Listen to post:
A Different Approach to Personal Finance for Lawyers
by Rho Thomas, Lawyer turned money coach
Managing your money well is more about what you choose to do than what you can or can’t do.
The traditional approach to personal finance often centers on shame and deprivation and isn’t effective for many lawyers.
This approach tends to lead to avoidance because the lawyers equate improving their finances with a deprived life where they can’t do the things they want. Or it leads to guilt and shame, as they try to follow the rules but see that the things they want don’t fit into the traditional view of “responsible” money management.
If your money plan involves constantly feeling deprived or believing the things that you want are wrong, it’s a surefire way to fail. You may be able to stick with it for a little while, but it’s really hard to stick with it long term.
The problem is that sticking with a plan long term is how you achieve the results that you want. It’s what’s required to achieve the success you’re looking for.
Instead, you want to move away from a money plan driven by shame, guilt, and deprivation and towards a plan driven by your goals and values. When you do that, you’ll actually make the progress you want to make with your money because you’ll be able to stick with it long term.
So how do you create such a plan?
It starts with identifying the things that are important to you. Once you’re clear on what those things are, you can allocate your money accordingly.
Rather than cutting out everything and deciding you can’t do anything but sit in the house and save money, you make intentional decisions about how you’re going to use your money based on the things you value.
You decide, “I value this, so I’m going to use my money for this. I don’t care about that, so I’m not going to use my money for that.” Some of the things that you value might seem silly to the next person and vice versa, but that’s okay. Personal finance isn’t one-size-fits-all. It’s inherently personal.
One thing that’s true about personal finance across the board, though, is that the things that you value will include your needs, your wants, and your goals. You want to decide upfront how to allocate your money across those three categories.
By planning how to use your money on the front end, you can make sure that you account for your needs, achieve your goals, and still have room for fun. It’s critical that you make room for fun in your plan because being able to spend on fun things will keep you motivated on your journey. When you don’t have room for fun in your plan, it’s much harder to stick with your plan long term, which, as we previously discussed, is the key to achieving your goals.
Ultimately, personal finance doesn’t have to be all deprivation and cutting back. It doesn’t have to be about shame and guilt.
When you identify the things you value first and plan your finances around those things, you make sure that all of the “responsible” things are taken care of without sacrificing the things you want.
By taking a different approach to your finances, you create a more sustainable plan for your money that reflects your life and goals, rather than what someone else wants for you.
Rho Thomas is an attorney and financial coach who believes that true wealth is having control of your time. She helps lawyers master their personal finances to create freedom and choice in their lives. She also hosts the Wealthyesq podcast where she shares strategies each week for lawyers to improve their money mindset and manage their money to achieve true wealth. Get afree copy of her short ebook, 5 Mistakes That Keep Lawyers in Debt, at rhothomas.com/mistakes.