The absence of a boss, and having greater control over income and expenses are certainly advantages. Now there are some important caveats when it comes to self-employment.Ī lot of people only think they’re better off moving from employment to self-employment. That happened because self-employment gave me greater control over both my income and expenses. That is, I had to put in the time and effort to generate revenue.īut there was one major difference: I was able to make more money. Unfortunately, becoming self-employed still involves a strong measure of trading time for money. Previously provided by my employer, it was now up to me to both get and pay for the coverage. I had to get office space, office furniture, and make a choice as to the best computer equipment to buy. Where my previous employer maintained the office and paid all my business expenses, those concerns were suddenly squarely in my corner. And with that step, I went from one quadrant – Employee – over to another – Self-employed. Taking the buyout as my cue to leave, I co-founded a financial planning firm with three other financial advisors. And that largely happened because my employer had been bought out. It took me five years being an employee before I finally made the jump. Will you need a building to operate out of, hire employees, or do you need vehicles or other specialized equipment? These hurdles are probably what keep more people from becoming self-employed. There will also be questions about specific tactics. As well, you’ll have to figure out how you’re going to get paid for doing it. More specifically, you’ll have to determine what products or services you’re going to provide, and who you’ll offer them to. You must decide exactly how you’re going to become self-employed. This is an understandably scary step for people. If I was ever going to move to the wealth-building side of the Cashflow Quadrant, I was going to have to shift to Quadrant #2. And while I felt like I was building a business (it was a mostly commission-income situation), I still had a boss as well as the risk of being fired. That meant my income potential was limited. Very few people ever get rich going this route. After all, it’s safe and relatively predictable, and can even provide a comfortable living. On the positive side, I had regular hours, a steady paycheck, and important benefits, like health insurance.Īll those advantages are why most people stay employed through their entire working lives. When I graduated from college, I got a job in a brokerage firm. And if you’re not actively working, you’re not earning any income. Translated, it means you can only make so much money. The basic limitation is that you only have so much time. But it’s where I was when I read Rich Dad, Poor Dad.Īs an employee, you’re trading your time for money. It’s the standard advice, but it’s far from the best path toward building wealth. You go to college, get a degree, get a job, hopefully stash money in your retirement plan, then retire when you’re 65 or 70. It’s what people are trained to do, and the course most follow. That’s because each enables you to leverage people and money to increase your wealth, even while you’re busy doing other things. The phases are always from E to S, to B, to I.The second two, Business Owner and Investor, are on the “rich side” of the Quadrant. Remember, there's no shortcut magic bullet will make you jump from Employee to suddenly a successful Big Business Owner or Big Investor. Then transition into becoming a pure investor. Then transition into being a big business owner. Then transition into being self-employed. Thankfully, Robert Kiyosaki also gives a roadmap of the usual path towards becoming rich. Now freedom with money is enjoyed by people who are in the B and I quadrants. This means having millions invested in different companies and you're living off on the dividends. Then being in I means you're able to earn all of your income just from investing. So yes, it's some pretty high standards to reach this quadrant. This means having a business you can leave on autopilot for an entire year, and it would still grow. Now, let me share some finer details on his definitions.īeing in B - business means a Big Business.
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