In today’s world filled with digital innovation online and rapid technological advancements in almost every industry, there’s a significant need for technology professionals. If you work in tech, you may reap a variety of benefits along with a fast-paced work environment, including competitive pay, frequent opportunities for career growth and development, remote work, and flexible hours.
While a career in technology can be very rewarding, it can also be quite demanding and prevent you from tending to personal matters like financial planning. Since healthy finances are key to a high quality of life, it’s important to make them a priority.
Challenges of Financial Planning for Technology Professionals
Just because you’re tech-savvy doesn’t mean you have the time to gain the knowledge and skills required to plan for your financial future. After all, technology and finance are two different worlds. The good news is you don’t have to tackle financial planning on your own.
We’ve created this useful guide to help you get started. This guide paired with professional support from a financial advisor can help you reach your goals so you can live a fulfilling life with minimal to no financial stress.
Financial Planning for Technology Professionals
There are a number of topics to consider and questions you’ll have when you’re planning your finances as a technology professional. Here’s a brief overview:
Living Well on a Technology Salary
According to the Bureau of Labor Statistics, the median annual salary for computer programmers in 2021 was $93,000. While you can earn great money with a technology job, you’ll still need to budget for the things that matter most to you.
If early retirement is one of your goals, for example, you may have to live in a smaller home or spend less on travel or entertainment. This way you’ll be able to allocate more of your paycheck to your 401k or other retirement accounts.
As you advance in your career and potentially cross the six-figure mark, you’ll find it easier to meet multiple short and long-term goals. Here are a few questions a financial advisor can help you answer to make the most of your technology income:
● How much should I have saved today in order to retire comfortably at my desired retirement age?
● If I don’t have enough saved today, what steps can I take to get back on track?
● What financial planning insights have you gained working with other technology professionals like me?
Repaying Your Student Loans as a Technology Professional
While some technology professionals bypassed college or completed a training or certificate program, most hold at least a bachelor’s degree in a field like computer science or management information systems.
If you went the college route, and especially if you also earned a graduate degree, there’s a good chance you’ve been left with the burden of sizable student loan debt. Regardless of how much student loan debt you have accrued, it is in your best interest to design an appropriate repayment plan.
It may be a good idea to pay off your student loans as soon as possible. Or, it may make more sense to take advantage of your low interest rate and prioritize paying other debt instead. A financial advisor can help you make the right decision.
Making the Most of Your Employee Benefits as a Technology Professional
If you’re a full-time technology professional, you likely receive more than a generous salary. You may qualify for healthcare coverage and life insurance as well as paid sick and vacation time. You may also enjoy a retirement plan like a 401k with a company match and stock options.
Depending on the company you work for, you may benefit from other perks like free food and snacks, all-expense paid seminars and conferences, wellness programs, and bonuses. Technology companies are known to go above and beyond for their employees to attract the brightest talent.
It’s important that you become familiar with all of the benefits at your disposal so you take full advantage of them all. When you meet with a financial advisor, you’ll discuss how to make the most of your employee benefits. Examples of questions a financial advisor will help you answer include:
● How much of my income should I invest in each of the retirement and savings plans available through my employer to maximize my benefits?
● How should I allocate the investments in my retirement and savings plans?
● Should I invest in my company stock, or in fact, diversify away from my company stock?
Buying a Home as a Technology Professional
As a technology professional with a steady paycheck, you shouldn’t have an issue getting approved for a mortgage. If you’re a freelancer or contract employee, however, it may be more of a challenge because you won’t have pay stubs and a W2 to show your consistent income. You’ll need to provide additional documentation to prove your earnings.
A financial advisor can guide you through the mortgage process and help you save for a down payment. You can also trust them to help you figure out a housing budget that allows you to live in a home that’s right for your lifestyle yet still allows you to meet other goals.
Saving for Retirement as a Technology Professional
If your employer offers a 401k retirement plan, you’ll be able to deduct money from each paycheck and save for retirement. Ideally, the employer matches your contribution and essentially gives you “free money” so you can maximize your retirement savings.
You may also save for retirement without an employer-sponsored 401k if you open an account such as a Roth IRA or Traditional IRA. With a financial advisor’s support, you can determine the ideal retirement vehicles for you as well as how much you’ll need to save to live your preferred lifestyle.
They may also answer questions such as:
● What are the tax advantages of my retirement accounts?
● What brokerage firm should I use?
● What is the ideal investment strategy for my situation?
Expenses and Deductions: Keep More of Your Income
When you file your taxes, you may choose the standard deduction or itemize your expenses to lower your tax burden. If you determine that itemizing is the better option, you’ll need to consider which deductions you may be eligible for.
As a freelancer or self-employed technology professional, you can deduct your home office, tech tools, and office supplies, legal and professional service fees, and even advertising and promotion costs. Unfortunately, there are fewer deductions available to full-time tech workers.
Since taxes can be complex, especially if you don’t have a typical 8 to 5 job, a financial advisor is an invaluable resource. They can help you answer a number of questions like:
● Does it make sense to take the standard deduction or itemize?
● Which deductions am I eligible for?
● Is it better for me to be a 1099 contractor or a W2 employer?
Certain questions may be better answered by a tax professional (EA or CPA) – your financial advisor can help connect you if you don’t already work with one.
Your Insurance Needs as a Technology Professional
If you’re a technology professional with a salary or hourly wage, there’s a good chance you can meet many of your insurance needs through your employer. Most tech employers offer health, dental, and vision insurance as a benefit. Some even go the extra mile and provide life insurance, short-term disability, and other insurance options.
In the event you perform contract or freelance work, you’ll need to take care of insurance needs on your own. Fortunately, there are a number of insurance plans you can choose from. Also known as the Health Insurance Exchange, the Health Insurance Marketplace can give you valuable information on your eligibility for various plans and how you can cover premium costs and minimize out-of-pocket expenses.
A financial advisor can help you navigate your insurance needs and select the plans you need to protect yourself and your family from the unexpected. Their advice may save you thousands of dollars down the road.
Financial Planning is a Necessity
Working in technology requires highly specialized skills that the average person simply doesn’t possess. If you work in the field, it’s important that you realize your value and use your career to thrive in your personal life.
A customized financial plan can help you keep your debt levels down, make the most out of your earnings and benefits and live the life you desire. You’ll find that a financial advisor may help you accomplish all of this and so much more. They’ll be there for you any time you have a financial question or concern.
Enjoy a Secure Financial Future
Financial planning leads to financial security. When you’re secure with your finances, you have enough money to live the way you want to and simultaneously save for your future. You don’t have to worry about an unexpected life event or expense ruining your finances. No matter what happens, you have the means to provide your family with the peace of mind you all deserve.
Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. Before making major financial decisions, please speak with us or another qualified professional for guidance. The original version of this article first appeared on Wealthtender written by Brian Thorp.
