The paradox of our time is that we’ve never had more information at our fingertips, and yet the answers aren’t any clearer. Google (and now ChatGPT) has no shortage of results for any financial planning questions you have, and social media is full of clickbait articles like “11 Things Your Financial Plan is Probably Missing.”

The problem is that while there’s an abundance of information, very little of it applies to your personal situation. More often than not, it places the focus on all the hot topics of the day (and very little of which is helpful for your plan!)

So today I want to show you how most people in tech approach financial planning, why that’s the wrong way to plan, and 4 steps to plan the right way.

Let’s dive in.

What most tech professionals overlook

Wild but true – most people don’t actually take the time to figure out where they are headed! They have a vague idea of some sort of end destination, and figure if they make enough money, the rest will take care of themselves.

They focus on the tactics and how to make money, the next stock pick, the fancy tax strategy. Without having any idea of where they are headed.

It’s like trying to drive from Los Angeles to well, I don’t know, somewhere. We’ll figure out the destination later, but for now, let’s just make sure we’re going fast!

What a gamble. I don’t want you to do that.

Because understanding your values and your goals (and the potential roadblocks) is critical to your success. And without that information, you might build a lot of wealth but never stop to enjoy it.

So here is a step by step guide to approaching planning, so you can use your money to live the life you want.

Step 1: Start out with the destination in mind

If you are going to take a road trip, what’s the most important thing to figure out?

This isn’t a trick question by the way: it’s the destination!

Because if you don’t where you’re headed, it doesn’t matter the make and model of the car you drive, what restaurants you stop at along the way, or what the weather will be.

So the first step is to decide what you want to accomplish:

Do you want to retire early or be work optional?
Start a business of your own?
Take a year off and travel?
Buy a house?
Pay for your kid’s eduction?

What other dreams might you have?

PS: I also come across plenty of clients who don’t have an absolutely, crystal clear destination in mind. Or it changes! And that’s ok.

I love this tweet by Devin - in particular that last line. “We focus on saving and investing so that when you do know, no options are off the table.”

I also love Bill Winterberg’s comment - so much of life is unpredictable. We can have an idea of what the next 5-10 years look like and what we want, while also accepting that things can change drastically.

I’m a perfect example of this - at 24, all I knew was that I wanted to quit my job to travel the world. But I had no idea that I would move to Santa Barbara, join Procore, get married, quit and start a financial planning firm, and have a kid. And while I have some ideas of what the next 10 years might look like, I’m sure 44 year old me will be pretty surprised along the way.

Step 2: Build your roadmap from point A to point B

Once you know where you are headed (at least for now!), the next most important step is the route you take. This is where you build a plan to get you from where you are today to where you’d like to go. In our road trip analogy, this is the route you take. We still haven’t got to the make and model, restaurants, etc. That’s step #3.

At the risk of sounding repetitive, this all goes back to your goals from step 1:

Want to become work optional? What does that look like for you, where are you finances at today, and where do they need to be to pull the trigger?
Start a business of your own? What type of business? How much runway will you need? Investors? Business plan?
Take a year off and travel? Where do you want to go, and how much will it cost you? How are you going to pay for it?
Buy a house? How big of a house, and how much do you want to put down? How much do you need to save? Will you have help from family?
Pay for your kid’s education? What type of education? When will they go to school? Will they get a scholarship? Harvard or community college?

Now we’re on our way

Step 3: define your investments and tactics

Now we get into the nitty gritty

But we can only do this with confidence specifically because we have a really dialed in roadmap. And depending on your timeline and destination, this will look different. Someone trying to retire in 30 years is going to take very different actions than someone trying to take a big trip in the next 12-24 months.

Morgan Housel puts it well: “A lot of financial debates are just people with different time horizons talking over each other.” I’d add goals too!

Some of the tactics we focus on:

Company stock - Make sure you are making the most of your company equity to increase the potential value and reduce the overall taxes
Cash flow - Set up the optimal cash flow strategy to make sure you are using the right accounts so that you have both option & flexibility but also tax savings
Investments - Make sure you are set up in a way that fits your larger goals. And doing the things you might not be doing now to add extra return to your portfolio
Risk Management - If something happens to you, would that impact your family, and if so, what can we do to reduce the overall impact (at least financially)?
Tax Planning - If all of these are set up and monitored correctly, that will help ensure you pay the least amount of tax over your lifetime.

Step 4: Adapt as life changes

One thing is certain - where you’ll be and what you’ll want WILL change. Maybe it’s in 5 years, maybe it’s in 25 years.

So the key is flexibility - back to Devin’s tweet from earlier, the goal is to give you options. And when you have an idea that your life might be changing, your next step is to adapt your plan.

Recently we had a client who was planning and working and diligently saving to retire in his early 50s (about 10 years out). But an opportunity came to buy his dream home, which would provide a lot of benefits to his family, albeit at a higher monthly cost. We chatted through it, and came to the conclusion that while this might push his target retirement date back, it was well worth it for him and his family.

Putting It All Together

It’s your road trip and your plan.

Not your parents, not your coworkers, and definitely not social media’s.

I hope these steps will help you better navigate your finances. And maybe they are just the nudge you needed to take a step back and think through why you’re working your butt off.

That’s for you to decide. But I do know the goal is not to go to the grave with the most amount of money.

Sometimes we are so close to our finances that we can’t see our blind spots, or potential opportunities. So remember to ask for help when you’re feeling overwhelmed.

Because “when the vision is clear, the decisions are easy.”

Whenever you’re ready, there are 4 ways I can help you:

The Tech Financial Planning Newsletter: Join 1,100+ tech professionals getting a 5-minute (or less) email on the 1st and 3rd Saturdays of each month about financial planning, taxes, investments, and company stock
The Financial Planning For Procore Employees Whitepaper. Many of our clients are current and former Procore employees. As a result of this experience, we’ve attempted to point out the unique financial circumstances and opportunities that Procore employees face.
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