The Problem With Working for Money—It's a Trap

Why Socioeconomic Status and Depression Are Linked

This article is an excerpt from the Shortform book guide to "Rich Dad's Cashflow Quadrant" by Robert T. Kiyosaki. Shortform has the world's best summaries and analyses of books you should be reading.

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Why is working for money no longer secure? What are the dangers of relying on employment to generate income?

According to Robert Kiyosaki, working for money is no longer a safe bet for financial security, much less financial freedom. He says that people who generate income from the work they do (employees, self-employed, and small business owners) are at a much higher risk today than they were in the past because of the economic changes that took place over the past half-century.

Here is what’s wrong with working for money, according to Kiyosaki.

Robert Kiyosaki: Working for Money Is a Trap

According to Kiyosaki, there are four general ways of generating income: as an employee (E), as a self-employed person or a small business owner (S), as a large business owner (B), and as an investor (I).

In the E and S categories, you are working for money and sacrificing freedom for security. In the B and I categories, you generate income by owning assets.

Kiyosaki says that working for money is no longer a secure way to generate income (more so, in the E category). Other than the financial trap the E job will land you in, Kiyosaki says the disadvantages of an E job are the lack of control you have over your day-to-day work and the idea that the better you are at your job, the more responsibility you get, and the harder you have to work.

Employee (E)

An employee works for a business, organization, or person. As an employee, you have a paycheck and a boss. You have a contract and exchange work for money on a continuing basis.

Examples: CEOs and secretaries are both in the E category because they draw a salary from the company they work for.

Values: Kiyosaki says people drawn to the E category prioritize security and value predictability.

According to Kiyosaki, E’s are influenced by fear of uncertainty—in both their job responsibilities and especially in their finances—and are willing to sacrifice money for security.

Disadvantages: Other than the financial trap Kiyosaki says an E job will land you in, Kiyosaki says the disadvantages of an E job are the lack of control you have over your day-to-day work and the idea that the better you are at your job, the more responsibility you get, and the harder you have to work. (Shortform note: A related disadvantage is “job creep,” where employees are gradually expected to perform more work than what’s detailed in their job description. This often eats into employees’ personal time.)

Self-Employed/Small Business Owner (S)

The self-employed and small business owners are their business. They are their own boss, and can also be the boss of other people, but without their labor, expertise, and management, their business can’t run. Their income is the profit from their business.

Examples: Restaurateurs, makeup artists, doctors, and writers are all in this category.

Values: Kiyosaki says people drawn to the S category prioritize personal excellence and independence. According to Kiyosaki, people often choose the S category because they value:

Being at the top of their chosen field. For S’s, being good at their craft matters a lot. Kiyosaki labels S’s both perfectionists and artists. According to Kiyosaki, they think that they are the best at what they do and want to have control over their work. They bristle when people who aren’t as talented as they are decide their pay. According to Kiyosaki, an S’s need for independence and personal excellence tops their desire for money.
Like those in the E category, they also value security; unlike those in the E category, they feel secure when they take control completely because they trust themselves more than anyone else.

The Problem With Working for Money—It’s a Trap