When I first launched Deane Financial, I was fortunate to leverage my fiancée’s design insight to build a wealth management firm exclusively for Millennials in tech. From the holistic lens of my business, service design plays a vital role in encouraging varying levels of innovation within the firm — whether it be incremental, adjacent, or disruptive. As you can imagine, my method of doing things is a bit different. I spend a good deal of time thinking like my niche to build the ideal firm that serves them. I’ll admit, sometimes I get so entrenched in the tech world, I feel like I’m in the industry myself. So, I thought, why not put myself in your shoes for this week’s blog post on personal finance?
So, here it is.
If I were a Millennial in tech, here’s what I would be doing right now when it comes to my financial life.
Develop multiple streams of income
If we’re similar and your goal is financial independence, the roadmap is simple. Multiple streams of income. Once Kem became a designer, it didn’t take long for me to notice the potential Millennials in tech possessed when it came to their earning power. Like some Millennials, I like to reward myself with
expensive nice things, but only when it’s earned. And I hate feeling like I need to cut back on expenses if I want to meet my financial goals. So, if I were a Millennial in tech, I would focus on the alternative. Things I can do to earn more income.
Thankfully, we live in the age of the internet, where information spreads at zero marginal cost. If you have a personal brand, and you’re willing to put in the work, there are plenty of ways to develop multiple streams of income. For instance, if you have a technical skillset like design or engineering, you can do freelance projects making apps and SaaS products. If the educational route is more fitting, you can create online courses or ebooks. You can even do live trainings. Because I’ve been to a few and had great experiences, I would look to partner with specific organizations and host events like design sprints and hackathons. And because I’m all about passive income, I would be a Shopify Developer Partner. Without a doubt.
Automate my financial life
Financial success is a lot like designing and engineering. It requires seamless systems and processes that promote end-user satisfaction. Considering my day-to-day responsibilities, keeping long-term goals in mind at all times requires entirely too much willpower and effort. Thankfully, having a process in place that replaces willpower makes it easier for me to remain disciplined. On a high-level, there are three personal finance rules that I live by:
- Spend less than I earn
- Spend money on the things that align with my values
- Prioritize saving and investing
While these standards aren’t always easy to follow, I’ve found that automating my finances gives me an enormous advantage. For me, it’s the best strategy to lock in future behavior as opposed to relying on willpower in the moment. Be that as it may, when saving and investing, it’s more than a goal that I’m hoping for. It’s an outcome that is virtually guaranteed.
Here’s what it looks like in 5 simple steps:
- Compartmentalize my accounts. For example, I have three checking accounts — a joint account with Kem for our monthly bills, a personal account, and a business account. I also have a Roth IRA for retirement, and online saving accounts for my goals (buy a home, wedding, vacations, etc.)
- Set up my entire direct deposit to go to my primary checking account for fixed expenses.
- Set up automatic transfers from my primary checking account to my secondary checking account for my personal allowance. This will be for day-to-day spending, variable expenses, shopping, etc.
- Set up automatic transfers from my primary checking to my various savings and investment accounts for future goals.
- Because I’m all about simplicity, I would use a budgeting app like Tiller Money or TrueBill to track and review my expenses regularly.
Use company stock to fund my goals
This should be no surprise to you. If I were a Millennial in tech, I would make it a priority to know the ins and outs of my stock compensation plan. Since company stock awards can vary widely, my first step to understanding its true value is identifying the specific plan type. Next, I would get familiar with key terms, important dates, tax consequences, trading restrictions, and the inner workings of my stock plan.
Equity indeed has the potential to be a useful wealth-building tool due to the growth of the underlying company stock. But because uncertainty is inherent, I view it separately from salary and would resist the urge to perceive it as a “lottery ticket.” Instead, I would utilize a holistic approach to manage my stock compensation — amassing equity to meet my short and long-term goals.
By clearly defining in advance events, dates, and price ranges that will trigger specific actions with company stock — I will be making investment decisions more straightforward and seamless. In fact, I have more of a rules-based personality, so I would likely create a decision flowchart to implement this aspect of my financial plan. Most importantly, if I were a Millennial in tech, I would review my financial plan periodically and adjust for any changes in my goals and circumstances.
Build an opportunity fund
We all know about the importance of saving to build an emergency fund. But what if I’ve been diligent with building financial stability and I already have that covered? What’s next? The way I see it, if I’ve saved for inevitable but unpredictable adverse events, I should also save for inevitable but unpredictable good events. This is the moment when my bonuses and an opportunity fund makes its way into the picture. I like to think of opportunity funds as a competitive advantage, particularly in economic downturns. In moments of fear and uncertainty, the best investment opportunities will go to those with lots of cash.
For instance, as my personal and professional network expands, I am molding relationships with more people who might be starting a business or getting involved with an investment. I’m a calculated risk-taker, so I like to have money set aside to take advantage of opportunities. Under those circumstances, the two things I refrain from doing is pulling money from my retirement nest egg and dipping into my emergency savings. Given these points, this opportunity fund is strictly for “risky” investments that align with my tolerance and capacity for risk.
As for where I would keep it? It would likely be in a money market mutual fund that invests in high-quality, short-term debt. They are considered a favorable place to park cash because they’re much less volatile than the stock markets, and is one of the safer investments you can make. Because you can earn interest of 1%-3% a year, these funds are useful for investors who want to protect their assets, but still earn interest. There may also be tax benefits since some money market funds hold municipal securities that are not included in federal and state taxes. Win, win if you ask me.