Lawyers are hard-working, intelligent, and generally sensible people, so why are they so prone to overspending?
What Makes Lawyers Spend?
If you’re a lawyer, it’s probably no surprise that studies consistently show being a lawyer is one of the most stressful professions. Between the pressurized work environment, long hours, constant client demands, and the crazy billing, you may tend to neglect everything that you view as not essential to your work or yourself.
For many lawyers with this mindset, financial planning and budgeting may just seem like another nuisance they don’t have time to worry about, especially when they’re earning a six-figure salary. In the context of your hard work, high paying salary, and the little time you have to enjoy the lifestyle perks that everyone says should come with that generous salary, you may feel you deserve and can afford to spend however much you want. But even though your job may give you some financial wiggle room, unrestrained spending can destroy any financial cushion and quickly deplete your savings, in addition to the money you need to put towards student loans. In the long-term, overspending can wipe away any financial flexibility and restrain your ability to put away money for your future.
Changing Your Money Mindset
Before you can effectively break the habit of overspending, you have to change the way you see money. First, understand that just because you have money to spend does not mean you should spend it. Replace the “if I have it, I spend it” attitude with “if I absolutely need it, I spend it.” Remember, do not confuse need with want—just because something is on sale or your friends have it doesn’t mean you need to buy it. If you have difficulty with impulse spending, try to think about how you might otherwise be able to spend your money rather than blowing it on new shoes or a Michelin-starred restaurant. While it may not seem like much, every few hundred dollars you choose to put towards a down payment on your future house or paying off your student loans instead of buying that new piece of clothing will seriously help you in the long run.
Also, don’t use money as a coping mechanism or to make yourself feel better. Studies have shown that retail therapy—shopping with the primary purpose of improving the buyer’s mood—is real. This is not to say that you shouldn’t spend money on the things and the people you love, but rather that you shouldn’t go on a shopping spree simply because you need a boost or had a tough day at work. If you’re frustrated at work or feeling down, there are better ways to blow off steam than shopping.
Replacing Your Bad Habits with Better Ones
In order to change your spending patterns, you need to understand and track what you spend your money on. Creating a budget is an extremely important step when it comes to mapping out your finances and getting a solid grasp of your overall financial situation. Budgeting apps and online budgeting tools are easy to use, so making a budget doesn’t have to be a hassle. When tracking your spending, don’t forget to highlight non-essential purchases, or the things that you choose to spend money on but don’t absolutely need. Sometimes when making a budget, simply visualizing the amount of money you spend on something, like streaming subscriptions or eating out at restaurants, can be eye opening.
If you’re having difficulty choosing which discretionary expenses to cut down on, prioritize the activities that give you the most joy and that you truly don’t feel you can do without. If you can’t eliminate something from your budget completely, think about implementing cost-cutting alternatives like taking the subway or walking to work instead of using Uber, or making dinner a few times a week instead of ordering takeout every night. At the same time, don’t cut out everything you enjoy doing for the sake of being frugal. Saving money is only sustainable when you strike a balance between spending on what you truly care about and sacrificing what you don’t.
Use more cash. To avoid the temptation of spending money every time a sale comes up or when you’re out with friends, give yourself a finite amount of cash to spend every week based on your budget. If you want to be more regimented, put aside specific amounts of cash in envelopes and label the envelopes based on what the money is reserved for. Using credit and debit cards can be dangerous, as one purchase can easily lead to another. When you’re using a card, money feels more abstract and you’re disconnected from the tangible amount you’re actually spending. Cash not only gives you a more immediate sense of how much you’re spending but will also prevent you from spending more than you have and accruing any type of debt. So try to use cash when you can, especially when purchasing those non-essential items.
Create goals for yourself. Besides making a budget, setting short-term and long-term goals for yourself is another great way to stay motivated and keep your spending in control. The combination of short-term and long-term goals will help reinforce to you that your newfound money discipline and prudence is building towards something. Treat these goals as challenges and don’t be hesitant to reward yourself if you successfully meet them. Again, splurging on yourself is okay every now and then as long as you do it responsibly and within the constraints of your budget.
Take the next two weeks to track your spending and create a budget, and get a start on avoiding overspending.