Maximizing Income as a Software Engineer(ourmoneymentality.com)
ourmoneymentality.com
Maximizing Income as a Software Engineer
https://ourmoneymentality.com/how-to-maximize-your-income-as-a-software-engineer/
48 comments
In many ways this is a SV / USA bubble. Tech pays well in other countries too, but nowhere near those levels.
I think in many ways tech salaries as still depressed. We forget about the Apple / Google / Adobe / eBay / Intel salary fixing ( https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L... ). Since SV 'set the bar' for salaries I think that deal depressed the tech compensation until today. The period when salaries were intentionally depressed (2005 to 2009) was especially important for the growth of the industry with mobile phones and cloud computing starting then.
I think in many ways tech salaries as still depressed. We forget about the Apple / Google / Adobe / eBay / Intel salary fixing ( https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L... ). Since SV 'set the bar' for salaries I think that deal depressed the tech compensation until today. The period when salaries were intentionally depressed (2005 to 2009) was especially important for the growth of the industry with mobile phones and cloud computing starting then.
I feel you bro, the struggle is real, it's a shame not all dev jobs are as inherently interesting as those at Xerox Parc in the good old days. If you enjoy tech, sometimes the best option is to code for the $$$ during the day and enjoy yourself coding at night. Same thing goes if you want to be a marine biologist, you'll first have to be a millionaire and then you can study the asexual reproductive cycle of micro organisms at the bottom of the ocean.
Another way to be a marine biologist is to draw cartoons :-p
https://en.wikipedia.org/wiki/Stephen_Hillenburg#Early_caree...
https://en.wikipedia.org/wiki/Stephen_Hillenburg#Early_caree...
In every successful industry you'll see scammers pop up. I've also seen those videos and usually at the end of it they'll try to sell you on their course, private membership forum, or something like that.
Also, the iOS app boom is clearly over, so I wouldn't trust anyone that claims learning Swift will lead to a comfortable retirement.
That said, even for projects that you do as a calling, I still believe you should charge a lot, simply to make others and especially business types respect you.
Also, the iOS app boom is clearly over, so I wouldn't trust anyone that claims learning Swift will lead to a comfortable retirement.
That said, even for projects that you do as a calling, I still believe you should charge a lot, simply to make others and especially business types respect you.
On the bright side, most people who are only in it for the money will not do as well as people who are passionate about it, because a passionate person can naturally spend their spare time learning and tinkering, so will improve more. Someone who's not passionate about it will probably burn out if they force themselves to spend their spare time on something that doesn't interest them a lot.
So there's a "Make Work/Life Balance Key" section with no argument as to how that maximises income and the very next section is "Always Be Working on a Side Hustle". What?
> A side hustle can provide supplemental income while providing you security if something goes south
What kind of money-making side-hustle can layer on top of a 40-50 hr/week job and _not_ negatively impact work/life balance? Pretty unconvincing.
> A side hustle can provide supplemental income while providing you security if something goes south
What kind of money-making side-hustle can layer on top of a 40-50 hr/week job and _not_ negatively impact work/life balance? Pretty unconvincing.
> What kind of money-making side-hustle can layer on top of a 40-50 hr/week job and _not_ negatively impact work/life balance? Pretty unconvincing.
There is a big difference between running a side hustle to make a little money on the side and running a side hustle with the objective to eventually found the next big thing startup.
The former is pretty doable in my experience. I have three friends that run small volume productions of different speciality physical goods in their basements. From what they told me independently most work is packaging and shipping; "Once the CNC runs, it runs...". One of my friends sells art. I rent out property and there is always some work to do but overall it is pretty much doable besides a regular day job, having a family and maintaining work/life balance. I'm sure there are a ton of other examples, the only caveat here is that all that I can think of need at least a little investment.
There is a big difference between running a side hustle to make a little money on the side and running a side hustle with the objective to eventually found the next big thing startup.
The former is pretty doable in my experience. I have three friends that run small volume productions of different speciality physical goods in their basements. From what they told me independently most work is packaging and shipping; "Once the CNC runs, it runs...". One of my friends sells art. I rent out property and there is always some work to do but overall it is pretty much doable besides a regular day job, having a family and maintaining work/life balance. I'm sure there are a ton of other examples, the only caveat here is that all that I can think of need at least a little investment.
