What this article covers
With layoffs spreading across the tech sector and stock options underwater, Opher Ganel and six financial advisors explain what nervous tech workers can do now to protect themselves and their families. Their advice centers on a longer cash runway (up to six to 12 months of expenses), sharper skills, proactive networking and a stronger LinkedIn profile, plus a caution against risky job moves in an uncertain market.
Key Takeaways
Tech workers worried about layoffs should build a cash runway of at least six months of expenses
Marianne Nolte notes that most CFP professionals recommend three to six months of expenses in a liquid emergency fund and says uncertain times call for the full six months. Grant Maddox suggests doubling it to six to 12 months if you anticipate a prolonged lack of income, and Darryl Lyons warns that thin reserves can force you into a job you don’t like.
Updated skills, a strong network and a polished LinkedIn profile make you harder to lay off and easier to hire
Michael Reynolds advises earning certifications in in-demand technologies, connecting with at least three industry professionals every week and documenting your wins for reviews and compensation talks. Danielle Miura adds that you should keep copies of work samples, completed projects and emails that praised you.
A high tech salary is both an advantage and a risk in a downturn
Opher Ganel points out that top-tier pay lets you save and invest aggressively, but it also tends to bring expensive lifestyle choices (housing, cars, eating out) that are hard to undo after a job loss. He also cautions against quitting for a new offer unless it is solid and you can survive an extended period of unemployment.
Michael Reynolds
Richard ArcherWhat we’re seeing happen now reminds me of a gold rush. Just in reverse.
During a gold rush, people get giddy about the fortune they’re sure they’ll find. Others are savvy enough to take advantage by scooping up large inventories of shovels.
Whether the wannabe gold miners strike it rich or not, the shovel suppliers will make out well.
Now, however, people are concerned about the economy, the stock market, inflation, rising interest rates, supply chain disruptions, war abroad, energy shortages, etc.
In this situation, people stop ‘buying shovels.’
So, if you want to know how tech workers feel, look at the ‘shovel suppliers’ who serve them. Specifically, financial advisors who help highly compensated tech employees manage their money.
What are those advisors saying now?
Why Are Tech Workers Nervous About Layoffs and Their Finances?
There’s a lot of chatter among financial advisors who work with technology professionals, saying the mood among their clients is more somber because (a) the bull market is firmly in the rearview mirror (more below on what that implies), and (b) many high-tech workers are nervous about what’s coming, so they’re less likely to spend money hiring advisors.
In the current environment, hundreds of tech companies are trimming staff, stock options are “underwater” (due to the bear market, especially in tech stocks), and many employees face uncertain career prospects with their current employers, let alone other potential employers.
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What Should Tech Workers Do If They’re Worried About Layoffs?
First, feeling nervous is not just natural, it’s helpful.
It makes you stop and consider what you may need to do differently to protect yourself and your family from growing risks.
If you’re concerned your employer may be getting ready to lay off staff and wondering if your job might end up on the chopping block, there are many things you can do now to reduce your risk and mitigate the impacts of getting laid off if that risk becomes an unhappy reality.
Keep Your Powder Dry: How Big a Cash Runway Do You Need?
One of the tips I suggest is to identify all your financial resources that could help bridge a loss of income for a few months. As my own experience showed when I lost my last salaried position, the longer your “runway” to get the next job or your first business revenue (that latter was what it ended up being for me), 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 personal budgets and make sure they have enough cash reserves to weather a transition time 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 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.
Grant R. Maddox, CFP®, AWMA®, CSRIC®, Hampton Park Financial Planning sums it up:
Regardless of uncertain times, always focus on the basics of financial planning. Build an emergency fund. Diversify your investments. If you have a goal less than a year away, consider a more conservative allocation. “I often give similar advice to folks who’re concerned about uncertain times as ones about to take a sabbatical: if you anticipate a prolonged lack of income, double your emergency fund. If your emergency fund is three to six months of expenses, consider expanding that to six to 12 months.
Beyond keeping your (emergency fund) powder dry, look for ways to diversify your income, e.g., by starting a side hustle. Such additional income will help extend your financial runway and help you stay sane through the stress of possible job loss.
Sharpen the Saw: Keep Your Tech Skills and Certifications Current
Stephen Covey’s celebrated book, “The 7 Habits of Highly Effective People” finishes with this admonition as his 7th habit: “sharpen the saw.”
In our current context, that means 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. All this will make you more valuable to your current employer, as well as to others 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. This can help you not only improve your chances of retaining employment, but can create more opportunities if you start looking for a job.
How to Network Before You Need a New Job
When I lost my job, I didn’t really know how to network effectively. I hadn’t joined any professional groups or business clubs. And even when I reached out to (dozens of) contacts, I made the mistake of concentrating on me and what I needed, rather than them and what they wanted.
