control of their income, make more money than those who don’t. Making more money as a person goes hand in hand with starting your own business and avoiding being employed. In looking at these different categories of making money, you will be able to have a clear picture of your current position and with regard to the different categories look at where you would like to position yourself in the future in accordance to the cash flow quadrant.

The employee is in the first cash flow quadrant. This quadrant is the most common way to make money as it is regarded more secure but in real sense, it involves making the rich richer. Great tax burdens are laid to employees rather than to employers. Employees lack the leisure to lay off most of their tax burdens as they are normally controlled and governed by their employers.

Small business owners normally occupy the second quadrant. The main problem with being an employee or self-employed is that you are directly swapping time for money, and when you aren’t swapping your time, you aren’t making any money. Here your financial stability is always on a bargain, because it is not always the case that you will be fit to do the job.

In the third quadrant we have big business owners. Big business owners normally don’t have a ceiling to their earnings as they are not limited by time compared to the small business owners. The big business owners normally establish systems to create their wealth, for instance, instead of selling ice cream on the roads by exchanging their time for the job to earn, they will invest on some good capital to buy five different ice cream tracks and thus employ people on those tracks. Big businesses owners have a wide source of their income for instance they would always choose to invest more to a business and earn more from employees than employ themselves for their limited time. Big business owners are thus able to secure on their sources of income as they have a wider variety.

An investor occupies the last quadrant. It is a person who invest greatly in projects so as to have great returns in the future. They normally invest on big plans and ideas. it involves few people as it requires great capital.

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