I agree. Depends on the situation: if you are single and by life you mean going out, dating and having some trips then it's one thing. If you are married with children, especially young, I think the side hustle is a no-go.
In my experience, the best ways to maximize your income as a software engineer are to job hop, study data structures/algorithms, and learn how to market yourself. Companies rarely reward engineers who stay put.
> In my experience, the best ways to maximize your income as a software engineer are to job hop
Until you find a good situation and stick with it. A good situation shouldn't be discarded on a whim.
Until you find a good situation and stick with it. A good situation shouldn't be discarded on a whim.
Sure, but continuing to job hop will still get you more compensation more quickly.
When you're in a good situation you're usually around the top of your pay grade.
And when you're among the top most respected and authoritative persons in the room, it is usually a sign that you should be moving on to a different room or company to get better experience / skills.
And in such a situation, if you're highly compensated because you've job hopped, moving on to get a better experience or skills might mean that you have to take a pay cut. No one's stupid enough to pay a job hopper well above market value.
Edit: Furthermore, there's a well-defined career track for job hoppers, it's called being an independent contractor. You know what you're worth and you set your rate, and it's generally assumed that you know how long you're going to stay in a position when you start, and you only accept positions that are the length you want.
Edit: Furthermore, there's a well-defined career track for job hoppers, it's called being an independent contractor. You know what you're worth and you set your rate, and it's generally assumed that you know how long you're going to stay in a position when you start, and you only accept positions that are the length you want.
Practice negotiating.
The article says it and I fully agree, you need to be able to verbally stand your ground when time comes to discuss your compensation.
As a CTO, I have seen first hand that overconfident amateurs can pass the external HR tests and an interview with my CEO just fine. And then I'm left dumbfounded during the technical interview because our $200k annual engineering candidate cannot explain what threads are, despite claiming 5 years of experience building multithreaded systems.
Also, I did get bitten by the American way of doing business where everything that isn't written in a contract or the companies financial books isn't worth anything. Never do gentlemen's agreements with US companies.
Oh and there's one very easy lever if companies are unwilling to pay your full price: you just work less. Offer them 20 hours a week for their suggested monthly rate and then a month in you can ask if they would like to increase your working hours. At that time, you can then say "I'm sorry I cannot work for less per hour than before"
So basically it's all negotiation. If you are truly skilled, almost nobody will offer you a fair price right away, because all of them have been burned by overconfident amateurs. But imagine how you'd feel if you notice a year in that your incompetent coworker is making twice your salary. Being paid highly will also automatically grant you decision power and respect.
So no matter what else you do, practice negotiating. It's the single most important skill, assuming that you're generally capable at your job.
And good people skills will also spill over to all other aspects of your life, like getting laid.
The article says it and I fully agree, you need to be able to verbally stand your ground when time comes to discuss your compensation.
As a CTO, I have seen first hand that overconfident amateurs can pass the external HR tests and an interview with my CEO just fine. And then I'm left dumbfounded during the technical interview because our $200k annual engineering candidate cannot explain what threads are, despite claiming 5 years of experience building multithreaded systems.
Also, I did get bitten by the American way of doing business where everything that isn't written in a contract or the companies financial books isn't worth anything. Never do gentlemen's agreements with US companies.
Oh and there's one very easy lever if companies are unwilling to pay your full price: you just work less. Offer them 20 hours a week for their suggested monthly rate and then a month in you can ask if they would like to increase your working hours. At that time, you can then say "I'm sorry I cannot work for less per hour than before"
So basically it's all negotiation. If you are truly skilled, almost nobody will offer you a fair price right away, because all of them have been burned by overconfident amateurs. But imagine how you'd feel if you notice a year in that your incompetent coworker is making twice your salary. Being paid highly will also automatically grant you decision power and respect.
So no matter what else you do, practice negotiating. It's the single most important skill, assuming that you're generally capable at your job.
And good people skills will also spill over to all other aspects of your life, like getting laid.
Upon reading this article, I came to the conclusion that there is nothing particularly special about these points except arguably the second to last point - don't these points apply for anyone in any corporate job? For the exception point, many professions simply cannot pursue a side hustle that can really pay off because their day jobs consume them by nature of their profession being such like doctors, so software engineers have some leeway in theory. Sure, many doctors do have side hustles and passions, but they almost always intersect with their profession in some way. Most of my side passions take almost zero knowledge or experience with software, yet people will probably not care unless I explain what I do for a day job with the social proof of competence that brings with it.
