It’s no secret that we’re currently facing a difficult tech market. From recurring mass tech layoffs and rapid advancement in artificial intelligence to a more recent stock market correction, many software engineers are feeling uneasy about the future. While this feeling is reasonable, tough markets are inevitable—because of this, it’s crucial to learn how to weather them tactfully. Here are the four critical moves that catapulted my career and wealth during the COVID crash, while others panicked.
1. Build an Emergency Fund
The first aspect that was crucial in allowing me to further my career and wealth during COVID was building my emergency fund. An emergency fund is a savings account designed to cover unexpected expenses like car repairs, medical bills, or job loss, providing a financial safety net, which was essential in early 2020 as fear and uncertainty in the tech market grew. Living and working in Manhattan is expensive, but thankfully, up to this point in my career, I had heavily prioritized living frugally and steadily increasing my income to build a nest egg.
To illustrate this, here’s a picture of my first apartment in New York City. The blue tape was placed by the realtor to supposedly outline the size of a queen mattress, but it was definitely closer to a twin. To maximize my savings, I even bought a twin bed that was meant for children having sleepovers (it could “pull out” to a queen mattress, but it turned out the slats weren’t strong enough to support me) and built a clothing rack out of PVC pipes and slept underneath it (for more on the lore of this apartment, check out this post).
Living cheaply and always tracking my finances (30-day free trial of Monarch) allowed me to stockpile money and secure a six-month emergency fund — something my dad had always told me was crucial. This fund helped me feel comfortable leaving my employer at the end of February 2020 (talk about timing). It was nerve-wracking starting at a new job at the end of March, just as COVID sent the world into a spiral. Thankfully, the company that hired me kept me on.
While I was lucky that I didn’t need to tap into my emergency fund, it helped give me confidence that if things went south, I had time to figure it out and get back on my feet. Thankfully, this fund has afforded me the flexibility to take continued risks in my career, changing jobs multiple times since this switch.
I can’t stress enough how important it is to prioritize building an emergency fund. Do your best to put money away where possible to save for the inevitable. While stockpiling 6 months of living expenses is difficult, it might look easy compared to the alternative you could be faced with if you don’t have it. If possible, automate the process and continuously save x% of your paycheck automatically by transferring it into a high-yield savings or brokerage account to ensure you’re “paying yourself first”.
2. Don’t Assume Job Security
The next advantage I had during COVID was that I never assumed my job security. I worked hard to ensure that I was always ready to interview for all opportunities that came my way. By consistently practicing for interviews, not because I necessarily had interviews, but because I might need interviews quickly, I helped guarantee that I could speedrun any company’s process, as I wouldn’t need time to prepare for technical rounds.
This perpetual readiness also gave me the confidence to proactively apply for any opportunities that piqued my interest. Especially for larger, more “difficult” companies to get into, I viewed it as playing a free lottery — it couldn’t hurt to play and see what happens. If I got an interview, I would have a real chance to seize a great opportunity, further my career, and increase my earnings. And if I didn’t, I can always play again next year. With my luck, I ended up winning this lottery, landing a job at Amazon before the end of 2020.
Don’t underestimate the value of good preparation, it can make all the difference. Practicing anything diligently and honing your skills are great ways to build your confidence. If you manage to practice long and hard enough, you’ll learn that succeeding is less a function of ability and more a function of time — this is what getting into Amazon taught me.
3. Don’t Panic, Stay the Course
Ironically, the final step that helped me weather the COVID downturn and significantly grow my savings was “staying the course”. This was accomplished by continuing with my investing strategy despite the immense amounts of fear, uncertainty, and doubt around me.
I’ve concluded, like many others, that I prefer to take the emotion out of investing, although 2020 certainly gave me a run for my money (literally and metaphorically) in that department. While I’m not a financial advisor, I’ve largely settled on simply buying the S&P 500 once each week regardless of price. I’ve found that a few reminders help me sleep well at night with this strategy:
The S&P 500 has historically returned ~10% each year on average (before inflation) since the 1950s
I shouldn’t act like I know better than the quants, PhDs, and others whose actual job it is to find an alpha in the market
And perhaps most importantly, little matters more to me than my peace of mind and investing in ETFs (Exchange Traded Funds) that track the S&P 500 largely delivers that
Thankfully, this strategy paid off and I am in a much better financial place thanks to it. Now having gone through a significant economic downturn, I feel more well-equipped to weather the one that could be currently unfolding.
Where you can find me online:
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Excellent post, Kevin! Congrats
Reading the Psychology of Money by Morgan Housel has been really helpful for me :)