Over the years since, I learned.
When networking, concentrate on listening rather than speaking. Be curious as to what your professional colleagues need, what they’re excited about, and what they’re afraid of. Then, send them relevant articles or other resources. Where you can, 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. If you need to look for new opportunities, established relationships are crucial.
Use LinkedIn Like a Pro: Update Your Profile and Document Your Wins
Michael Reynolds says:
Make sure your LinkedIn profile is up to date, complete, and makes full use of the platform’s capabilities.
A lot of networking and hiring happens on LinkedIn, and a great profile can really 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.
Gather Proof of Your Value Before a Layoff
Another tip from the above-mentioned comprehensive guide to reducing layoff risk and mitigating it comes from Danielle Miura, CFP®, founder and owner of Spark Financials, who suggests:
Gather proof you were an asset to your company by making copies of samples of your work, projects that you have completed, and emails that praised you.
Be Bold: Should You Exercise Stock Options When Prices Are Down?
Another concern you might be facing is that your employer may have given you tons of stock options that are 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 tech professional clients to exercise their employee stock options at these rock-bottom prices to maximize their after-tax gains.
What’s the saying?
“Go big or go home!”
If you have enough money stashed away that exercising options doesn’t hurt your liquidity (think emergency fund) and your ability to cover expenses for the months it may take to find a good job if you lose your current one (the above-mentioned financial runway), this is bold move could pay off big-time once the market recovers.
…But Not Too Bold: Be Cautious About Changing Jobs Right Now
If you’ve been thinking about leaving your current job and pursuing a better opportunity, this is a time to be a little cautious.
A programmer I know once resigned from his position to take a better one, only to have the new company decide to shut down the location he had just started working at 10 days prior.
The economy in general, and the tech sector in particular, was in better shape back then, and after going to six interviews he got three job offers and picked the one he liked best.
In the current environment, things might not go so well. Thus, if you quit your job to start somewhere else, be very certain the new offer is solid. Also, be sure you can survive an extended period of unemployment if things fall through anyway.
The Bottom Line: A High Tech Salary Is Both an Advantage and a Risk
If you’re a nervous high-tech employee, you have a big 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.
The advantage part is that a high income lets you save a lot of money and invest it aggressively.
The disadvantage part because you’ve probably made expensive lifestyle choices (renting or buying an expensive home, buying an expensive car, routinely ordering food and/or eating out, etc.) that will be difficult to undo and/or get used to doing without.
The above tips should help you navigate this uncertain time with less stress, and come out the other side in better shape.
Frequently Asked Questions
How big should a tech worker’s emergency fund be during layoff fears?
Advisors quoted in the article note that the usual guideline is three to six months of expenses in a liquid emergency fund. In uncertain times, one advisor recommends erring on the conservative side with a full six months, and another suggests doubling your fund to six to 12 months if you anticipate a prolonged lack of income.
What can I do now to reduce the risk of being laid off from a tech job?
Keep your professional skills current, pursue certifications in in-demand areas and take on added roles and responsibilities so losing you would hurt your employer more. One advisor interviewed also recommends documenting your wins and referencing them in performance reviews to reinforce your value.
How should I network if I’m worried about losing my job?
Build your network before you need it. Opher Ganel recommends listening more than speaking, learning what colleagues need and sharing useful resources or introductions without regard to how they might benefit you. One advisor suggests connecting with at least three industry professionals every week and engaging with their posts.
Should I change tech jobs during an economic downturn?
Be cautious. Opher Ganel recommends quitting for a new role only if the offer is very solid and you can survive an extended period of unemployment if things fall through, since a new employer may still cut staff or close a location.
Why is a high tech salary a financial risk in uncertain times?
A high income makes it possible to save and invest aggressively, but it often comes with expensive lifestyle choices such as a costly home, car or frequent dining out. Those commitments can be hard to undo if your income suddenly stops.
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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
About the author
Contributing Writer, Wealthtender
My career has taken some unexpected turns, from earning a PhD in experimental high-energy physics, to conducting cosmic-ray research in Antarctica, to supporting NASA projects and programs, to running my own consulting business. I also run several other small businesses and help my wife run her Marriage and Family Therapy practice.
Those experiences taught me to question assumptions, think critically, and recognize that real-world decisions of any significance rarely have simple answers that apply to everyone. Today, I bring that perspective to writing about personal finance. Drawing on my analytical background, business experience, and research, I explore financial decisions, challenge conventional wisdom, and help readers understand the tradeoffs that can affect their financial well-being. To complement my own research and experience, I also weave insights from financial professionals into my articles, drawing on their expertise and real-world experience helping clients navigate financial decisions and challenges.
At medium.com/@opher-ganel, you can read more of my articles and subscribe to receive email notifications when new ones come out.