242 | 6 Habits That Keep Lawyers Broke

Are your money habits keeping you broke?

I’ve personally had habits that kept me stuck financially in the past, and I’ve seen other lawyers experience the same over the years in my time as a money coach.

In this episode, let’s talk about 6 habits that will keep you broke and prevent you from building wealth.

• • sacrificing the future for the present
  • putting yourself last
  • focusing on lack
  • comparing yourself with others
  • believing you deserve things
  • caring more about appearances than reality

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You’re listening to Personal Finance for Lawyers. I’m Rho Thomas, and as a busy wife, mom, and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today we are talking about six habits that keep lawyers broke. Now, some of these are things that I personally experienced. All of them are things that I’ve seen my clients deal with, maybe not all at once, but they’ve dealt with some of these at some point, and they all are things that are going to hinder your wealth building and keep you in the struggle cycle, keep you in that broke place. And so I want to help you avoid them. So let’s get into them. The first one is sacrificing the future for the present. If you’re in the habit of sacrificing the future for the present, it means that you are only thinking about right now, and you don’t think about what’s going to happen in the future. Often it’s spending all your money on things that you just want now. I see this thing I want it. I’m not thinking about the unexpected expense that could come up. I’m not thinking about the emergency situation or the fact that there is another thing down the line that I know is coming up, but I’m not planning for it, right? When you’re sacrificing the future for the present, you’re not practicing delayed gratification. It’s like, I want this thing right now. I’m buying it regardless of what’s happening in the future. And it’s one of these things where, like, I’m not big on deprivation, right? A lot of times with personal finance, they teach like, don’t go out to eat and don’t go on vacation if you have debt or if your finances aren’t where you want them to be, like you should just sit in the house and look at the wall. I don’t think that works, and I don’t believe in just sitting and not doing anything until you get your finances in order, however, there is some measure of sacrifice or deprivation involved, because it’s like you are intentionally saying I could spend X, but I’m not going to spend X, I’m going to spend less than x, and I’m going to use that money that I’m not spending to be able to set aside for improving my finances. So you would put that money aside for the unexpected thing that’s inevitably going to come up, or for that you know, expense that you know down the line, whatever future thing that you have coming up, and being able to not do something in the present, to put off doing the things that you’re thinking about in the present in service of your future is going to help you in your wealth building journey. So that is the first habit. If you’re sacrificing your future for the present, you want to stop doing that and flip it. You want to be thinking about the future. Still able to do those things that you want to do in the present, but making sure that you’re thinking about the future as well. So all right, the next one is kind of similar, or kind of goes hand in hand. It’s related, but there’s a little nuance here, and it’s putting yourself last. So when I say that, what I mean is a lot of times when lawyers first come to me, they tell me that they’re not able to save because there’s never anything left at the end of the month, or they’re never able to make extra debt payments or things like that. And it’s because they’re putting themselves last. So they’re looking at all of the other expenses, spending all the money throughout the month, and then they get to the end and look at whether there’s any money left to save or to pay off debt or invest or whatever you want to flip that you want to put yourself first. And what I do with my clients is we look at whatever financial goal they have, and we plan for it at the beginning of the month, and we will set that money aside in savings. So it could be, for example, let’s say they’ve got a savings goal. We are going to take that money at the outset and set it in savings. It might not be the entire savings amount, because, you know, maybe it’s a large amount that they want to save, and we are going to maybe take some from their first paycheck, like take half of that goal from the first paycheck and put it in savings, and then take the other half from the second paycheck. But the point is, it’s coming out off top, we are not looking at what crumbs are left over after they spent all the money and buy all these other things and pay all these bills and whatever other expenses come up. Right? A lot of times it’s like, you know, getting stuff for the kids, or they feel guilty because this co worker is doing this charitable organization thing, and they want them to donate or contribute to it, or whatever, and none of those things is bad or wrong, but you want to make sure that you’ve taken care of your goals first, instead of seeing what’s left at the end. So I want you to flip if you are constantly putting yourself last and you get to the end of the month and try to see what’s left to save or pay off debt or whatever, flip it. Take your stuff out first, and you’re planning your spending, right? So I’m not saying take all of your paycheck and put it in savings and then