All posts by A lawyer

I'm a lawyer. I went to a fancy law school and had some fancy jobs. I'm now a partner at a small firm on the East Coast. And I really don't want to piss money away.
Book Review, Lawyer Psychology

The Millionaire Next Door

The Millionaire Next Door is a classic in personal finance literature. I can’t recommend it highly enough. It’s less a prescription for how to invest your cash but a description of who actually becomes rich.

Lawyers tend to want to think through what principles ought to apply in order to get to a certain result. Here are some examples: Make a lot of money, then you will be rich. Go to a good law school, then you will be successful. Make partner, then you will be rich.

These are all fine inferences if you want to think your way into disappointment.

This person’s net worth is probably higher than yours.

Another way to figure out what gets a result is to look at when that result has happened, then study how it happened.

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Lawyer Psychology

Why Read Personal Finance Blogs?

A while ago I got deep into triathlon. I’d work out for three or four hours in a day, then finish, eat, and think about triathlon some more.

Because there are limits to how much someone can really exercise in a day – and I hit them – I found myself still wanting to do something with triathlon. I was still thinking about triathlons.

So, what did I do? I read books on triathlon, I browsed blogs about triathlon, and – I say with no small amount of shame, given the forum – I bought stuff associated with triathlon.

Not making progress.

Virtually none of this buying, reading, or browsing did much to advance my triathloning much. My abilities were not such that reducing the weight on my bicycle, for example, but 30 grams made a tremendous difference in where I placed in a race. (more working out, though, did a lot)

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Student Loans

Should You Pay Off Your Student Loans With Your Bonus or Invest that Money?

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Most lawyers come out of law school with a massive amount of student loan debt. I know my wife and I did.

So, when you get your year-end bonus – or you’ve got a good chunk of cash saved up from your salary – should you invest that money or pay down the principal on your law school loans?

money-trap1-1238807First kudos to you for thinking of it that way. We’ve all heard the stories of lawyers who spent their bonus on a super-fancy vacation or car. Don’t be that guy.

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Goals

You’ve Got to Have Financial Goals. Here are Mine.

Having goals is a game changer.

For years, I didn’t have financial goals.

I’d max out my 401(k) (or TSP when I worked for the government) and, when my kids were born, put a set amount in their 529 plans. Then I’d go on my merry way, assuming that the 401(k) max and some amount in the 529 would be ducky.

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Budgeting

Budgeting is Fundamental

If you want to lose weight, you should create a record of each and every calorie you consume, and record how much you exercise. This is a pretty successful approach when it’s followed, but it’s pretty tricky to follow.

Similarly, if you want to build wealth, you should spend less and save more. As with losing weight, gaining wealth comes from awareness. If you’re mindlessly eating in new restaurants night after night, you will be fat and poor. (Unless you’re also working out all the time and cutting back in other areas, of course).

A fun way to spend Saturday afternoon.
A fun way to spend Saturday afternoon.

So, if you want to save more – and if you don’t want that then I’m not sure why you’re on this page – you should have a budget.

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Lawyer Psychology

Lawyer Unhappiness and Money

Lawyers are known for being broken people. Compared to the average person on the street, we’re more likely to abuse drugs and alcohol suffer from mental illness, or commit suicide.

There are a lot of reasons for this. For one thing, the law attracts and rewards pessimists and being pessimistic doesn’t really correlate with happiness. For another, much of law is zero sum; someone loses every case that goes to trial or a contested motion. Lawyers are second guessed often, and we often see people at their worst.

Probably a lawyer.
Probably a lawyer.

All of that is important for why lawyers tend to be miserable. But I think there’s another important problem – lawyers think external rewards bring happiness.

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Lawyer Psychology

Why Lawyers Aren’t Rich

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Lawyers are generally great at generating income. Lawyers generally suck at generating net worth. It feels like 80% of the folks I know who are partners at law firms are living paycheck to paycheck.

Why is that?

There are two easy and obvious answers:

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