In an earlier post, “Money Management Tips for New Associates,” we focused on how freshly minted lawyers can start their financial life on the right foot. Now let’s fast-forward a few years and consider some guidance for mid-level associates and young law firm owners.
So, you’re older and wiser. What should you do at this point to keep your finances on the right track?
Before we dive in, note that the following items are presented for educational purposes only. Nothing here is or should be considered specific financial advice for you. As your situation is undoubtedly nuanced, you should seek the advice of financial and tax professionals before utilizing the strategies mentioned.
Revisit Your Student Loans
Have you changed jobs? Gotten married (or gotten unmarried)? Then it’s time to re-examine your student loans.
Maybe you started as a public defender using an income-sensitive repayment plan and pursuing public service loan forgiveness (PSLF). Now, though, you’ve shifted into private practice criminal defense and your salary has increased dramatically. You’re certainly no longer eligible for public service loan forgiveness and your previously selected income-sensitive plan may no longer be appropriate.
Further, depending on how much your income has risen (among other factors), refinancing your student loans with a private lender (i.e., SoFi, Common Bond, LendKey, Earnest, Laurel Road, etc.) may be a smart move.
Bottom line: If your personal or professional circumstances have changed dramatically, reassess your student loan pay-down strategy. Don’t just adopt a “set it and forget it” mentality.
Start Working on a Money-Moves Plan
You’re no longer “right out of law school” and your finances need to reflect this. Your (and your spouse’s/partner’s) income, expenses, savings, investments and debt need to be handled in a cohesive fashion. If you’re running your own practice, this becomes even more important.
Maybe you sit down quarterly and informally take stock of your numbers, or perhaps you engage a professional for an added level of expertise and accountability. Regardless, the money moves you make now and the pitfalls you avoid will shape your financial future.
Should I Stay or Should I Go …
“If I go, there will be trouble, and if I stay it will be double.” — The Clash
By now, for better or worse, you’ve practiced law long enough to start thinking critically about your future. Maybe you love being on your feet in a courtroom or negotiating deal terms or building your own practice. Perhaps you loathe every bit of it.
You need to start realistically assessing the next five to 10 years of your career.
At the top of the career decision tree, you must first determine if you wish to remain an attorney, practicing law in somewhat of a traditional sense. If law was the wrong career choice and you want to return to school for an MBA, a doctorate in physics or something else entirely, this is the time to start contemplating your options.
For reference, Attorney At Work’s Experts list is a prime example of numerous ways to blend legal experience with other disciplines.
Assuming law was the right move, you should examine your practice area. Many young lawyers fall into a certain group depending on firm needs at the time they were hired. Hopefully, your preferences, interests and work style match well with your current role. If not, and a different subset of law or specialization appeals to you more, you need to have some tough conversations.
Yes, changing specializations will disrupt and reset your career progress. No argument there. However, you’re better off addressing this a few years in than miserably slogging through decades of work.
Assuming your practice area is a good fit, you must consider down what avenue you would like to take your career:
- Attempting to make partner at your current firm, or at a different one
- Going in-house
- Starting your own firm
- Pursuing a non-partner role at your current firm or another one
- If applicable, continuing to grow your own firm
Luckily, this list isn’t exhaustive, these options aren’t binary, and you don’t need to decide today. Just start thinking about it. All these choices will impact your career, your family and your finances. (See “Leaving the Law Behind: Now What?” by Casey Berman.)
The Low-Hanging Fruit
- Run your own shop? Set up a retirement plan (no, they’re not expensive) and start pumping in dollars. Small-business owners across nearly all industries are notorious for undersaving.
- Work for someone else? Max out your retirement plan contributions if possible, and if not, at least take full advantage of your firm’s matching dollars.
- Seldom use your health insurance? Consider switching to a high-deductible plan, opening a health savings account and taking advantage of the rare triple tax benefits.
- Still have lingering credit card debt? Right-size your monthly spending, lay out a pay-down plan and execute ferociously. Maintaining credit card balances only enriches the card issuers.
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