How to easily earn money by changing daily life habits

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HappyChases

4 min readJul 1, 2018

I am starting a series in which I will be talking about how we can easily earn money by changing our few habits. Its gonna be a very long post so I will be dividing this into parts.

Today we will work on our basics i.e. why some people are poor and some rich as well as why some people remain poor in their whole life. I will be talking about a wonderful book “Rich Dad, Poor Dad” by Robert T Kiyosaki. It is a must-read book if you want to understand the philosophy of human mind for money. I have added my affiliate link to FlipKart and Amazon.in of the same book which you may find at the end of the post.

There are many things told in that book but I would like to tell you about “THE CASH FLOW QUADRANT”.

The Cash Flow Quadrant

The above one is also known as EBSI graph. According to the cash flow quadrant, there are four kinds of people namely Employee, Self Employed, Businessman, and Investor. And yes, you guessed it right, correct full forms of EBSI. So the left portion of the graph shows the category of financially poor people. Whereas the right portion shows the category of financially rich people. I will be explaining in detail why it has been considered so. So let’s talk about all the quadrants separately. But before that let’s talk about Assets and Liabilities.

Assets and Liabilities

The most important thing which I learned from the book is about Assets and Liabilities. We buy home, car, watch etc and consider these as our assets but we have to spend more money for its well-being and care. For example, if we stop investing money in the painting and similar things the value of the house will drop. Or when we own a watch we have to change battery when the battery drops to zero. So what I mean to say is that these things add extra responsibilities on our self. Hence, these are the liabilities not assets. Now if we own a share of a company XYZ. So considering the simplest case it will be giving us money we don’t need to spend more money on it. (There are an amazing explanation about the same so do read the book.)

Active Income and Passive Income

Active Income is the income which we get on return of something. Like a task was assigned to you, you completed it and in turn you were rewarded some money. The moment you stop doing the job you lose your income and that’s why it is called an active income.
Passive Income is the income which you get even after when you stop working. Don’t worry I am not talking about doing something illegal, instead there are many legal ways by which we can earn money passively i.e. MLM (Multilevel Marketing) or direct selling business.

E for Employee

An employee earns till he or she works. If you stop going to the office or stop doing the assigned tasks you will be fired. And the income which a person earns from here is mostly active income. So till there is some input there is some output. You input hard work and you get the output as money.

S for Self Employed

There are small shop owners or similar kind of people who does the work on their own. Generally, they offer some service. But in this too it is the same the moment you fall ill or unable to offer your service you stop getting the income. So the income generated by this people is also active income.

B for Businessman

So a businessman too offers some service but we need to understand one important thing. There is a fine line between self-employed and a businessman. A businessman might have been self-employed once but his services have been automated. Now it does not matter whether he works or does not work. More because he has employees under him now they are working for him. So the income earned by these people are passive income.

I for Investor

Not to mention they have very huge money. They invest money in startups / new industries. Ultimately the income generated by these people are passive income.