There are some financial mistakes that lawyers make that hurt their legal practice and prevent them from achieving their dreams in life.
The financial mistakes that lawyers make in their practice can be avoided by acquiring financial literacy.
According to some experts, many lawyers struggle when it comes to managing their own money and finances.
Lawyers’ financial management struggle is partly connected with their training at the law school.
The bulk of courses for lawyers in law school are on substantive law as very little attention is paid to making and managing money.
For centuries, lawyers have prided themselves as members of a noble profession whose primary duty is to protect peoples’ rights.
Although the law is a profession and vocation, it is also a business. For lawyers to do their jobs effectively they must learn to make money and manage their finances.
What will it profit a lawyer to learn all the principles and practice of law and neglect their finances which will eventually determine their success? A financially secure lawyer is a happy lawyer.
The following are some financial mistakes that lawyers make in their practice.
No Financial Plan.
A financial plan is like a road map that contains the procedure of achieving investment goals and objectives.
For every business, a financial plan is a foundation for every financial decision made by the company.
To many lawyers, a financial plan is a strategy employed by accountants or those engaged in trading.
Very few lawyers have an idea of the value of their financial assets, or what their short –term or long term goals are or.
Lawyers who have developed a plan early on know their practice areas and their target market.
Without a business plan, business owners including lawyers are bound to veer off course and in their spending.
According to experts not having a financial goal can lead to poor financial judgments that make you spend recklessly.
Poor Savings Culture.
One of the biggest financial mistakes by lawyers is poor savings culture. The art of saving has to do with setting aside money and other valuables for future use.
Like many people, lawyers tend to put off saving their money until they attain a set milestone.
The truth however is that there is no perfect time to start saving money as there would always be things to do with the money.
People tend to put off doing the needful until it’s too late. For the lawyer, it’s like ‘I’ll start saving when I finish law school’. Then it quickly changes to ‘I’ll start saving when I set up my law firm’, and so on.
You, therefore, need a strong will and discipline to set aside a certain percentage of your income for savings.
Little or no Investments.
Investment is one proven way to increase revenue. Investments are assets acquired to generate income or create wealth in the future.
There are several investment opportunities like real estate, stocks, mutual funds, bonds, derivatives, etc.
In many jurisdictions, lawyers are barred from practicing law and doing any other kind of business at the same time.
Smart lawyers take advantage of some investment opportunities to increase the source of their income.
According to financial experts, there is no rich man who has only one source of income.
Lawyers should therefore spread their net through other investments and not put all their eggs in one basket.
If one form of legal practice is not working out, there are alternative career options for lawyers.
At the beginning of legal practice, lawyers find it a little difficult to break even, but with time they see a rise in their income.
For many lawyers, the sudden increase in income presents an opportunity to upgrade and live out their dreams.
While a lawyer needs to look presentable and live a comfortable lifestyle, spending money recklessly is dangerous.
Combining Business Account with Personal Account.
It is financial suicide for any lawyer to not have a separate account for his/her business and personal transactions.
Lawyers should always remember that law or legal practice is a business and treat it as such.
There will always be family and relationship issues that require money. Lawyers should therefore beware of dipping their hand into their business accounts to solve relationship problems.
Family and relationship problems are never-ending, no matter how much you pour into solving them.
There is an urge for lawyers, especially the new ones to show their family and friends that they’ve arrived.
Using your finances to impress people or to prove a point is one of the fastest ways to financial ruin.
If you cannot pay for a full apartment of your own, then don’t go out of your way to lease one. Share with others.
Lawyers should remember that we have individual differences and no two attorneys are the same.
Remember that legal practice is not a sprint – it’s a race. So while starting strong is good, finishing stronger is even better. Many lawyers have learned the hard way about the importance of wise spending.
Resting My Case.
Avoiding financial mistakes will keep your legal practice going and help you save for rainy days.
At the end of the day, no matter how good you are as a lawyer, if you can’t handle your finances, your efforts are going down the drain.
Learning how to be financially literate will allow you to handle your finances and live out your dreams as a successful lawyer.