It’s the start of the season for recent law graduates to begin their careers. Assuming they successfully passed the bar during the summer, the fall season is when most lawyers begin working officially as “attorneys” and no longer as “law clerks”. To celebrate, I wrote a column laying out a financial checklist for new lawyers over at Ms-JD. I hope you enjoy it. Here’s an excerpt:
It’s the season of first-year associates and newly minted lawyers starting their legal careers. I hope that you’ve successfully passed the bar, moved to the new city and are now beginning to find your way around the office. Beginning your first job summons plenty of emotions and there’s no lack of things to do. Here’s a financial checklist to help make sure you start your career on the right path.
1. Don’t grow into your income. No matter whether you’ve started in Biglaw or are working for the government, your starting salary is likely larger than anything you’ve earned previously. But, it’s not nearly as big as you think and there’s a decent chance that it will go down in the future. Many lawyers move around during the first five years of their career as they settle into the right fields, so keep that in mind as you’re deciding how to split up your pie. The key to beginning life with a great financial future is to continue living like a law student for the first 3-5 years out of law school. You’re already used to it, so it won’t seem like such a shock. As most of us know, it’s far more difficult to cut back on your lifestyle than to never increase it in the first place. Don’t let yourself fall into the trap of buying or renting more house than you can afford or getting the nice car because “you’ve worked hard”. Save up to the 20% downpayment for the house and pay cash for the cars.
Read the full article here as it discusses developing a debt management plan, learning about taxes and writing an investment policy statement, then come back here and let me know what you think. Did I get it right? What other financial issues do new lawyers docs need to address? Comment below!
Joshua Holt is a practicing private equity M&A lawyer and the creator of Biglaw Investor. Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He spends 10 minutes a month on Personal Capital keeping track of his money and is currently fascinated by the JD Mortgage service connecting lawyers with lenders offering no to low down payment options.