238 | Wealth Is a Habit

If you want to be a wealthy lawyer, there’s something you must know.

Wealth isn’t a pipe dream or just for the lucky few. Wealth is a habit that can be mastered by anyone.

In this episode, let’s talk about the key switch you need to make to start building wealth today.

• • wealth and income are not correlated
  • my personal experience of being a broke lawyer and watching people who aren’t lawyers building wealth
  • the ineffective way many lawyers manage their money
  • a more effective way of managing money
  • Parkinson’s law as applied to personal finance
  • the mindset shift that guarantees you build wealth
  • client experiences with changing their money mindset and money habits and the effects on their finances

Episode 237: When You Get Tired of Managing Your Money

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. By the way, if you’re a lawyer who’s struggling with debt, you’re probably making at least one of five common mistakes. Grab my free guide on how to correct those mistakes and finally get out of debt for good. Head on over to rhothomas.com/guide. That’s G-U-I-D-E.

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 the habit of building wealth, because wealth is a habit. It’s not something that just happens to you. It’s not something that’s just for the lucky ones or the chosen ones or the people who make a certain amount of money, or anything like that. Wealth is a result of consistent habits that lead to accumulation of wealth. It is for those people who implement those habits to build wealth. You know how you hear about a celebrity or professional athlete or somebody like that who makes all this money and then they go broke? We think, with our regular non celebrity income that that’s crazy. Like we think, oh my gosh, how could you go broke after making so much money? We say things like, if I had that kind of money, there’s no way I’d be in that position. But did you know that there are people who make less than lawyers typically make who have those same thoughts about lawyers who have trouble with their finances. They think it’s crazy that so many lawyers have financial troubles, and we think it’s because of the amount that we make like if we made that celebrity type money, we wouldn’t be in that situation, but it’s not. There are people who make less than you, who have built wealth, and there are people who make a lot more than you, like those celebrities that we were just talking about, who are struggling, who are broke, like, Isn’t that wild? That’s a big part of the inspiration behind my money journey. Like my husband and I had over $678,000 of debt, we had a negative $342,000 net worth, despite the fact that we were making six figures, and I came across stories of all these people who didn’t make the kind of money that I made as a lawyer, who didn’t make the kind of money that you make as a lawyer, who didn’t make the kind of money that my husband makes as a doctor, but they were better off financially than we were. And I’m looking like, what’s going on? Like, how can this be right? Like, what is what’s really going on here? They were making a fraction of what we were making, but they were building wealth, and it’s all because of the way that they were managing their money, the habits that they had for managing their money. They had better habits than we had, and they made building wealth a habit. So they built wealth despite the fact that their income was lower. The biggest issue that many lawyers have with their money is not looking out for number one. Too many lawyers go to work, make money, pay bills and then spend all the rest of the money on stuff, right, on going out to eat, on experiences, whatever it is you spend the rest of the money. And when you use your money in this way, you have nothing left to show for it, right? You have nothing left for you. So what was all the work for? I want you to flip that. I want you to set aside money for yourself, for your family, for your financial goals, before you do all that other stuff, right? Set aside money for you first, money for your goals, money for paying off debt, money for saving, money for investing money for increasing your net worth, set that aside first, then from there, you use what’s left. Like, have you ever heard of Parkinson’s Law? Basically, it says that work will expand to fit the time that we give it. So if we give ourselves a week to do something, it’s going to take us a week to do it. If we give ourselves a day to do something, it’s going to take us a day to do it. And that same principle applies with your finances. If you give yourself 100% of your finances to spend, you’re going to spend 100% of your finances, right? You’re going to spend all of the money. That’s exactly what happens when you don’t plan how you’re going to use your money ahead of time. You can’t just spend whatever’s in your account and hope that there’s something left at the end of the month for your goals. You have to decide how you’re going to use your money, including how much you’re going to set aside for those goals, like, how much are you going to set aside for paying off debt, for saving, for investing all of those things that help you build wealth? How are you going to set aside money for yourself to do that you’re not doing yourself or your family any good by taking care of Jeff Bezos first, taking care of whoever owns target first, taking care of whoever