204 | Why Lawyers Don’t Know How to Manage Money (and What to Do About It)

If you’re a lawyer who beats yourself up for the state of your finances, this episode is for you.

There’s one key reason why lawyers don’t know how to manage money, and it’s not entirely our fault.

But there’s a simple solution to fix it.

In this episode, let’s talk about why lawyers don’t know how to manage money and what to do about it.

• • the assumption many people make about lawyers and their money management
  • common thoughts of the lawyers I work with about their ability to manage money
  • the truth about managing money
  • lawyers’ experiences with money and money education early in life
  • when many lawyers realize they need help with money
  • the kinds of experiences many of my clients have before we start working together
  • how to learn to manage your money better

The Wealthyesq Group Coaching Program

You’re listening to Wealthyesq. 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 why lawyers don’t know how to manage money and what to do about it. Many people assume that lawyers should have no money trouble like a lot of people outside the profession think that all lawyers make multiple six figures and you know that we should just have it made because we’re rolling in the dough and we’ve made it right. And of course we know that’s not the case. But even within the profession a lot of lawyers also believe that they shouldn’t have money troubles. I talked to a lot of lawyers about money. And you might be surprised the number of people I’ve talked to who say things like, What is wrong with me or you know, they feel so much shame because they haven’t figured their money stuff out. They say that they’re making good money so they shouldn’t be in whatever financial position they’re in. Maybe they’re living paycheck to paycheck where they’ve got about a credit card debt or they are struggling to save money or to pay off debt. So basically, most people, lawyers included believe that lawyers know how to manage their money. And my question is why? Why do we think that like what makes us think that managing money is a skill, it’s something you have to learn how to do. It’s something you have to practice just like any other skill, and nobody’s looking at lawyers and assuming that all of us just inherently know how to play the piano or how to perform surgery, or how to drive an 18 Wheeler, right? Like those are skills, they take specific knowledge. And if you haven’t learned those skills, you don’t know how to do them. The same is true with managing your money. You have to learn how to manage your money and you have to practice that skill. Most lawyers have never learned and I think there are a few reasons for that. First many of us come from families that don’t know how to manage their money either, right? Like various studies estimate that the majority of Americans in some cases up to 78% live paycheck to paycheck. And I don’t have numbers for every country in the world, but I’ve seen similar statistics for Canada, Australia and the UK. Although if I remember correctly, those statistics were a little bit lower. But still, it was a significant minority of people who are living paycheck to paycheck in those places as well. The point is, with so many people living paycheck in so many countries, it makes sense that lawyers don’t know how to manage their money because they often don’t receive that finance education at home and granite. I can’t say specifically how many of the people in those studies are the families of lawyers and what the figures were when people who are currently lawyers were kids and all that but like if we’re just looking at things generally, a huge swath of the population of society doesn’t know how to manage their money. It stands to reason that people who are coming from the families of the majority of people in the case of America or a significant chunk of people in some other countries, if you’re coming from those families, you haven’t learned how to manage your money either. Right? There seem to be a lot of people who don’t have financial knowledge. So it makes sense that many lawyers don’t receive financial education at home. And even if that’s a little bit of a leap from the data that we talked about, like I think that that makes sense. And beyond that, we didn’t learn this in schools, like even now, only about half of the states in America require or will soon require that high school students take some sort of personal finance education before they’re allowed to graduate. And that’s pretty new. Like that’s pretty recent. It was far fewer when I was in school, and when many people who are currently lawyers were in school, right when many of you were in school, we didn’t learn at home. We didn’t learn at school. So that means that we would have had to learn it on our own. Right, here’s the problem with that. Often, it’s not until there’s a problem that we realize we need help that we realize that we need that education, like when you’re in law school, for the most part, you’re pretty broke. Like some people work their way through school, right? But even then, money is probably still a lot tighter while you’re in school than when you graduate and you’re practicing full time. So students tend not to spend money because they don’t have much. And then once you graduate, you’re used to having nothing so when you finally start making some money, you feel like you should be able to spend it right like I deserve it. So you start getting a little looser with how you spend because you have more money available and you might buy things that were once luxuries a lot more often. You might get a nicer place with a higher mortgage or rent payment or a nicer car with a higher car payment. Maybe get married. You have kids and all the expenses that come with those phases of life, and you start shopping at nicer places and going out to eat more often and at nicer restaurants, and all that kind of stuff, not to mention the student loan payments, right? So then your income starts getting eaten up with all these different expenses. And then an emergency comes up and you don’t have the cash to handle it. So you figure out just put it on a credit card and pay it off. But then you don’t get around to paying it off and then another unexpected expense pops up. And then that goes on the car too. And maybe there’s something that you want to buy right now, but you don’t have the cash but you can finance it for like 60 days with no interest. But then 60 days comes and goes and you get hit with the interest on the whole balance right and the next thing you know, even though you’re making more your income is stretched in so many different directions and you’re stressing you’re anxious about your money and you never feel like you have any left for yourself. Let alone for paying off debt or saving. Is this sounding familiar to you at all? Because this is the kind of situation that a lot of my clients are in when we first start working together. And it’s really, really common, because we don’t get that education and we don’t seek the education ourselves, right? But it doesn’t have to be that way. So here is what you do. Number one, acknowledge that being a lawyer doesn’t mean that you know how to do everything. Like you’re not a superhero. You are a human. You have to learn how to do the things that you don’t already know how to do. Number two, seek out knowledge on managing your money better. There are so many books and blogs and podcasts and videos and all kinds of resources, use them. Learn more about money, learn how to manage it. And then here’s the key number three, implement the knowledge you learn. It’s not enough to just know it right you have to use it. You have to actually take action on the things that you learn if you’re gonna get some results. And a lot of times we get stuck on step two, like we learn the knowledge, we listen to the podcasts, we read the books and we feel really good about that. Like we feel like we’ve done something, but you haven’t when you haven’t implemented it, like until you actually take the advice and those resources that you’re reading that you’re listening to. You don’t get the results that you’re looking for. So you have to implement. And sometimes we get stuck where it’s like okay, I know the things that I need to be doing but I just can’t bring myself to do them. So sometimes you need some accountability or some guidance to implement. So if that’s the case, hire a coach, get into a class or a program or something like that to help you. If you want to work with me enrollment for my six month group coaching group, the Wealthyesq group is opening on June 17. It is exclusively created for lawyers who want to get out of debt and manage their money better. So head to rho Thomas.com slash coaching for more information and to sign up for the waitlist. But all that to say you can’t just expect that you’ll magically know how to manage your money if you’ve never learned. Managing your money is a skill and you just have to take action to learn it and then implement the things that you learn to manage your money better. All right. So that is it for this week’s episode. 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.