Achieve Financial Freedom. How to Manage..

Achieve Financial Freedom. How to Manage Cash Flow according to Robert T Kiyosaki’s Theory

Nikko Indonesia6 months ago

Most people are familiar with the definition of cash flow, especially the people who struggle to manage private financial activities aiming for one goal, financial freedom.

Cash flow is a measurement of the amount of cash that comes into and out of your pocket in a particular period. Cash flow is not only for a company but also for individuals in their daily live costs.

Fundamentally, there is no difference between company cash flow and individual cash flow. With cash flow, you can control and evaluate the flow of personal expenses.

Positive Cash Flow or Negative Cash Flow

Cash flow has two results, it might be positive or negative. A positive cash flow is money coming. Robert T Kiyosaki in his book ‘Cash Flow Quadrant’ divided cash flow into four quadrants, depending on what kind of income you get. The four quadrants are E(Employee), S(Self-Employee Business), B(Big Business), and I(Investor). If you are an employee of a company, the income you will get are depending on the monthly salary, bonuses, and allowances. A negative cash flow is all of the mandatory and unavoidable outgoings such as tax, electricity bills, internet, transport, meal, or additional expenses such as entertainment and self-reward.

How to Manage Cash Flow?

After you already know the four quadrants above, you probably can start mapping which quadrant is suitable according to your income. Let’s say E(Employee) quadrant, you can report every money coming and going so you will understand what term makes you thrifty or extravagant. You can also control and refine your needs and wants. To achieve financial freedom, Kiyosaki gives attention to B(Big Business) and I(Investment) quadrants more, where you probably get financial freedom faster because you make people work for you in your business or money work for you in terms of the investment’s dividend. Here are some tips for switching the current quadrant to the B and I quadrants.

1. Have Passive Income

Passive income is acquired money without spending time and effort to manage. The money from passive income is generated from investments, or from the royalty of a work. You can possibly earn money from your hobby. It is time to review what skills you have which can guarantee you money.

2. Prepare the Emergency Fund

With the awareness of how important the emergency fund is for your future, you can start with set aside some money into another special storage for emergency fund savings, then in the future, your main income could not disturb by unexpected costs.

3. Start Investing

If you already know well what is your goal in managing finances, investment is the best stage. You surely can start investing without a big amount, depending on your risk profile. You can also choose the investment instrument which is the most suitable for you, such as deposit, gold, property, stock, or fund cash.

The good news is, Nikko Sekuritas has more than 30 years of providing local and foreign customers the service for investing and funding cash easily.

As a reminder, you must commit to managing cash flow to achieve financial freedom as you wish. The sooner you decide to act, the better result you probably get in the future.

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