A Financial Guide for Technical Professionals
Technical professionals have their own code when it comes to finances.
Savings strategies for technical professionals
Most technical professionals tend to graduate without an enormous amount of obligation but it varies depending upon the type of institution you matriculated from. One of the first questions technical professionals tend to have about their money concerns whether or not they should be paying down school loans.
Savings strategies should be modified with the needs of taking care of financial obligations - i.e., addressing credit card debit, paying down student loans, etc.
You should consider a number of factors such as the amount and type of the debt as well as the interest rate on the loans.
You may have already started saving in some manner; however, the assistance of a financial professional will give you a more rounded perspective.
Investment strategies for technical professionals
Technical professionals tend to have three major options for investments: their company 403b or 401k option, investing in the company’s stock, or establishing your own company retirement plan if you are self-employed.
A diversified portfolio is necessary for the most successful investment plan.
You should take the ‘long view’ with regards to your financial plan.
Make your investment contributions part of your monthly ‘budget.’ .
If your company offers a 401k or 403b savings plan and matches a percentage of your input, it is strongly suggested that you take advantage of this ‘free money’ provided by your employer.
If your company allows you to invest in company stock, this option may be advisable - depending on how much you have diversified your portfolio. Remember, if something happens to the company or your position in it, both your salary arid portfolio could be in jeopardy. Do your research and talk to a financial professional.
If you are self-employed, you may want to consider a variety of options for yourself and any employees you may have such as SEP IRAs, SIMPLE IRAs, or Keough plans. Here is where it is especially important to have a good hold of your profit and loss for the business as the timing and amount of contributions is critical.
What to invest in? This comes down to where you are in life and your expectations, as well as your risk assessment and cash flow requirements. Work with a financial professional to review your status and goals to determine what investments options are best for you.
Estate planning for technical professionals
As highly educated members of the population, you have a tremendous contribution to make to society, your family, and the world. At the same time, however, as a member of a profession that is known to make a decent living, understand that liabilities do exist.
You need to put in place some kind of plan to protect your assets -whether it be income, physical assets, your business - keeping in mind your interests and goals for the future.
Depending on the complexity of your situation, you may need a team of experts to assist you in establishing the appropriate plan - i.e., financial advisor, attorney, accountant, investment banker, business advisor.
Most importantly, your life evolves and changes over time - and so should your financial and estate plans. Once you set up your plans, you will need to review and update them regularly (at least, annually).
Conclusion
Just like the trade of engineer itself, managing your finances as an engineer or technical professional takes skill. For questions related to the financial planning process for engineers, please feel free to reach out to me.
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