This post comes from multiple requests from friends with whom I have talked about leaving tech, and returning to tech, and the way that I started to think about money relating to that. Money is a loaded topic, and I want to be up front here that this is written from a place of financial privilege. I graduated from my undergrad (and dropped out of grad school) without any debt. My first developer job paid well, including stock grants (not options). I inherited some money. I’m also a citizen of a country with public healthcare. I need to work, but I’ve not had to try and create my own financial stability – because I already had it.
Forty-one percent of women leave technology companies after 10 years of
experience, compared to only 17 percent of men [source]. For comparison, consider that the average career length of a Premiership Football player is 8 years [source]. Premiership Football players make a lot more money, but if you know that part your career is likely to be over within ten years, you (if you are sensible) factor that into your financial planning. Looking at the data, it makes sense for women in tech to do the same.
Some people call it a “fuck you fund”. I call it sensible financial planning. Bankers who treated their bonus like it was part of their salary ended up in hot water when the markets crashed and bonuses shrank or disappeared. Looking at the stats about women leaving, to me it makes sense to treat every year you last in tech after ten years as a bonus.
I would love that to be different, and let’s be clear – I work very hard to make that the case, for me and others. But sometimes we play game that’s on, and sometimes we try and make a new game. Until we have a new game, 10 years is realistic – and honestly, optimistic for some.
Tax and Rent
The first way in which I changed the the way I thought about money was to realise that my major out-goings were tax and rent. My salary seemed so much more than I could possibly make doing anything else. But let’s do some math.
Let’s consider a salary of 75K British pounds, which is I think pretty standard for London. And then consider a salary of 50K British pounds (a number I completely fabricated) outside of London.
Woah! A 25K pay cut! But first – the top 25K of that was taxed at 40%. So the government loses 10K, and you lose 15K.
Then, rent. The difference between rent and council tax on a 1-bed apartment in London vs another major UK city like Manchester or Birmingham could reasonably be 750 GBP / month. So now you’re paying 9K less a year in rent.
So now you’re 6K a year worse off, or 500 GBP a month.
But you move to a place where things are on average 1/3 cheaper (completely reasonable for Birmingham, Manchester or even Edinburgh in comparison to London [source]). So gym membership, food, transportation… depending on your habits, it might just be a wash.
Then if your job no longer stresses you to the point where you are paying for weekly therapy and / or expensive getaways or other forms of retail therapy… you might even be in profit.
Salary and Longevity
The second is to consider longevity. Consider two job offers. Job A pays 20% more. But the company is well known for being staffed by brogrammers. You think you could do two years. Job B seems nicer – they let you work from home 1-2 days a week, invest in your personal development, and there are noticeably more women there. You think you could do three years there, maybe even longer!
So then the maths (ignoring inflation and payrises):
Job A: year 1:X + 20%, year 2: X + 20%, year 3: 0 (burnout) = 2.4X
Job B: year 1: X, year 2: X, year 3: X = 3X
Then Job B starts to look like a better option financially – as well as emotionally. And that’s not even considering tax.
Let’s consider tax (at an average of 30%).
Job A: year 1: 1.2X * 70%, year 2: 1.2X * 70%, year 3: 0 (no tax!) = 2.4X * 70% = 1.68X
Job B: year 1: X * 70%, year 2: X * 70%, year 3: X * 70% = 3X * 70% = 2.1X
This doesn’t consider that with a non-regressive tax system you might actually pay proportionally more of your salary in tax when you make more.
Even though Job A pays 20% more, in this scenario, you’re 25% better off over a three year period if you take Job B.
This is not to say I think people should always take the lower paying job, or move to the cheaper city. I’m not a financial advisor, and I don’t like to give advice about any topic, least of all this one.
But I think people should think about costs as well as salary. And salary in real (post-tax) terms. And for women – our best financial investment might actually be in creating longevity in our careers.
Thinking like this has encouraged me to take more risks in my career, and approach it differently. I stopped being afraid to take an on-paper pay-cut, because I looked at it differently and knew I could end up much better off over the longer term from it. I think I did end up better off financially over the longer term. But emotionally there is just no comparison. Leaving (again) is something I accept as statistically likely, but no longer feel every single day.
But, like I said at the beginning, financial privilege. And risks are much more palatable when you already have a baseline.