Can I ask you guys and gals a question?

Even though that question may seem weird but I still feel the need to ask?

And that question is –

Do you know how money actually works and why it works that way?

Whether people think its allocation is fair or unfair?

When I was an employee, I used to listen and believed what my family members, friends and relatives said about being employee. 

That despite them working hard for long hours, they are not always getting paid enough OR unable to get beyond their income ceiling. 

After much thinking, I realized all of them are struck in Employment sector or quadrant. 

You cannot expect employee to be instantly self-employed, self-employed to be instant business owners and business owners to be instant investors. 

However, after networking and connecting with people who are self-employed, business owners and investors, I began to have a full understanding of how and why money works.

Now these people do not know each other at all. 

Nor are they related. 

But they all know me since I took the initiative to build rapport and talk to them. 

Now I am sure whether any of you have read Robert Kiyosaki’s Cash Flow Quadrant. 

Someone passed me that book along with Rich Dad Poor Dad on the eve of my first job but being broke that time, I could not afford to buy those books. 

But that saleperson was very persistent probably because he need to achieve his sales quota or give his boss the impression of selling all the books. 

So he thrusted those books into my hands but I still never read them until 6 years later when I was going through real financial difficulties and being out of job for a period of time. 

Having said that, here are the 4 ways to make money. 

At my time of writing this, these 4 are considered globally to be the most practical though Bitcoin and Cryptocurrency could be the 5th in 3 to 5 years from now. 

Here is his next diagram which I added arrows to be more realistic after going through the ups and downs myself.

Having said that, each way of making money has its advantages and disadvantages.

1. Employment

The first way is what everybody knows or what our parents, relatives, teachers and even friends have been conditioning us since young.

That if you have no money, the first step is to get a job. 

Or work for other bosses in employment as employee.

While undoubtedly this seems to be the first logical step to making money, what we are not aware of is this is NOT a complete and sustainable way to make money. 

But since the people we spent most time with – parents, relatives, teachers and even friends – are mostly struck in the first Employment quadrant, we tend to believe them.

And for those who are bold enough to be entrepreneur – which I explain more later – and failed, they will be back to employment under sheer pressure from family and friends. 

Especially if they borrowed money from them to run traditional businesses but did not succeed which were very common yet unfortunate cases in my country Singapore. 

Moreover, the office rentals are very high.

If you want to run an office downtown, it will be at least $3000 to $5000 every month. 

Out of town, the cost will be at least $2000 to $4000. 

But which option you take, you still have to stick to at least 1 to 3 years contract. 

So on top of these and other business costs, most bosses tend to be super selective in who they hire and how much they should pay. 

Truth being said, unless you are into sales and marketing which adds to the company revenue, any other job out there is designed to reduce bosses’ workload but does NOT reduce their expenses. 

That is the reason why you are unable to earn and progress beyond glass ceiling in any other job. 

2. Self-Employed

As self-employed – whether you are running business by yourself or with your business partner, you have the flexibility of being in control of your time and activities. 

Does not matter if you are running on-or-offline businesses.

However, you have no cash flow or your cash flow is slow for the first 3 – 5 weeks, months or even years depending on what business you operate. 

In the past, people used to borrow from family, friends and relatives before praying that their business will take off and they will be able to repay their loan and make a financial breakdown for themselves and their families. 

Unfortunately yet truthfully, that is the tried and failed model in most cases. 

Especially off businesses like cafes, offices, restaurants, stalls and stores which required a huge capital to begin before you even earn a cent. 

As in rental, operating costs and paying staff salaries. 

That is precisely why I am not a fan of those and remained as employee until I learn the potential of internet marketing which I explained in my other post. 

And I intend to stay that way for a long time.

3. Business Ownership

The next quadrant I am going to talk about is business ownership. 

At first glance, this may seem similar to self-employment but really it is not as pointed out by my good friend. 

As self-employed, it is just you or your business partner. 

But in real business – does not matter what industry, you have a team of people under you working and making money for you. 

Whether you bother to show up for work everyday or not. 

However I see 2 problems arising from what most people see as lucrative and what happened to fellow internetpreneur Anik Singal and how he recovered. 

1. Firstly, you do not know whether the people wanting to join your team or company can be trusted to perform in their job.

2. Secondly, even if they joined your team or company since you decided to hire them, you do not know whether they are acting in company interests or values. 

3. Thirdly, taking into consideration office rental and operating costs, they will have to calculate whether they can afford to pay the staff based on expectations or actual company performance.  

So regarding what your and my family, friends, relatives and teachers said about employment, those 3, my dear friends, are the EXACT reasons why they are not earning enough or progress beyond glass ceiling. 

And if they are unable to afford business costs and staff salaries for whatever reasons, they can be made bankrupt or even sued by landlords for unable to pay rent. 

4. Investment

That brings me to fourth and final quadrant. 

Which I now realized why Robert Kiyosaki called this 4 ways of making money Cash Flow Quadrant though that could change 10 years from now with the rise of Cryptocurrency and other digital or technology advances. 

Unlike the other 3 quadrants which require activities and time to generate income, this one just requires money to make money.

As of now, there are different investment instruments as in unit trusts, company stocks/shares, properties, foreign exchange or Forex and in recent years Bitcoin and Cryptocurrency.

Best of all, you can trade anytime anywhere with just internet connection, laptop or just smartphone. 

However you need capital of at least $1000 to $10,000 USD based on my personal experience I will share another day.  

And most importantly, you need to understand winning and losing money is part of the investment game regardless of what you invested.

As well as how to manage your risk and emotions whether the outcome is in your favor or not. 

You can make thousands in a day. 

You can also lose thousands as well. 

So having said that, here is what Robert really means by his Cash Flow Quadrant as in how and why money works. 

Whether people thinks its allocation is fair or unfair.