Lawyers are smart and generally hard-working so why do so many of them seem to have money management issues?
We all know the lawyer who hasn’t yet bothered to set up 401(k) deductions, spends every cent he makes, and has no idea who much he actually spends. We all know lawyers who earn great salaries but are barely keeping up with their law school debt—and who don’t bother looking at financial statements or planning much for the future. Why are these smart people so adverse to dealing with their own money?
One of the contributors to the stress lawyers experience, no matter how much money they earn, is that many of them are not very financially confident. The cost of going to law school continues to rise, and new lawyers continue to drown in debt. Experts have suggested that law schools should offer financial education geared specifically towards legal professionals to combat this all-too-common problem.
Some Lawyers Are a Bit Behind Others
Once lawyers fully enter the working world, they often don’t move on to the next level of financial savviness and planning that a well-paid professional should. A few extra years of living as a cash-strapped student while peers are already doing things like building towards retirement and saving for a home leave their mark. For those who go the BigLaw route, suddenly having a high-stress, high-paying job (with years of paying off crushing debt still ahead), can be an odd position to be in. For lawyers who don’t come from wealth, earning such a high salary can lull them into a false sense of not having to worry about money at all, while grappling with the reality of paying a huge, inescapable bill every month. Coupled with not tracking savings and spending, a lack of any financial strategy will likely result in problems down the road.
Many Lawyers Are Intimidated by Math
We’ve all heard at least one joke about lawyers’ lack of math and science skills. But for some lawyers, a discomfort with numbers is exactly what spurs them to avoid budgeting and learning more about investments. Yes, some of these highly intelligent, hard-working people who got through the rigors of law school are put off by a little math.
The good news is that lawyers can put those big brains to use for themselves by learning the basics about concepts such as retirement saving and investing, and using an app to track expenses and budget. It doesn’t need to be a difficult or time-consuming endeavor, and becoming more financially educated and ultimately, comfortable, has only an upside.
Lawyers Are Busy
That lawyers are time-challenged is not new information. The practice of law can consume one’s life for long stretches, and anything not connected to work or the necessities of living can fall by the wayside. Many lawyers are simply convinced they don’t have time to create a budget or to sit down and make 401(k) elections—but the real issue is that they don’t consider these actions important enough to make the time.
This is where the ease of automation comes in. Making the one-time effort to set up automated monthly bill payments—including loan payments—as well as automated deductions for retirement and savings accounts will ultimately save time and hassle later. A brief meeting with a financial planner (often provided by employers for free) will help you get a basic understanding of how a 401(k) works and what elections you should make, giving you the opportunity to set your deductions and not have to worry about them again until an annual review. These things don’t take hours, and putting them off has no upside.
Lawyers Are Terrible at Self-Care
If you think about the act of managing your finances as part of self-care, it makes sense that lawyers often neglect it. Lawyers are notoriously bad at caring for themselves—taking vacations, sleeping enough, fitting in exercise—in the most basic ways. Planning for the future and budgeting may not be on the same level as getting enough sleep, but they are necessary and, importantly, take place outside of actual lawyering. So these tasks become one more thing lawyers push to the side in favor of billable hours.
But like neglecting physical health, neglecting financial health will eventually take its toll.