Saturday, September 08, 2007

Work and Passion, how to do it?

I think once in a while, we would want to reflect on our life, especially about our job and what we would like to do. Then we try to think of our passion, about how we can chase our passion and whether we could afford to leave the things we are doing now. It’s a complicated thing, with a lot of concerns and uncertainty.

Today, I got a more systematic view about things and some small answers. Yes, we must chase our passion and do the things we like. Yes, money is important and we need it to support many things. So, we need the money before we can chase the passion. Unless we can turn our passion into money, else we will have to make enough money to support our passion.

So, how do we make the money? We can work very hard to make more money, but it shall consume all our time and energy. So, can we make money without working very hard? There is an idea of passive income, where it is the ability to generate income without actually working or physically attending the business all the time. What is the example of passive income? Perhaps rental gained from property investment, perhaps a website which automatically generates income with little supervision or perhaps a business which is run by a proper manager. Passive income means a mechanism which shall continue to generate income though we are sleeping at home and not going to work. Passive income does not means we don't have to work at all, but to work hard initially to create a system which can generate income without much participation from us at a later age. It's like a Money Making Machine. We create a Money Making Machine, and we don't become the machine itself.

So, why do we need to generate passive income? Can’t we work very hard to make the money instead? Yes, you could. The reason is to achieve financial independence. What is financial independence? It’s the day where we do not work for survival. As quoted by Robert Kiyosaki (famous for Rich Dad Poor Dad), it’s the number of days you can survived without working, and the number of days should be forever (at least until you die). So, how do I calculate that? The rough formula is your Net Worth (all your money and liquid able asset) divide by your comfortable daily expenses minus your passive income. So, the quickest way to achieve financial independence is to increase your net worth, reduce your actual expenses and increase you passive income. You could be super rich, or you could spend very little. Or, you could create a passive income which could actually match your expenses, and then you would have achieved FREEDOM.

Then you could work up in the morning; choose not to go to work, and start thinking of what you would rather be doing for the day. The idea is the easy part; the execution of the plan is the essence.

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