Why Build Passive Income If You Love Your Job?

Back in my corporate days, I had a great setup at McKesson.

My boss and I got along great, and my boss’s boss regularly pulled me into meetings as a subject-matter expert. I worked out of Atlanta while most of my team was in San Francisco, and I had a lot of freedom in how I did my job.

I thought there was a possibility that McKesson could be my last stop. The company was huge, and plenty of people had been there for 20+ years, but had done 5 or 6 different jobs…so there was space for both advancement and variety.

But then came 2018.

New senior leadership for our group came in, and immediately started bringing in their own people – some into roles we thought already belonged to someone else.

Naively, I didn’t expect it to reach me. At the time, I was running a new high-priority initiative – the new leadership was engaged, and I gave them regular updates on it.

Then, the week before Thanksgiving, I found out they had hired KPMG to run the initiative.

Not “was going to hire” – they had already hired them. I’d started my career as a Big 4 consultant, so I knew engagements like that take weeks to put together. They’d been working on it behind the scenes the whole time I was giving them updates.

Everything with new leadership had been challenging, but that was the straw that broke the camel’s back – I knew right then and there I wasn’t going to be a McKesson lifer. I just hoped I could leave on my terms, and not theirs.

That winter, I started taking calls from recruiters for the first time in my career. I’d step away from my desk to a conference room for each one, hoping it would be the one to free me from this increasingly bad situation.

I hadn’t yet discovered syndication, or the idea of investing for cash flow. My paycheck was the only thing paying my bills, so when my situation changed, finding another one was the only move I really had.

If you’re like pre-2018 me, you probably like your job. Maybe you lead a team, you have equity vesting, or you can see yourself staying for years. So when “passive income” gets pitched as a way to replace your paycheck and quit, it’s easy to tune out.

But even if you never plan to quit your job, a portfolio of cash-flowing investments becomes insurance against the uncontrollables of life.

A job you like can disappear in a heartbeat

Your paycheck can stop for reasons that have nothing to do with how you feel about the work:

• The job changes: new leadership brings in their own people (like it did for me), or your company gets acquired. (I’ve written before about why job security is an illusion.)
• You’re forced out of work: an illness or injury physically keeps you from doing the job.
• You need to step away: someone in your family needs care, and you can’t be there for them and do the job at the same time.

Without passive income, you’re uninsured

Your pay comes from a combination of salary, bonus, and equity/profit sharing. All three depend on you staying in the job. If you leave, the salary and bonus stop, and unvested equity is usually forfeited.

If nothing else is covering your bills, your options list is short. You end up taking the next job quickly even if it isn’t a good fit, going back to work before you’ve recovered, or staying at work when your family needs you.

That’s why I think of passive income as insurance. It gives you the flexibility to handle any of those situations the way that’s best for you.

“The time to repair the roof is when the sun is shining”

Things ultimately worked out well for me, but back when I was taking those recruiter calls, I could have avoided a lot of stress and sleepless nights if I’d had a portfolio of cash flow covering my bills.

Because with passive income like that, an unexpected job change (or life event) becomes something you get to decide how to handle from a position of strength. You can stay and see how it plays out, look around on your own timeline, or take time off if you need it.

So start building that income now, while you like your job, you’re able to work, and your paycheck can pay for the investments.

If your situation changes later, you’ll already have a “new roof” protecting you from the rain.