I don't really agree with the promotion advice. You simply have to assume that the only way to get a promotion in a reasonable timeframe is to leave the company and get the title increase in a new job.
> Negotiate In The Beginning and Never Take A Companies’ Word As Payment
More people than you would expect need this advice.
In addition, I have to lecture people that you want to have a higher starting title because that gives you a higher top end to your salary band for raises without needing a promotion.
The ONLY point at which you have leverage over a company is before you take the job. You don't have to rake them over the coals for every single penny, but you should know what you are worth and negotiate for it.
I will also say that if you are working with a smaller company, you might want to apply some creativity to your negotiation. Maybe they can't match your salary numbers, but they could give you twice or thrice the paid vacation (that has value). Or, they may not be able to pay you a cash bonus, but maybe they can provide you with something (services, products, reimbursement for domestic help, foreign travel to conferences, etc.) because it comes from a different budgetary bucket.
But, as always, get it in writing.
> Negotiate In The Beginning and Never Take A Companies’ Word As Payment
More people than you would expect need this advice.
In addition, I have to lecture people that you want to have a higher starting title because that gives you a higher top end to your salary band for raises without needing a promotion.
The ONLY point at which you have leverage over a company is before you take the job. You don't have to rake them over the coals for every single penny, but you should know what you are worth and negotiate for it.
I will also say that if you are working with a smaller company, you might want to apply some creativity to your negotiation. Maybe they can't match your salary numbers, but they could give you twice or thrice the paid vacation (that has value). Or, they may not be able to pay you a cash bonus, but maybe they can provide you with something (services, products, reimbursement for domestic help, foreign travel to conferences, etc.) because it comes from a different budgetary bucket.
But, as always, get it in writing.
There is an age old tradition among programmers: once they have a couple of years of experience they decide to start a blog to explain to everyone all this exciting stuff they know. They believe that all you have to is be smart and think about things and it's reasonable to start telling other people how to do it, even while having little to no track record and only having done it themselves for a short time in a single narrowly specific context (or in this case probably never).
This person is an entry level software engineer. There is basically no reason to think they can give any kind of insight into how promotions and raises work, since they've never been in the room making decisions about promotions and raises. The advice in this blog post boils down to "if you want a raise, 1. try to get promoted, 2. negotiate for more money, 3. try to get promoted, 4. work life balance, but then unironically 5. when you aren't at work, always be doing different work and finally 6. if this advice doesn't work for you it's your fault"
It's cute.
This person is an entry level software engineer. There is basically no reason to think they can give any kind of insight into how promotions and raises work, since they've never been in the room making decisions about promotions and raises. The advice in this blog post boils down to "if you want a raise, 1. try to get promoted, 2. negotiate for more money, 3. try to get promoted, 4. work life balance, but then unironically 5. when you aren't at work, always be doing different work and finally 6. if this advice doesn't work for you it's your fault"
It's cute.
I’m still happy people are writing about these things and that’s making conversations happening. What he described could happen to anyone at any level.
Hi all - author of the post here! I'm not 100% sure why the post was flagged, but I did want to drop by and thank everyone who commented - both positively and negatively. I thought it'd be interesting for people to hear my story and get another perspective on a dev career. I do apologize to anyone who felt it didn't live up to their expectations. I think some of the ideas are obvious to some people, but definitely not all (like myself). Like all things, I'll use your feedback to improve my writing and keep on iterating. Have a great day today, everyone :)
I got lucky at a startup and ended up with stock currently worth around $1.3M though could see it doubling the next round. I’m not that motivated career wise though and in some ways having a nest egg that could likely stretch into retirement at a relatively young age is a bit demotivating oddly.
The value of a thing is defined as the amount you can sell it for. Valuation based on fundraising rounds is not how much you can sell your stock for.
Your stock may be worth a lot more if/when it is finally liquid, but it is much much more likely that it will be worthless. There are many ways that your shares can end up worthless while the founders (or more likely investors) of the company cash out millions of dollars. Be careful to avoid being dependent on that stock in how you plan your finances.
