This is the second installment in a three part series on wealth and money. Part one of the series was on Financial Freedom. Part two is on Passive Income.
Passive income is a myth, just as Financial Freedom is. Think about the word "passive". Webster`s defines the word passive as "Inactive." I believe the words we use to describe our experiences become the experience. One of the most powerful determinants of our life is the words we use and what we say to our self. If we are in pursuit of passive anything, what do you think the message is to our brain? How can I do nothing and get a bunch? How can I be inactive and get rich? How can I do the least and get the most? I don`t think there is such a thing as passive income.
What do you think your health would look like if your goal was "passive health"? How about your relationships? What if you went to your partner and said, "From now on, I only want passive sex"? When you really stop to think about the word "passive" and the goal of passive anything you begin to see just how ludicrous the thought is and how damaging it can be. The thought relayed to your brain is that by doing nothing, I can have what I want, so most people spend their time looking for something that doesn`t exist, and therefore, wind up with nothing.
People who are intrigued by the concept of passive income are the people who put some of their income into a 401(K) and then turned their investment over to the "pros" and said, "I`m going to be passive. I know I did all the work to earn this money, but I am going to be inactive. I don`t want to know about all this money and investing stuff. Now that I`ve made it, I`m going to do nothing. Someone else will look after this investment for me and I don`t need to pay attention to it or understand what`s happening with my money. Shoot, I don`t even have to think about it because I read in a book that the goal is to have passive income, which means that I can sit back and be inactive and do absolutely nothing." These people found out that they don`t have 401(K)s, they`ve got 201(K)s. That`s what happens when you think you can do the least and get the most!
Money is like a woman! If you don`t think she`s important, if you don`t tell her she`s special, if you don`t talk to her and love her and caress her every day, she will leave you. Money is like a man. If you don`t tell him he`s important and wonderful, if you ignore him and decide to be "inactive", he will leave you. Money is like health. If you think health is unimportant, if you think you can create the health and the body you want by being inactive, you will soon be on your deathbed. Your health will leave you, too.
Think about passive in the context of a merry-go-round. Remember when you have gone to a playground and the kids jumped on the merry-go-round and yelled for you to push it? Remember how much effort it took to get it going? A bunch, right? But, once the merry-go-round was moving, the amount of effort it took to keep it going was no more than an occasional swoop with your hand. It required very little effort to keep it going. BUT, it did require some effort. You cannot be passive and expect the merry-go-round to keep going. If you ever decide to completely stop pushing the handle bars, the merry-go-round will stop.
The distinction I`m making is this: passive anything is a bad goal and a bad thought because it requires us to fall into the trap of thinking that by doing nothing we can get what we want. A much better thought is "Leveraged Income." Now, that is a word I can get excited about. If I am focused on leveraged income, then I am focused on having my money make money; I am focused on using OPM (Other People`s Money); I am focused on OPB (Other People`s Brains); I am focused on OPN (Other People`s Networks). I am active and involved when I am leveraging. I`m playing smart. I`m using my brain to achieve my goals. I am active in the process of leveraging. I am not focused on doing nothing, on being passive. Instead, I`m focused on how do I take the resources I have and grow them most efficiently and effectively.
When you stop to really look at the most financially successful people on the planet — Bill Gates, Warren Buffett, Michael Dell, Richard Branson, Larry Ellison — you will not find any of them doing passive. They are all active, but they are leveraged. Furthermore, none of them started their businesses because they were looking for passive income or financial freedom. If they had, they wouldn`t be the success they are today.
Success in any endeavor requires you to be active. Nothing you want is attained by being passive, including wealth and income. The seductive siren`s song of "passive" income is one of the reasons so few people have the wealth they want. Rethink your goal and how you can achieve it. Start looking for ways to leverage yourself and your money. You will be stunned by the difference it makes in your life and in the obtainment of your goals.
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