The lessons they can learn from this experience could put them ahead of the pack. We have an entire generation that knows nothing but post-crisis bull markets. When the next downturn comes, those tempered by bad experiences have the opportunity to position defensively and react nimbly. (Or at least more defensively and nimbler than their peers.)
It is honestly better to be on the leading edge of the curve than on the trailing edge.
People who got culled early in the dotcom did ok since the cross company hiring freeze wasn’t yet in effect. They took a hit but found more secure jobs earlier. The people a bit later went a year unable to find jobs.
> Could you define: "Position yourself defensively and react nimbly" means to an IC?
Depends on specifics. Broadly speaking, having been an IC, the lessons I learned the hard way were:
(1) Pay your taxes early and often. Keep your credit and channels open fixed-cost obligations low. (Nimble and defensive.)
(2) Save aggressively. Rule-of-thumb liquidity advice doesn't apply to you; I learned to keep 2 years of cash in Treasuries et cetera. (Defensive.)
(3) If you can't do (2), favor full-time offers, even those with lower face-value economics. (Defensive.)
(4) Don't over-negotiate. (Nimble.)
(5) Don't feel overly committed to your current gig(s). You can keep grabbing drinks with old colleagues from your new job. When the ship goes down, the captain gets commended for going down with it; everyone else just drowns. (Nimble.)
How does an Individual Contributor (IC) have to worry about paying taxes? I’ve never worked at a company and had to worry about the timing of my taxes.
Save enough for 2 years? Only a very small percent could actually save 2 years worth of salary. For a family I’m not sure if anyone able to do this. The standard advice is 6 months.
> Save enough for 2 years? Only a very small percent could actually save 2 years worth of salary. For a family I’m not sure if anyone able to do this. The standard advice is 6 months.
You don't need to save 2 years of salary.
You need to save 2 years of your expenses.
As a SWE, you make at least ~3x what lower-income people in your area make. If you live with the same expenses as those people, you should be saving 2 years of expenses, every year that you work. It's clearly possible to live that way - most people do it just fine.
If, however, you are a good participant in the consumer economy, and spend every dollar that you make (and two pennies besides), a downturn may be tough to weather. You might even have to... not renew the lease on that second Tesla.
People with windfalls are often surprised how much they owe.
As an example, below 1M, I am told, Uber only withheld 25% from vested (taxable) RSU grants.
It was worse in 1999. I knew a few people who blew everything they took out at 1Y with the expectation there was more to come. They ended up with significant tax debt due to under withholding once the market crashed and there wasn’t more to come.
You forgot one key thing. Don't stop learning. Too many former colleagues of mine got busy, got comfortable, or both, and now find themselves in a limited job market.
And now they'll be a little less of each.
The lessons they can learn from this experience could put them ahead of the pack. We have an entire generation that knows nothing but post-crisis bull markets. When the next downturn comes, those tempered by bad experiences have the opportunity to position defensively and react nimbly. (Or at least more defensively and nimbler than their peers.)