Your stock may be worth a lot more if/when it is finally liquid, but it is much much more likely that it will be worthless. There are many ways that your shares can end up worthless while the founders (or more likely investors) of the company cash out millions of dollars. Be careful to avoid being dependent on that stock in how you plan your finances.
I’ve already cashed out some in a company sponsored secondary round, so there’s definitely a market for it. Again, I got lucky, and the company is actually doing well from what I can tell (haven’t worked there for a number of years now)
My opinion is that switching jobs is always the strongest way to increase salary.
I don't know why, maybe human nature, but it seems that compensation for new hires is more competitive than internal salary increases.
That said, other compensation like stock and espp can dwarf your salary if you're at a growing company.
I don't know why, maybe human nature, but it seems that compensation for new hires is more competitive than internal salary increases.
That said, other compensation like stock and espp can dwarf your salary if you're at a growing company.
The reason is fairly straightforward. Companies get more bang for their buck with new hires. They can pay 20k to get a new hire. Or they can pay their entire staff 20k more each to reduce their turnover by one employee.
It still doesn't make a lot of sense. There's a lot of risk in a new hire because you can only vet them so well. On the other hand you know how good your current employees are and they have very valuable internal knowledge you couldn't pay for if you wanted to.
Sure, improving employee retention is better than improving employee acquisition, but it's not 10x better. Each dollar just goes so much farther towards acquisition than retention. Basically money is a more important to people when they decide which job to take than when they decide whether or not to quit.
Is the goal to maximize your income? It seems like if that’s the goal and you are playing to win, you might make a lot of questionable choices to get that win
Not speaking about the article, just in general. Eg, there is an article about jp Morgan and climate change on the front page too
Not speaking about the article, just in general. Eg, there is an article about jp Morgan and climate change on the front page too
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I find this a little pedantic. If someone talks about maximizing their salary, it doesn't mean literally maximizing it at all cost. If someone tells you that they're interested in maximizing their income, it means that they'd like to take steps to increase their income, not that they've lost all of their morals or any other goal in life to do so.
Imho, the best way to be high paid is a social activity. Nowadays most parts of companies try to find someone who has good references somewhere. Taking part in conferences or having a good place in competitions(I am from data science domain), or writing interesting open-source project can give you more money than working hard hours
> good place in competitions(I am from data science domain)
Do people actually commonly care about that these days? Good papers / leaderboard positions on shared tasks I get in data science but competitions as in Kaggle et al? My brain defaults to interpreting that as "had time to waste working for free, for whoever put up that competition". Seeing that in an application package has about as much influence for me personally as some random certification.
Do people actually commonly care about that these days? Good papers / leaderboard positions on shared tasks I get in data science but competitions as in Kaggle et al? My brain defaults to interpreting that as "had time to waste working for free, for whoever put up that competition". Seeing that in an application package has about as much influence for me personally as some random certification.
Simply "being promoted" won't work past a certain point. You will get called out in competitive workplaces if you don't have actual skills. Yes, having an aggressive personality can get you promoted. In my opinion the best was to maximize your income is to work hard building real skills and then join a top, high potential company as a highly experienced/expert hire
Also the grind is painful. You're better off minimizing your expenses (low CoL) and living on a modest wage in my opinion
Also the grind is painful. You're better off minimizing your expenses (low CoL) and living on a modest wage in my opinion
That's what you hope I'm afraid.
The problem is ... where to go once you do this? Let's say you get (very) high wage sorted. Not C-level, so close to $200k, and over a long time it'll go to $350k. You get some side income through the stock market and property (which as it turns out was the right choice: property works better with $ (because mortgages have ridiculous leverage and are very low risk), stock market works a lot better with $$$, and there's a large space in between where property matters only in that owning the place you live in helps a lot). You do the tax optimization (which matters more and more the further you get, and starts being the main factor at a surprisingly "low" wage. I guarantee that anyone making $100k can make more with tax optimization than with a promotion).
But promotion, even in the very best of places, with quite good taxes, has very diminishing returns. A promotion takes new skills, more work, and let's say a 10% bump in salary (higher percentage increases seem to only happen at the low end. I got a 180% wage increase at one point but now that would be ridiculous). I mean I guess there's the executive promotion but I have no idea how people get that. These executives certainly aren't smarter or more effective than I am, so ... There comes a point, surprisingly low (let's say $200k a year), where chasing promotion is just not worth it, as a 10% before tax raise will only get you 2-3% actual more money. And generally speaking even the $350k or so I'll eventually probably get to will only get me $60k or so more income.
