How to prepare yourself for the uncertainty in the economy?

emergency fund
Posted on . 3 min read

It’s a scary time to be a tech worker. For years, software engineers grew accustomed to rapidly rising incomes, job security, and a job market hungry for their talent. But since the Federal Reserve began raising interest rates, things have changed. It’s now difficult to find a large technology firm that hasn’t announced layoffs in recent months.

Just this week, Meta announced that it would cut around 10,000 jobs. It also stopped hiring for 5,000 open roles. This comes as Mark Zuckerberg is executing his plan for a “year of efficiency,” which already included 11,000 job cuts last fall.

Meta is hardly alone. Amazon, Alphabet, Microsoft, Salesforce, TikTok, Twitter, Tesla, IBM, Dell, and Ericsson all announced sizable layoffs in recent months. The highest number of tech employees were let go in January, with 108,080 estimated lost jobs.

Enough with the bad news. If you’re in the tech industry, you’re probably stressed enough about the economic situation. What can you do about it?

First, dealing with a down economy is as much about coping with anxiety as anything else. As hard as it may seem, try to focus only on the things that are in your control. Understand that everything will eventually be ok (think 2+ years ahead) because an economic recession lasts only around 18 months on average. The U.S. is still an incredibly robust economy. The tech industry is strong and key technologies such as generative AI promise to unlock vast leaps in productivity. Companies might be downsizing, but they’ll always have a need for software engineers, product managers, designers, etc.

Having an Emergency Fund is critical. Even if you keep your job, just knowing that you are prepared to handle the unexpected reduces anxiety and gives you peace of mind. It can determine whether you have sleepless nights or wake up refreshed, ready to code.

It’s also important to have the right size Emergency Fund. If you save too much, you risk losing out on precious investment opportunities — time in the market is critical for young workers. If you don’t save enough, however, you can cause undue financial strain in the event of an emergency. So how do you calculate the right size for an Emergency Fund? We can help.

The Xillion Emergency Funds Calculator helps you calculate the right amount based on your family’s emergency needs.

First, we factored in the obvious factors:

1️⃣ Expenses

2️⃣ Savings

Then, we add the factors unique to you and your family:

3️⃣ Income

4️⃣ Job Security

5️⃣ Severance & COBRA Package

6️⃣ Spouse Employment

Finally, we include macros inputs:

7️⃣ Inflation

8️⃣ Economic Growth

9️⃣ Opportunity Cost of Excess Savings

✅ That’s how we calculate the exact amount that you should save. This amount is completely customized for your family’s unique circumstances. These are uncertain times, but Xillion is here to help with your financial needs. A recession doesn’t need to upend your path to financial independence. With a little planning, you can be prepared to weather the storm and emerge stronger than ever!

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