166 | How to Stop Feeling Like a Broke Lawyer

Many lawyers who make six-figure incomes and higher feel broke. This often has more to do with their money mindset and money habits than anything else.

In this episode, let’s talk about key takeaways from a recent Bloomberg article about six-figure earners in America titled “Are You Rich?” and some action steps that lawyers who feel broke can take.

• • why I believe many six-figure earners feel broke
  • comparing yourself to others
  • not controlling your spending
  • taking on more and more large expenses
  • not believing you have control of your finances

Bloomberg article: “Are You Rich?”

You’re listening to Wealthyesque. We are a community of lawyers who believe that true wealth is having control of our time. 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 how to stop feeling like a broke lawyer. I read this Bloomberg article called Are you rich that explored the way high income earners in America which they defined as people who made 175,000 or so or more per year, viewed their financial health. Shout out to Amanda for sharing this with me on LinkedIn and I’m going to link the article in the show notes. If you want to read it. You can find those at rho thomas.com/ 166. But I thought the article was really interesting and the biggest thing was a lot of the people who are making this income said they see themselves as poor or just getting by and while I think some of that may have to do with which part of the country they’re in, like a higher income is not gonna stretch as far in New York as it does in Utah, right? But I think money mindset and money habits play a much bigger part in it. And I found that the views of many of people in the article track with conversations I’ve had with many lawyers over the years where they have a household income that would be considered upper middle class or upper class, but they feel broken like they’re just getting by. And so because of the parallels between the article and things I’ve heard from other lawyers, I want to pull out some of the key things that I picked up on in the article that will keep you feeling broke and not moving yourself forward financially and we can talk about how to stop feeling that way. The first one is comparing yourself to others. One respondent in the article had a million dollar home and she said she feels rich when she’s in her small hometown, but she doesn’t feel rich in Florida where she lives because there are billionaires there but the fact that there are billionaires in one place and not in the other doesn’t change the objective fact of how much money she has. It’s this comparison and her thoughts about how much the billionaires have or the people in her hometown have that are making her feel that way. And you may find yourself in a similar situation where you know that you’re in a better financial situation than you were in growing up for example, but you don’t feel like you’re as well off financially because your friend just bought this house or you know, this nicer house indoors where they went on that vacation, where they have XYZ items that you don’t have, but none of that has any bearing on your financial situation or on theirs for that matter. You have no idea how they’re buying those things. So they could have the trust fund. They could be saving up for stuff. They could just be willing to rack up debt to keep up their lifestyle. We don’t know one thing I do know though, is if you are focused on trying to keep up with what other people are doing, you’re much more likely to take yourself off track from your goals which will keep you feeling broke. If you want to stop feeling broke. Stop comparing what you’re doing with what your friends are doing or what other people around you are doing. Focus on yourself and your own goals and use that to determine how well you’re doing and what you want to do to improve. The next thing keeping people feeling broke is not controlling your spending. One of the people in the article said quote honestly, the more money you make, the more your lifestyle kind of changes a lot. Your vacations and the restaurants you go to are more expensive. And that statement was reported like it’s just a given like obviously we make more you’re gonna go to more expensive restaurant and take more expensive vacations. But while it may be true that you can do more expensive things, when you make more, it’s important to recognize that those are choices. You don’t have to do those things just because you make more. You can control your spending by planning how you want to spend your money. You can include expensive restaurants, expensive vacations in your plan if you want to, but first, they’re not a given. And second, you can do so in a way that you don’t feel like you’re spending all your money and that you’re still able to achieve your goals. So if you want to stop feeling broke, make sure you plan your spending intentionally decide how much and where you’re gonna spend your money. Don’t just allow the spending to keep creeping up and throw your hands up and say Well, that just is what it is. Recognize that you have choices and make the choices that move you closer to your financial goals. The next one is kind of similar and it’s taking on more and more big expenses as your income increases. So one of the people talked about the mortgages on his primary and secondary homes and it’s three car payments. And I often see this with lawyers with buying a house or renting an apartment or getting a car that’s too expensive for their income to handle. When you have big expenses taking up huge chunks of your income. It’s gonna be a lot harder to make the progress you want to make on your finances, and you’re much more likely to feel broke. As you add more of those expenses or more expensive expenses. It makes it even harder. So if you want to stop feeling broke, try decreasing the percentage that those big expenses take up in your income. I recommend getting your housing payment to about 25% or less of your take home pay and your car payments are about 10% or less of your take home pay. When you start getting above that it cuts into the money you have for your other bills for other things you need things you just want to do and your goals. Alright, and the last one is believing there’s nothing you can do to change your financial situation. No one in the article explicitly said this, but that was the undertone of most of it. A lot of it came off as like this is just what’s happening for me financially. There’s nothing I can do about it. But that way of thinking will inevitably keep you stuck in the same place doing the same things. If you want to stop feeling broke, recognize that there’s always something you can do about it. In many instances, it’s a matter of making some different choices than the ones you’re currently making. Which requires a shift in the way you’re thinking about your finances. But once you make that shift, you’ll start making the progress you want to make. So those are the major takeaways that I have from the Bloomberg article. Are you rich? As I said before, I will put a link to the article in the show notes so you can read it if you’d like the show notes again are at rho thomas.com/ 166. And listen, if you want to stop feeling like a real lawyer, I will help you teaching you how to shift the way you view your finances and how to implement more effective strategies is the focus of my membership is opening on September 14, so make sure you join the waitlist at rho thomas.com/waitlist so you don’t miss it. Alright, that is it for this week’s episode. If you’ve gotten value from today’s episode, will you do me a favor? I am trying to spread financial literacy across the legal profession and I need your help. So I want you to tell a friend or two about this podcast. Let them know that this information is available for them to learn about personal finance and hopefully implement the concepts I teach to improve their finances. That would mean the world to me. So thank you in advance. All right, 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 regain control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.