owns your favorite restaurant first. You’re not doing yourself any good looking out for all those other people first and giving yourself whatever scraps are left. Because if everything were to hit the fan, God forbid you lose your job, or your partner loses their job, somebody gets a serious illness or a serious injury or something like that, Jeff Bezos is not going to help you pay your mortgage. Target is not going to buy groceries for your family. You need to make sure that you are taking the necessary actions to move yourself forward, to build up your savings, so that you have a cushion for those types of unexpected things that can happen. You want to make sure that you’re taking actions that move your money to a better position, that decrease your debt, that build your savings, that build your investments, that increase your net worth, because at the end of the day, you are all you got. Nobody’s coming to save you. And that’s not to say that you can’t still spend on things, right? Like you 100% can. And I think it’s important to set aside money for you to spend on things, because that’s how you are able to stay on track with your goals without burning out. However, you’re not going to spend 100% of your money. That’s the point here. You still can spend stuff. You can still set aside money for those things that you enjoy, just don’t use all your money for those things. Instead, you’re going to use some portion of that money every month to improve your finances, improve your net worth, and move yourself forward financially. It’s a consistent habit. When I look at the people who were making less than we were making, but were better off financially, that’s what they were doing, like they were consistently using some portion of their money for their own financial progress. They weren’t just paying bills and spending everything that was left. We don’t go to work just to pay bills and buy stuff and, you know, spend on whatever else like if that’s all we’re doing with our money, then we’re missing the point. I heard a quote that was attributed to Suze Orman, and it said something like, you build wealth when you get more pleasure from saving money than from spending money. And I thought it was similar to what we talked about last week with making sure that money management is not a chore, making it something that you enjoy doing, because when you enjoy doing it, then you’re more likely to do the things necessary to manage your money well. In the same way when you enjoy building wealth more than you enjoy spending, then you’re going to do the things that you need to do to actually build wealth. Are there people who get wealthy from having some business take off, or from crypto or from whatever other random sources? Yes, that is a thing. However, it’s 100% possible to build wealth from just a w2 income. That’s what I did. That’s what the teachers and the engineers and all those people who I saw on the blogs and stuff back in the day like, that’s what they did too. They were building wealth because they managed their money in a way that allowed them to build wealth, and that’s 100% possible for you, especially as a lawyer, I think about this kind of stuff with my clients all the time, like when they first come to me, they are often spending more than they make. They’ve got no savings. They’ve got declining bank account balances. They’ve got rising debt balances. They are feeling stressed, they’re feeling afraid, they’re feeling overwhelmed, all of that kind of stuff. And by the time we finish working together, they have money in the bank. They have a cushion, a savings account for those unexpected expenses. They have decreasing debt balances and a strategy to pay it completely off. They have increased their net worth. They’re feeling confident, they’re feeling calm, they’re feeling peaceful, and they freed up all of this cash flow that allows them to keep doing the things they need to do to increase their net worth. They are completely flipping the way that they manage their money, and as a result, they’re able to increase that net worth. So it’s no longer about buy, buy, buy, right? It’s no longer about buying all the stuff and, you know, all of that kind of thing. They are still buying things, like I said, but because they shifted the focus to their own financial health and making sure that they’re taking care of that first, then they have all of these amazing results, right? They’ve got all this money, they have less debt, they’ve got the strategy, they’ve got the peace, and you better believe all of that feels a lot better than the way that they were feeling when we first started working together. So would you rather continue on with the way your finances are now, or would you like to have the experience that my clients are having? All it takes is implementing the habit of building wealth, and that means shifting from spending everything and hoping that there’s something left at the end of the month to taking care of your financial house first. All right, so that is it for this week’s episode. Please take a second to subscribe to the show, leave a review. Both of those things help to get this information in the hands of the lawyers who need it, because it shows the platforms that this show is valuable, and so they are more likely to recommend it to others. 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 regain control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.