I get the impression the only real way up at this point is starting a company, or at least starting to work for a company I have significant ownership in. Plus I fantasize it comes with more independence (although I lead teams now for more than a decade. Any illusions of control you have as a TL or manager didn't really survive). Truth is that I'd be surprisingly strongly affected if I were to get fired, and while I've always been able to find a new higher paying job rapidly (I left a lot of jobs early in my career because I found something better. "A lot" is about 6 btw, over now 17 years, not counting effective job changes while consulting), and I hate the risk this represents. I also don't think that'll happen, but there are certainly circumstances that would cause just this.
So starting a company. Something. But how to do that?
But promotion, even in the very best of places, with quite good taxes, has very diminishing returns. A promotion takes new skills, more work, and let's say a 10% bump in salary (higher percentage increases seem to only happen at the low end. I got a 180% wage increase at one point but now that would be ridiculous). I mean I guess there's the executive promotion but I have no idea how people get that. These executives certainly aren't smarter or more effective than I am, so ... There comes a point, surprisingly low (let's say $200k a year), where chasing promotion is just not worth it, as a 10% before tax raise will only get you 2-3% actual more money. And generally speaking even the $350k or so I'll eventually probably get to will only get me $60k or so more income.
I get the impression the only real way up at this point is starting a company, or at least starting to work for a company I have significant ownership in. Plus I fantasize it comes with more independence (although I lead teams now for more than a decade. Any illusions of control you have as a TL or manager didn't really survive). Truth is that I'd be surprisingly strongly affected if I were to get fired, and while I've always been able to find a new higher paying job rapidly (I left a lot of jobs early in my career because I found something better. "A lot" is about 6 btw, over now 17 years, not counting effective job changes while consulting), and I hate the risk this represents. I also don't think that'll happen, but there are certainly circumstances that would cause just this.
So starting a company. Something. But how to do that?
Sounds reasonable. Except for the 'more work' part? I don't have any evidence that management works any harder than Engineering.
What about becoming an expert at some niche technologies, writing prolific open source software contributions, and getting contracted as a highly paid consultant to guide the implementations in other company’s products?
Instead of this, how about writing something titled “How to maximize life satisfaction and happiness as a software engineer”?
That's much more difficult, because you can't stick a number on those things. I agree they're important, though.
The other option is lowering your expenses -- for example, working remotely in a city where your rent is much cheaper.
Maybe option is not the right word, as it suggests it's alternative, but you can do that and also apply some of the advice in TFA.
But yes, remote work can be a great way to maximize happiness and savings (if it works for you, not everyone is happy with it).
But yes, remote work can be a great way to maximize happiness and savings (if it works for you, not everyone is happy with it).
The income penalty you incur when you restrict yourself to remote only jobs generally vastly exceeds the 30k/year or whatever you save on rent by moving somewhere cheap.
Unless your current spending is extremely reckless, cutting expenses typically makes less of an impact than increasing income. If you currently spend 60k, you cannot cut your expenses by more than 60k, but you can definitely increase your income by more than that if you manage your career properly.
Unless your current spending is extremely reckless, cutting expenses typically makes less of an impact than increasing income. If you currently spend 60k, you cannot cut your expenses by more than 60k, but you can definitely increase your income by more than that if you manage your career properly.
Generally that high rent is an opportunity cost. Saving 3k/month by living in rural Wyoming instead of NYC when you’re in your 20s is not desirable unless you want to be a really sad person with no friends.
The takeaway is that you are responsible for your career. Not the company.
I imagine if you read this comment it doesn’t apply to you (you care enough to be on a forum about tech) and I realise you can do both - enjoy tech and want to earn more (which is fair, I do too). But seeing Tai Lopez style adverts on YouTube about learning JavaScript and React is just sad and negatively impacts our field.
As Alan Kay said on another thread, he and his contemporaries worked at Parc because it was “their calling” and only one wanted to make money. Nowadays the focus sadly seems to be comp first and passion second.
Edit: Just went to watch a video and had a recommendation titled "Java, Python, PHP, JavaScript, C++, C#... WHO MAKES MORE MONEY?". Point, I think, made.