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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What are the disadvantages of being an employee? Apart from depending on your employer for income, are there any other downsides?
People who generate income from employment are usually motivated by security (so much so that they are willing to sacrifice their freedom). According to financial educator Robert Kiyosaki, because of economic changes over the past half-century, employment is no longer a secure way to generate income.
Here is what Kiyosaki has to say on the disadvantages of employment.
Robert Kiyosaki: Employment Is a Financial Trap
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.
CEOs and secretaries are both in the E category because they draw a salary from the company they work for.
Kiyosaki says people drawn to the E category prioritize security. According to Kiyosaki, people often choose the E category because they value:
- Predictability of their day-to-day work
- Clarity in their job responsibilities
- Knowing they will be paid regularly
- Knowing their job is safe as long as they keep performing well
- The health and retirement benefits an E category job has traditionally offered
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.
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.)
The Benefits of Employment
While Kiyosaki is quick to point out the disadvantages of employment, he’s short on positives. One benefit of an E category job is that it can be a great way to learn skills and get paid for it. Kiyosaki notes that he was an employee of the Xerox company for four years, where he learned to overcome his shyness as a salesman.
Furthermore, many people appreciate, rather than feel held back by, the structure of an E category job.
People with mortgages, student loans, or other long-term significant debt may appreciate predictable pay. Parents with school-age children may appreciate a predictable work schedule.
Though Kiyosaki makes the disclaimer that all four “cashflow quadrants” make up an important part of the economy, he downplays the fact that many people seek out E category jobs because they enjoy work they can only do in the E category. Professors, researchers, chefs, and teachers, for example, all make a salary and often attract people interested in the particular kind of work offered in the E category.
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- Why the traditional path of college to career doesn't work
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- An in-depth look at Robert Kiyosaki's four cashflow quadrants