The title may be a bit harsh but the subject is a harsh truth and there are some differences of opinion. Investopedia, a site that typically has excellent career and investment advice, has an article where it quotes several successful people suggesting that you follow your passion. The passion peddlers are names that include Steve Jobs, Warren Buffett, Mark Zuckerberg and Chris Gardner. That advice has also been parroted by such notables as Sir Richard Branson and many others and it has set many a poor soul on foot down the path of financial ruin.
Don’t think I’m knocking passion, because it is a very useful emotion in its place. Like every other human emotion such as fear, anger and even jealousy, passion is one of those emotions that survived the evolutionary test of time. It’s still part of our collective character because it’s useful. While useful in its place, passion can produce unpredictable results when applied to business and investing.
Passionate About Money?
The problem with getting life advice from billionaires is none of them are hurting for money. It’s easy for them to preach about pursuing passion when your bills are already covered. Pursuing your passion is a great concept but if you don’t have the skills to successfully monetize it, then passion makes a lean dinner. What tends to happen when when you’re poor is your passion gets siphoned off towards making enough money to live. Wasting your passion on money is a poor trade and ultimately unsatisfying.
Work On Systems Instead
Passion will falter, passion will fade, passion will lead you to make poorly planned emotional decisions and leave you without two nickels to stack one upon another. Financial security, the thing you really need to pursue your passion, comes by having the right systems in place. Approaching financial security from a systems standpoint will align all aspects of your financial world into a single, unified whole with a common purpose. Too many approach their financial lives in a hodge podge of disconnected efforts, frequently at odds with each other. A living space, savings, investments and transportation might all seem unrelated but all work together to determine your financial success and just one out of place can conspire to defeat it.
Systematic Investment
If you really want to pursue your passion, you’re going to need money to get started. Money comes from savings and investing, two things few people with big dreams are willing to sacrifice to obtain. Savings and investments come from living below your means and having money left over in the budget to contribute toward an emergency fund, savings and investments.
Managing Your Investments
The few who manage the first hurdle can still falter by not having a disciplined investment plan. There’s no magic to investment success. Build a well-diversified portfolio composed of low-fee, market index mutual funds or ETFs, bonds, cash and hard assets, like gold and silver coins from the U.S. Mint, in fixed percentages. Twice a year rebalance that portfolio by selling off winners and buying more of the losers to restore those fixed percentages to balance. Rebalancing is the key to actually forcing yourself to implement the simplest of investment advice: Buy low, sell high.
You don’t have to be an investment expert or spend hours a day immersed in financial news. Also know that most “financial advisors” at financial institutions are, like real estate agents, little more than salespeople. If you think you need investing advice, then look for a Certified Financial Planner, someone with a fiduciary duty to put your interests ahead of their own when dispensing investment advice.
It’s really not that hard to develop your own sound, solid and systematic approach to saving and investing and stick with it. Building a solid understanding of how to manage money will give you the freedom to follow your passion and the financial base to build upon.
It’s in that context that I maintain that passion is for losers. The winners of the financial game of life are people who can temper their passion long enough to build a base of understanding about business and managing money.
So, the next time some billionaire suggests you follow your passion, ask them if they’re willing to bankroll your learning process. That’s when you’ll discover that life advice from billionaires is worth exactly what you’re paying for it.