How Nervous Technology Workers Can Financially Plan for Success During a Recession

Financial advisors who work with technology professionals say the mood among their clients is more somber because the bull market is firmly in the rearview mirror. Many high-tech workers are nervous about what’s coming next.

In the current environment, hundreds of tech companies are trimming staff, stock options are “underwater,” and many employees face uncertain career prospects with their current employers, let alone other potential employers.

If you’re concerned your employer may soon lay off staff and wonder if your job might end up on the chopping block, there are many things you can do now. Here’s how to reduce your risk and mitigate the impact of getting laid off, if that risk becomes a painful reality.

“Keep Your Powder Dry”

One of the first things to do is to identify all your financial resources that could help bridge a loss of income for a few months. The longer your “runway” to get the next job or your first business revenue, the less stressful it will be. And the longer you can spend searching without compromising on what you want and need.

Many financial advisors agree.

Darryl Lyons, CFP®, Chief Executive Officer, PAX Financial Group, says, “Tech workers need to revisit their budgets and make sure they have enough cash reserves to weather a transition before a new job. Don’t be in a position where you feel financially forced to take a job you don’t like.”

Marianne M Nolte, CFP®, Imagine Financial Services adds, “This is a perfect example of why advisors recommend having an emergency fund. It isn’t (just) so that you can cover the cost of a new set of tires or an unexpected hospital visit. It’s for layoffs too! Most Certified Financial Planners recommend setting aside three to six months of expenses in a liquid emergency fund. In times of economic uncertainty, it’s better to err on the conservative side and stash a full six months of expenses into your emergency fund.”

Beyond keeping your (emergency fund) powder dry, look for ways to diversify your income, e.g., by starting a side hustle. Such additional revenue will help extend your financial runway and help you stay sane through the stress of possible job loss.

“Sharpen the Saw”

Stephen Covey’s famous book, The 7 Habits of Highly Effective People, finishes with this warning as his 7th habit: “Sharpen the saw.”

In our current context, you need to keep your professional skills up to date and look for opportunities to learn and train in new, relevant skills. In addition, take on additional roles and responsibilities at work that will make the impact of losing you worse for your employer. This makes you more valuable to your current employer, and looks appealing to future employers, should your current job disappear.

As Michael Reynolds, CSRIC®, AIF®, CFT-I™, Principal at Elevation Financial LLC says, “Identify newer skills and technologies that are most in-demand and acquire certifications in those areas. Take courses to add to your skill set. Sharpening your skills can help you not only improve your chances of retaining employment but can create more opportunities if you start looking for a job.”

Network Proactively

When networking, concentrate on listening rather than speaking. Be curious about what your professional colleagues need, what they’re excited about, and why they are fearful. Then, send them relevant articles or other resources. Finally, connect them to others in your network who may help them or whom they can help.

Do these things without regard to how they might benefit you.

Keep it about them.

Michael Reynolds suggests, “Build your network before you need it. Aim to connect with at least three professionals in your industry every week. Comment on their posts and build rapport. Established relationships are crucial if you need to look for new opportunities.”

Use LinkedIn Like a Pro

Michael Reynolds says, “Make sure your LinkedIn profile is up to date, complete, and fully use the platform’s capabilities.

“A lot of networking and hiring happens on LinkedIn, and a great profile can help you stand out if you’re looking for opportunities. Write a compelling introduction that highlights your strengths and value. Include all relevant skills and experience, and ask for endorsements of those from others. Make sure your photo and cover image are up to date.

“Document your value to your employer. Review the past few years of your career and document your ‘wins’ and successful projects. Itemize all the things you contributed and accomplished on those projects and note the positive results they brought the company.

“Then, reference these notes in your reviews. That helps reinforce your value to your employer and can even be helpful in conversations about compensation.”

Be Bold

Another concern you might be facing is that your employer may have given you tons of stock options that are now underwater because of the current bear market.

Does that mean they’re worthless?

Not if you listen to Richard Archer, CDAA, CFA, CFP, MBA, Owner, and President of Archer Investment Management, who says, “I believe betting against technology companies is a loser’s bet over the long term. I’m encouraging my professional tech clients to exercise their employee stock options at these rock-bottom prices to maximize their after-tax gains.”

Suppose you have enough money stashed away that exercising options doesn’t hurt your liquidity and your ability to cover expenses for a couple of months. In that case, this bold move could pay off big-time once the market recovers.

But Not Too Bold

If you’ve been thinking about leaving your current job and pursuing a better opportunity, this is a time to be cautious.

In the current environment, things might not go so well. Thus, if you quit your job to start somewhere else, be sure the new offer is solid. Also, be sure you can survive an extended period of unemployment if things fall through anyway.

The Bottom Line

If you’re a nervous high-tech employee, you have a significant advantage and a big disadvantage.

Your advantage is that your salary is likely in the top 10% (if not 1%) of income (though major employers need to do more work to ensure pay equality for women in technology).

Your disadvantage is that your salary is likely in the top 10% (if not 1%) of income levels.

High income lets you save a lot of money and invest it aggressively.

The disadvantage is that you’ve probably made expensive lifestyle choices that will be difficult to undo.

These tips should help you navigate this uncertain time with less stress and come out to the other side in better shape.

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This article was produced by Wealthtender and syndicated by Wealth of Geeks.