“I was bad at math, so I went to law school.” Like a bad lawyer joke, we’ve all heard it before: your law school roommate landed there because he or she signed up for Calculus on the first week of college thinking about medical school, but once the partial differential equations started piling up it was all about the LSAT. Are lawyers really bad at money because they stink at math, is this another unfair lawyer stereotype, or is something else going on here?
I’m not sure, but I have a few theories. My undergraduate degree is in engineering and I’ve always been good at math. In fact, I’ve always thought that a technical background has been a great boost to my legal career. (I remember once interviewing with a partner at OCI and having to defend that position – which I thought was ridiculous at the time, and I still do.) And, to be fair, my personal finances were pretty much a mess for the first ten years that I practiced after law school. But I do think there are a few things that lawyers deal with that makes managing the money they make a difficult proposition. Here are three of them, in no particular order, and what I think can be done if you see yourself falling under any of these descriptions:
Practicing law is all-consuming
In my opinion this by far is the biggest reason that lawyers have lousy finances. One of my personal finance mantras (as you can read on the Dollar Barrister about page) is that “what gets measured gets improved.” I think most lawyers just don’t have the time to focus on their finances. Practicing law, particularly in a law firm, doesn’t leave much time for working on your finances. This makes automation so important. How? Enroll in an auto-deduct for your taxable, 401k, and IRA contributions. Link your accounts to Personal Capital or Mint.com and get an email update sent to you that you can read while you’re waiting in court. And most importantly, take care of yourself by making time for yourself. More on that below.
Lawyers find math intimidating
I think a lot of attorneys probably did find math and science intimidating in high school or college and for that reason chose a liberal arts path. There’s nothing wrong with that. But let’s face it – passing the bar and attending the law school is not easy and, on the other hand, personal finance is not rocket science. It’s about paying attention and being organized – qualities that most lawyers have already.
The best thing I ever did for my personal finances was to start tracking my checking account manually in an Excel spreadsheet (now I keep it in a Google document). I update it in real time after checking my online banking statements and, over time, I have added my investment and retirement accounts to separate tabs within the spreadsheet. Nobody will care more about your money than you! And the best way to start caring about it is to track it in a way that works for you.
Lawyers aren’t very good at taking care of themselves
A natural extension of my first reason above – I think lawyers in general spend too much time working, worrying about their clients and their matters, and not enough time taking care of themselves. We see and hear about it all the time – lawyers suffering from substance abuse and depression, or working themselves into divorce or a broken family. Life is short, my friends! The law can be a great profession that provides lots of opportunities for great professional and personal experiences, but like anything in life it can seduce you. Take time for your family and your friends. Carve out time for the gym and getting outside. And, because this is the Dollar Barrister, spend a few minutes every day tracking your finances and taking control over where your money is going!
Do you think the stereotype that lawyers are bad with personal finances and money is an accurate one? Why or why not?