The Cashflow Quadrant is a concept from Robert Kiyosaki's "Rich Dad Poor Dad" which represents the different methods by which income is generated:
There are 2 types of income:
Active Income: You are trading time for money. In order to make money you must perform something. Every day you start from zero.
Passive Income: You do not have to be present to generate income. Things like real estate, stocks, bonds are sources of passive income. You are literally making money while sleeping.
A financially literate person should be able to answer these questions:
According to John T. Reed the famous book is filled with bad advice:
Is debt acquired to purchase something that is going to benefit you financially in the future, usually with low interest. That means it's either going to generate income or allow you to make more money in the future.
Examples of good debt: