Financial Planning for Technology Professionals

Brian Thorp
Brian Thorp is the founder and CEO of Wealthtender and Editor-in-Chief. Prior to founding Wealthtender, Brian spent nearly 22 years in multiple leadership roles at Invesco. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress.

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To make Wealthtender free for readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a conflict of interest when we favor their promotion over others. Learn more. Wealthtender is not a client of these financial services providers.
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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 (though the rapid growth of fintech and wealthtech startups is quickly bringing these worlds together!). 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. And you also have access to a growing number of financial advisors who specialize in supporting technology professionals with their financial goals. These specialist financial advisors are well-versed in the unique opportunities and challenges likely to arise throughout your technology career. 

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 and information technology occupations in 2019 was $88,240. 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?
Are you a Woman Working in Technology?

Employers located in major tech hubs like Silicon Valley near San Francisco and Silicon Hills in Austin have made strides in hiring more women in technology roles. But as evidenced by Google’s agreement in 2022 to settle a pay equity lawsuit for $118 million, many technology firms have more work to do to ensure compensation for female professionals is on par with their male counterparts in similar roles. A financial advisor specializing in working with women in technology can help evaluate your compensation plan and offer guidance to help you ask for what you deserve.

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?
TJ van Gerven CFP headshot

TJ van Gerven, CFP

Modern Wealth Builders

Q: As a technology professional with incentive stock options (ISOs), how should I be optimizing the exercising and sale for taxes?

TJ: “When it comes to optimizing ISOs, most people’s first inclination is to exercise and hold to try and achieve long-term capital gains (LTCG). In order to achieve LTCG, you need to exercise your options and hold one year from the exercise date and two years from the grant date. Although the tax savings from LTCG can be substantial if the share price continues to rise, you should always be mindful of your concentration risk. Keep in mind the tax savings from LTCG can be completely wiped out if the share price drops by the same amount (or more) as the tax savings. Making taxes the primary factor in when to sell a concentrated stock position is ‘the tail wagging the dog’. If you’ve diversified your assets and solidified a path to financial independence, optimizing for LTCG can be substantial tax savings. However, you’ll want to work with a tax professional to project potential alternative minimum tax (AMT) liabilities so that you’re not caught in a cash flow crunch come tax time.”

Buying a House 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, they match your contribution and essentially give 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?

Jeff Schlotterbeck, CFP

Water Street Wealth Management

Q: My company offers a 401k plan with target-date funds. Should I just allocate all of my contributions to a single target-date fund or consider other investment options available to me?

Jeff: “For most employees, investing in a target-date fund within their 401k is usually a decent strategy, but it is not always the best strategy. Using a target-date fund is typically better than just picking a few funds within a plan. A lot of times investors will just pick a few funds based on their name or historical performance. When they do this what tends to happen is there is no diversification within the account and the portfolio ends up being heavily weighted in one particular asset class. Using a target-date fund instead allows for instant diversification through one simple position. This is one of the reasons they are so attractive and frequently chosen they are simple and convenient.

There are however some disadvantages to using target-date funds within your 401k as well. One of the big reasons I tend to shy away from recommending targe-date funds is that they don’t factor in outside assets that you may hold. When managing your investments, you need to make sure your total portfolio (401k and outside accounts) is allocated appropriately. The second reason I don’t like target-date funds is because of the expense ratios. They tend to have a higher overall expense ratio than the other fund choices available within plans. Some target-date funds are layered with expenses because they are a fund made up of funds each with its own cost and expense ratio. Finally, not all target-date funds are created equal. For example, even though two funds may have a target date of 2045, the overall allocation and glide path could be completely different. Meaning potentially different objectives and levels of risk. When helping clients my typical recommendation is to review all of the investment choices available to them and build out a customized plan and allocation, suited to their overall goals and 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 Certified Public Accountant (CPA) and your financial advisor can help connect you with a CPA 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. 

Jane Mepham

Elgon Financial Advisors

Q: Should I sign up for the HSA account, especially with my high income?

Jane: “If your company offers the HSA (Health Savings Account), typically a part of a HDHP (High Deductible Health Plan), seriously consider it due to the benefits you get. The money goes in tax-free (lowering your taxable income), grows tax-free and comes out tax-free if used for medical expenses. You own the account outright, so if you change jobs (which is typical in the tech field) you take the account with you. You are also able to invest the money in the market, which allows it to grow. One of the best ways to use the account is to treat it like a retirement account and leave the money in the account until you need it during retirement. The account can be used to pay for medical expenses abroad.

If you are facing very expensive medical expenses, it may not be ideal or you, but a good financial planner can help you weigh the pros and cons of the account in your specific situation.”

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. 

How To Find The Best Financial Advisors for Technology Professionals

While you may find a great financial advisor to work with through the referral of an acquaintance or whose office you drive by near your neighborhood, it’s important to consider several factors to improve your odds of hiring the best financial advisor for your individual needs.

As a technology professional, you may decide the best financial advisor for you is one who specializes in understanding the unique financial planning challenges and opportunities common among technology workers. These specialist financial advisors may hold credentials that demonstrate their expertise along with considerable experience working with technology workers that could benefit your own financial planning needs.

Because many financial advisors can work with you online, you’re not limited to hiring a financial advisor in your neighborhood when the best financial advisor for you may live hundreds of miles away.

In other words, whether you choose to hire a financial advisor who lives near or far, it may be most important to hire a financial advisor who truly understands your individual needs based on their education, experience, and commitment to helping people just like you.

You’ll find a growing number of financial advisors on Wealthtender who serve technology workers, including advisors specializing in working primarily with technology professionals. In fact, we’re happy to introduce you to the financial advisors showcased just below who are experienced in serving technology employees. To learn more, simply click on a preview card to view their profile page.

Find Financial Advisors for Technology Professionals on Wealthtender

📍 Click on a pin in the map view below for a preview of financial advisors who specialize in working with technology professionals. Or choose the grid view to search our directory of financial advisors with additional filtering options.

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Will I Have to Pay Tax on My Qualified ESPP?

According to Todd Pouliot, a fee-only financial advisor and President of Gateway Financial, you should consider the tax implications of investing through your ESPP to determine what the taxable consequences will be upon the sale of stock acquired through the ESPP.

Watch the video below and visit this page to learn more:
Will I Have To Pay Tax On My Qualified Employee Stock Purchase Plan ESPP?

What is the job outlook for technology professionals?

According to the Bureau of Labor Statistics, employment in computer and information technology occupations is projected to grow 11 percent from 2019 to 2029, much faster than the average for all occupations. These occupations are projected to add about 531,200 new jobs. Demand for these workers will stem from greater emphasis on cloud computing, the collection and storage of big data, and information security.

Are there financial coaches who specialize in working with technology professionals?

While financial advisors are generally best suited to help technology professionals who need investment advice and guidance, many financial coaches have experience working with technology workers whose hectic schedules have meant day to day budgeting and financial habits could use improvement.

Use the Wealthtender Financial Coach Directory to find the best financial coach or counselor for your individual needs.

The Best Finance Blogs and Podcasts for Technology Professionals

With over 250 personal finance blogs and financial podcasts featured on Wealthtender, you’ll find several that regularly publish articles and episodes with financial planning insights useful to technology professionals.

You’ll also find a list of popular blogs and podcasts for technology professionals at the below links offering articles and interviews on a range of topics including financial and career advice:

Do you have a favorite blog or podcast for technology professionals not featured above? Let us know in the comments section below or by email at yourfriends@wealthtender.com.

About the Author
A headshot of Brian Thorp, the founder and CEO of Wealthtender

About the Author

Brian Thorp

Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian

To make Wealthtender free for readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a conflict of interest when we favor their promotion over others. Learn more. Wealthtender is not a client of these financial services providers.
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