Amazon will reportedly lay off ~10,000 tech and corporate employees this winter. That makes Amazon the latest in a growing number of tech companies engaging in layoffs. Tech may experience more job losses in this downturn than after the tech bubble burst in 2000 and ‘01:
Winter is coming indeed. Jeff Bezos recently said, “The probabilities say that if we are not in a recession now, we are likely to be in one soon. My advice to people is to take some risk off the table right now.”
So how can you prepare yourself for this difficult period as an employee working in tech? Here’s 4 proactive steps I think you can take to put yourself in the best position:
- Prioritize Rainy Day Savings. Having a few months of living expenses in the bank will make a potential layoff and job search much less stressful. Even though you’d likely qualify for unemployment benefits in a layoff, those are likely to be a fraction of your former compensation. Thus keeping your expenses low and ensuring your emergency fund is topped off is a great way to protect yourself in case the worst comes to pass.
- Refresh your professional network. Reach out to former colleagues, classmates, friends, etc. and strengthen those relationships. The best time to network is when you don’t need anything. You never know how this could help you find opportunities should the unfortunate need arise. This step would be beneficial even if you don’t find yourself in any difficulty.
- Maximize your future employability
- Update your resume and cover letter
- Optimize your linkedin profile and any other online social presences
- Consider getting certifications or designations that might impress potential employers
- Don’t take too much investment risk
- Are you overly concentrated in your employer’s stock? Think about selling those vested RSUs or ESPP shares if you’ve held onto them (Although capital gains may be a consideration here).
- Do your investment allocations make sense? Have you taken on too much risk? Is your portfolio overly concentrated in tech?
- Is your overall debt/leverage at a reasonable level?
- Warren Buffett said, “My partner Charlie says there is only three ways a smart person can go broke: Ladies, liquor, and leverage. Now the truth is — the first two he just added because they started with L — it’s leverage.”
The hope is that tech has seen the worst of this downturn already. However, we don’t want to base our financial plans on optimistic best case scenarios. It never hurts to do a little financial housekeeping and ensure that you’re protected from adverse outcomes. A little extra savings and a little less risk might come in handy.
If you want to discuss your situation, schedule a complimentary call today.
Scott Caufield, CFA, CPA