you can’t pay your bills. We’re planning this. It’s something that’s realistic. But take your goals, your the money that you want for your goals, out first, and then from there you’re spending, you’re paying your other expenses, etc. That’s going to help you to be able to build wealth and move forward with your finances. All right, the next habit is focusing on lack so often, when I first start working with someone, they are focused on all the things that are going wrong in their finances, how much you know they don’t have in savings, how much debt they have, how they’ve made, all of these mistakes, all of that kind of stuff. And it is one of the biggest things that will keep you from actually improving your finances, because when you’re thinking about all the lack all the things that you don’t have, all the things that you’ve done wrong, it makes you feel really bad, and you’re never going to feel motivated to actually do the things you need to do to improve your finances and move yourself forward. If you’re always beating yourself up and focusing on how you don’t have anything in savings, or you have too much debt, or whatever it is. While it may be factually true that you don’t have money in savings or that you have X amount in debt, you don’t have to keep focusing on it and telling yourself that. Because just like those things might be true, there are also other positive things that are true about your finances as well, and so you can choose to focus more on those things. There are inevitably things that you’re doing well with your finances, like paying your bills on time. Maybe you don’t have as much as you would like in savings, but you have some money in savings, right? Those types of things are still good, and when we focus on the things that are going well, when we focus on the things that we do have, then we feel a little bit more encouraged. We might feel motivated, and that’s the energy that’s going to actually propel you to look at what’s happening with your finances and make the changes that you need to make, and do that work. Because if you’re always beating yourself up about mistakes and you don’t have enough and whatever else, you’re just going to perpetuate that, because all the energy that you’re giving to looking at what you don’t have and thinking about what you don’t have and feeling sorry for yourself is energy that you can’t use to fix it all right? So if you are in the habit of focusing on lack all the time, I want you to practice focusing on the other side. What else is true about your finances? Because it’s not all bad. What are the things that are going well? All right, number four is comparing yourself with others. Now this comes in kind of two flavors, if you will. So on one hand, it’s comparing yourself with others in terms of the things that they’re able to do or buy. So a lot of times, what comes up is seeing people who were able to take this vacation, or seeing people who were able to buy that car or that house, or whatever it is, right? And comparing yourself and thinking that if they did it, you should be able to do it too. But then I also see this in terms of seeing that this person was able to save X amount, or that this person was able to do this type of investment or those types of things, and feeling bad about yourself if you’re not there to and so in both instances, I want you to not compare yourself to what’s going on with someone else, because you have no idea how they’re doing the things that they’re doing with respect to those more material, experiential type things like the vacations or the car or the house or whatever, you don’t know what happened in the background that allowed them to be able to do that thing? I’ve heard stories of people who are drowning in debt, like financing these types of vacations and stuff like that to portray a certain lifestyle on social media. I’ve also heard stories of people being able to get money from their parents to help with their down payment for their first house. Like you just don’t know what’s happening in the background, and if you’re comparing yourself with them, you might not be making an apples to apples comparison. Same thing with respect to people who are able to make certain accomplishments happen. You don’t know how they were able to do it, and there’s no objective measure of where you should be at a certain point in time, right? Like all of those charts and stuff that say, like, Oh, by age 30 you should have this much in retirement. By age 35 you should have this much saved. Like, there is no objective measure, because personal finance is personal. And so what I want you to do, and what I always tell my clients, is compare yourself to yourself. So if you’re better now than you were a month ago or a year ago or whatever, then that’s great. You’re doing great. But comparing yourself to other people is never productive. It’s never useful, and it’s something that often makes people feel less motivated to do the things that they want to do with their finances. It makes them feel bad, makes them feel discouraged, rather than helping them to make the progress that they want to make. Now if you want to look at others as inspiration, then I welcome that. That’s something that helped me in my journey. I went from comparing myself to other people, thinking that I should be as far along as they were and that kind of thing, to seeing, okay, this person was able to do this. If they could do it, I could do it too. So I think looking at what others are doing in that way can be helpful. But if you’re looking at other people, comparing what you’re doing with what they’re