8 Important Financial Planning Tips For Lawyers

Financial management/planning is one of the many aspects of life that determines how well you manage your wealth and grow it. After all, money is the one thing we all rely on when it comes to buying food, clothing, and other essential items. 

Financial planning applies to all individuals who have jobs, businesses, assets, and a lot of accumulated wealth. However, since the topic of discussion is about how lawyers can manage their finances based on their career structure, we’re going to keep the discussion focused on them. So without further ado, here is how financial planning for lawyers can be done with eight helpful tips. 

1. Plan your next expense:

Financial planning for lawyers involves a lot of headaches, given the frequency of transactions they have to go through. And even though these transactions make lawyers a lot of money, they can still lose it in one go if they do not plan their next expenses according to their needs and wants. 

Here’s when financial planning for lawyers becomes a great help. By hiring an expert financial planner the lawyers can properly plan their expenses and become more financially stable during the process. 

2. Invest: 

Saving up for your 401(k) is probably the best bet to store up your wealth. But, there are other ways for lawyers to make the best possible use of their hard-earned money. This involves investing in assets like real estate, cryptocurrencies, stocks, etc. Remember, the goal is to retire financially free, and these are a few ways through which one can achieve this freedom. 

3. Record your transactions effectively: 

As mentioned above, lawyers have to carry the weight of endless transactions on their heads. And given the intensity of their work, it is completely natural for them to lose track of these transactions. Therefore, lawyers can consider hiring an accountant or an expert financial planner for this very purpose so that time is saved and records are maintained. 

4. Create an emergency fund: 

Like any human being, lawyers can also end up in an emergency. And God forbid that they do. It is important for them to be prepared for such a situation. They can do so by setting aside a portion of their income in a fixed account from which they cannot withdraw their money unless an emergency takes place. Such emergencies include but are not limited to child support and catastrophic events etc. 

5. Set a budget: 

Budgeting is absolutely crucial when it comes to managing finances. This is especially true for lawyers because they need to establish a threshold above which they cannot spend. Budgeting can be very helpful if fully understood as it can help reduce excessive expenses and give you more disposable income. A lawyer earning a high income should still get the assistance from a financial planner to better utilize his income and grow it with time. 

6. Try to live below your means:

The more one tries to live below their means, the more financially secure they will be for the future. And like everyone else, this principle also applies to lawyers as their income is substantial enough to fund a decent living. Therefore, aim towards living a simple life and saving up for the future. 

7. Avoid unnecessary debt: 

As a successful lawyer, you will be confident enough to become a spendthrift. This means using your credit card to its maximum limit or buying things that will eventually lead to a lot of debt. In one way, this is good because you get a better credit score from the bank. Nonetheless, there’s also a chance you might not be able to pay back such loans due to unforeseen conditions. 

8. Create two separate records of transactions:

As a lawyer, it is important to keep two separate records of transactions. This means using two bank accounts, one of which is directly used for your personal expenses and the other which is used for your clients to transfer service charges. By doing this, your financial statements will be easier to understand and, in turn, will help you plan your expenses better.  However, it's important to hire an experienced financial planning company who specializes in providing financial planning for lawyers. 

Conclusion: 

When it comes to financial planning for lawyers, there are a bunch of helpful tips you can follow to plan a financially problem-free future. In the end, it all comes down to how you spend your earnings. You can either be reckless with it, or you can save up and invest in assets that will keep growing as you age. Not only will a good investment benefit you, but it will also benefit your successors. Therefore, simply keep these four words in mind, and you’re all set for the future: Earn, Save, Invest, Repeat.