It is increasingly dawning on tech professionals globally that their long-running gravy train, driven by digital transformation, AI, and related trends may not last forever. With layoffs on the rise and new job postings wearing thin, personal finances are once again a pressing issue for many in the industry.
Over the past two decades, tech professionals have enjoyed pay that was significantly above average, putting them firmly in the upper-middle class bracket, but most have failed to use this to build a strong financial foundation for themselves and their families.
That being said, there’s still time for tech professionals to plan and thrive just as well when it comes to their personal finances. In this article, we uncover 5 tried-and-tested tips that can help you achieve financial freedom while staying clear of the many anxieties that come with a career in tech.
1. Master The Art of Budgeting & Expense Tracking
First off, if you don’t have a budget, you’re basically navigating a maze blindfolded. Budgeting is crucial, especially in tech, where gadget temptations are endless. Start simple: track your income and your outgoings.
There are tons of apps out there like Mint or YNAB (You Need A Budget) that can link up with your bank accounts and help keep track of every penny in a pretty slick way.
But here’s a pro tip: don’t just set it and forget it. Review your budget regularly. Tech folks love data, so treat your budget like a fun analytics project. Spot trends, see where you can cut back (do you really need another smartwatch?), and identify where you can invest more (maybe that coding course?).
2. Invest In Your Skills
In tech, stagnation is pretty much career suicide. Always be learning. Whether it’s taking new courses, attending workshops, or getting certifications, investing in your skills is essential. Not only does it add to your resume, but it also potentially leads to promotions and salary hikes.
Consider also less conventional investments like public speaking courses or management training. These can open up new paths like leadership roles or conference speaking engagements, which often come with a nice boost in income.
Also consider working on your personal branding, which can help set you apart in an increasingly competitive hiring landscape. This again requires a bit of investment, but when done right, it is well worth the cost.
3. Utilize Tax Advantages
Taxes can take a big chunk out of your paycheck, but there are ways to minimize this. If you’re employed, make sure you’re maximizing contributions to tax-advantaged accounts like a 401(k) or an IRA. If you’re freelancing or have a side gig, there are additional options like a SEP IRA.
Don’t forget about other potential deductions like home office expenses, necessary equipment, and even educational resources. It might be worth consulting with a tax professional who specializes in tech or freelance to make sure you’re not missing out on any benefits.
In addition to this, make sure to keep your tax details and filings in order. Late fees and penalties are a needless hit to your financial well-being and must be avoided at all costs.
Consider checking out a penalty calculator for late tax filings to better understand the scale of fines you risk for non-compliance.
4. Create Multiple Income Streams
Don’t rely on just your 9-to-5. The tech world is perfect for side hustles. Whether it’s freelance coding, tech consulting, building apps, or even tech blogging, having an extra source of income can not only pad your finances but also provide a safety net.
Passive income is another buzzword you might want to explore. Think about investing in stocks or real estate, or even creating an online course on a platform like Udemy about a tech subject you’re proficient in. The initial effort might be substantial, but the long-term payoff could be significant.
For seasoned tech professionals, there is no shortage of opportunities for side hustles and passive income streams. With a bit of experience and time spent in exploring, you can access several different avenues, which can be very lucrative over time.
If you’ve worked on big-ticket projects at large tech companies, know that your knowledge and experience is worth quite a bit, and people are willing to pay to better understand the nature of work at companies such as Alphabet, Meta Platforms, or Microsoft.
5. Plan For The Long Haul
Finally, think long term. This isn’t just about saving; it’s about strategic planning for your future self. Whether it’s investing in a robust retirement plan, buying insurance policies, or saving for a dream tech lab at home, start planning now.
The future can be unpredictable, especially in fast-moving fields like tech, so having a well-thought-out financial plan can make all the difference.
Also, consider lifestyle inflation, which is a real trap in high-income fields like tech. Just because you start making more doesn’t mean you should start spending wildly. Keep a lid on expenses and invest in your future.
Conclusion
Whether you're just starting out or are well into your career, these strategies can help you make the most of your finances. Remember, being smart with money in tech isn’t just about earning it, but rather about making it work for you.
Keep tweaking your financial strategies just like you would a piece of code, and watch your investments and savings grow.