doing, and making it mean that you’re you’re not doing enough, then that’s not helpful. So don’t do that. That’s going to keep you stuck. All right. Number five is the habit of believing that you deserve things. I am sure you’ve heard. Maybe you’ve even said, I work hard, I deserve it. And I always say, it’s not about whether you deserve it, it’s whether your finances can handle it, can your finances support you making whatever the purchase is that you’re thinking about. Because if you’re thinking like, oh, well, I deserve it. I work hard, I deserve it. Sometimes it leads to making purchases that aren’t the wisest. It leads to making purchases that put a strain on your finances, because you’re just thinking, I deserve this thing because I’m a lawyer, because I put in these hours or whatever. So what we want to do is look at okay, this is where my finances are. This is how much money I made. This is the money that I’m setting aside for my goals. These are the payments that are already coming out, right? And looking at all of those things, looking at the expenses that you already have. Can your finances handle taking on whatever the new expense is that you’re thinking about? Because if not, then whether you deserve it or not, it’s not a wise decision to make that purchase. So I don’t want you to be in the habit of looking at or believing that you deserve things, and so you’re buying stuff just because you, quote, deserve it. I want you instead to think about, can my finances support this purchase? If so, then great, by all means, get it. But if not, then maybe you put that decision off for a later date when your finances can support it. All right and number six is caring more about appearances than reality. So I see a lot of times kind of similar to we were just talking about with I work hard. I deserve it, with people thinking that I should have this because I’m a lawyer. Lawyers have this kind of house, lawyers have this kind of car. Lawyers wear these types of clothes, lawyers go to these types of places. And it’s more about the appearance of what’s happening and looking like a successful lawyer and whatever else than what’s actually happening with your finances. I have seen people drowning in debt because they’re making these purchases. And it’s like, every time they get a raise or they get some sort of promotion or whatever, they move up in seniority at their firm, then they move up the level of their house or their car or that kind of stuff too. And you do not want to be in that position because it’s so stressful when it’s like, I’ve got all this stuff. I’m, you know, I’m the successful lawyer that has this kind of house and this kind of car or whatever, but inside, like, at night, you’re crying because you can’t figure out how to manage the finances. Like, it feels like you’re on this hamster wheel and you don’t know how to get off. So I don’t want you to care more about the appearance of looking wealthy, of looking like a successful lawyer, then you care about your actual finances. There’s a great book called The Millionaire Next Door. And what I love about the book is it kind of debunks this myth, this idea that we have of what wealthy people live like, because I think in the media and on social media, especially like we see people with the big, fancy houses and the cars and, you know, whatever else. And that’s not to say that there aren’t wealthy people who buy those things. There definitely are. But that book The Millionaire Next Door talks about how a lot of times the Millionaire is your neighbor or it’s your coworker, and you just don’t realize that they are millionaires. They don’t have these external markers of wealth. They’ve got a modest, regular house, regular car, whatever, but they have been very prudent with the way that they’ve managed their finances to that to the point that they have built their net worth that way. That’s my story. Like my neighbors probably would not suspect that my husband and I are actually millionaires. We live in just a regular house, we drive regular cars, all of that stuff, but it’s because we’re not more concerned about the appearances than we are of our actual finances. So I want you to think more about what’s happening with your finances, similarly to what we talked about with number five, when you believe you deserve things, right, like making purchases in line with what your finances can actually afford, making sure that you’re thinking about your financial progress, your financial health, and not just the appearance of being a successful lawyer, right? I don’t want you to be more caught up in looking wealthy than actually building wealth. All right, so those are the six habits that keep lawyers broke. I hope that it is helpful for you. If you would like to go more in depth on how to build wealth, I want you to join me in the less debt, more money, master class. The next one is happening on January 11 at 1pm Eastern Time, and you can sign up at Rho thomas.com/less debt, even if it’s after that date, the next one should be posted. All right, so that’s it for this week’s episode. I hope it’s been useful to you. Please take a second and subscribe to the show if you haven’t done so already. That helps to get it in front of more lawyers, so that more lawyers can get their hands on this information. And as always, I appreciate your support. As we close out, friend, I pray that you take the information you learn here, apply it in your life and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to take back control of your time, build wealth and live the life of freedom and choice you deserve. Talk to you later.