Advice for the Unapologetically Ambitious Women in Tech

by | May 17, 2024 | Entrepreneurs, Financial Planning, Smart Finances, Women and Finance

The technology sector offers incredible opportunities and unique challenges, especially for women. Whether you’re scaling the heights in a large or mega cap tech company or riding the thrilling ups and downs of a startup, the financial implications can be significant and sometimes overwhelming. As a Certified Financial Planner™ professional, I understand these challenges and have strategies to help you manage the financial stressors specific to your industry. 

Key Financial Stress Points for Women in Tech

  1. Equity Compensation Complexity: One of the most lucrative—and complicated—aspects of working in tech is navigating equity compensation. Stock options, restricted stock units (RSUs), and other equity forms can be a significant part of your compensation package, especially in startups. Understanding the tax implications, knowing when to exercise options, and planning for potential changes in stock value require sophisticated financial planning.

 

  1. Job Volatility and Career Transitions: The tech industry is known for its rapid innovation and change, which can lead to job volatility. Startups might explode in value or implode and vanish. Even within established companies, projects can shift, and roles can change quickly. Planning for career transitions, building an emergency fund, and maintaining financial flexibility are crucial strategies to ensure stability amid uncertainty.

 

  1. Balancing High Income with High Cost of Living: Particularly in major tech hubs like Silicon Valley, New York, and Tampa Bay, the cost of living can be prohibitively high. While salaries in tech are typically above average, they often come with higher expectations of lifestyle and spending. Creating a budget that allows for comfortable living while also maximizing savings and investments is a delicate balance that requires careful thought and planning. 

 

  1. Retirement Planning Amid Uncertainty: With the fast-paced nature of tech careers, long-term planning like retirement can sometimes take a back seat. However, the potential for early retirement or career shifts makes it essential to have a robust retirement strategy in place. This includes taking full advantage of company-matched 401(k) plans, IRAs, and other retirement vehicles suited to your financial situation and goals.

 

  1. Navigating Family Planning, Maternity Leave, and Career Breaks: For women in tech, taking maternity leave or career breaks for family planning can have significant financial impacts. Planning for these life events, understanding your company’s policies, and strategizing around them financially will help ensure that taking time off doesn’t derail your financial goals.

 

Strategies for Financial Empowerment

  1. Addressing the Gender Pay Gap:

Unfortunately, the gender pay gap persists in many industries, including the tech sector. Though women in technology have a smaller gender pay gap than the general population. Women in tech earn 87-cents for every dollar a man earns (compared to 82-cents for women in general, 66-cents for Black women, 52-cents for Hispanic/Latina women, and 69-cents for self-employed women; source AAUW/U.S. Census Bureau). As women in tech, it’s essential to advocate for fair compensation. Negotiate your salary and your equity compensation confidently, backed by thorough research on industry standards and your worth. Additionally, consider seeking out employers committed to pay equity and transparency.

  1. Building a Robust Emergency Fund:

The tech industry can be volatile, with layoffs and company restructuring not uncommon occurrences. Establishing an emergency fund with at least 3-6 months’ worth of living expenses is crucial to weathering financial storms and providing peace of mind during uncertain times.

  1. Leveraging Equity Compensation:

In the tech industry, equity compensation is a common form of remuneration, offering employees the opportunity to share in the success of the company. Understanding how to leverage equity compensation effectively is crucial for maximizing your financial rewards.

For Women in Large Cap Companies: Large-cap tech companies often provide employees with stock options, restricted stock units (RSUs), or employee stock purchase plans (ESPPs) as part of their compensation packages. Here’s how you can make the most of these equity incentives:

  • Stock Options: Stock options give you the right to purchase company stock at a predetermined price (the exercise price) within a specified period. Consider exercising your options strategically, taking into account the current market value of the stock, potential tax implications, and your overall investment portfolio diversification.
  • Restricted Stock Units (RSUs): RSUs grant you shares of company stock outright, typically vesting over a predetermined period. Once vested, you own the shares outright and can choose to hold or sell them. Develop a plan for managing your RSUs, considering factors such as tax implications, diversification, and your long-term financial goals.
  • Employee Stock Purchase Plans (ESPPs): ESPPs allow employees to purchase company stock at a discounted price through payroll deductions. Take advantage of this opportunity to acquire company shares at a favorable price, but be mindful of holding too much of your investment portfolio in your employer’s stock.

For Women in Small Businesses with Private Investors: In smaller tech companies with private investors, equity compensation may take different forms, such as stock options, restricted stock, or phantom stock. Here’s what you need to know about navigating equity compensation in this environment:

  • Stock Options: Similar to large-cap companies, stock options in small businesses offer the right to purchase company shares at a predetermined price. However, liquidity may be limited as the company is not publicly traded. Evaluate the potential for future liquidity events, such as an IPO or acquisition, when considering the value of your stock options.
  • Restricted Stock: Private companies may issue restricted stock as a form of equity compensation, subject to vesting conditions. Be aware of any restrictions on the transferability of restricted stock and consider the implications for your financial planning.
  • Phantom Stock: Phantom stock plans provide employees with hypothetical equity rights tied to the value of the company’s stock. While not actual ownership of shares, phantom stock can offer similar financial benefits and may be structured to align with the company’s growth and performance.
  1. Community and Networking: Engage with other women in tech through forums, networking events, and professional groups like Women in Tech & Entrepreneurship (from whom I borrowed the phrase ‘unapologetically ambitious’ in the title). Sharing experiences and strategies can provide both support and practical advice tailored to your needs.

Conclusion

As women in technology, you have the talent, ambition, and drive to succeed in a dynamic and fast-paced industry. By proactively addressing your financial concerns and implementing sound financial strategies, you can empower yourself to achieve your goals, secure your financial future, and thrive both personally and professionally. Remember, your financial well-being is an essential component of your overall success and happiness.

Ready to learn more about how BayView Financial Planning can help you achieve your future financial security? Schedule a complimentary call.