Financial fitness for young lawyers
Emerging legal professionals must ensure they are on top of their financials from the outset, if they are to achieve their personal goals, argues one law grad-turned-business owner.
Speaking recently on The Lawyers Weekly Show, Paridhi Jain, law graduate and founder of financial education business SkilledSmart, said her experience working at Cancer Council as part of her practical legal training opened her eyes to the possibility of personal finances spiralling out of control, in light of cancer treatment being expensive.
“That was my first interaction with the consequences of not getting your finances sorted. It was pretty full-on [and] emotionally quite heavy stuff, but I got to see first-hand a lot of people who’d been working their whole lives and they think they’re doing it right, [but then they say], ‘How did we get here? Why is it so hard? Shouldn’t it be a little bit easier?’”
From there, Ms Jain said she started seeing a pattern whereby a lot of her friends and classmates in law school, and then out in the real world, had no idea what they were doing, even though they were brilliant in the context of their own profession.
“They’re earning good money, they’re great at what they do, they’re very well educated, and you ask them a question about money and it’s like of like this hushed, ‘I actually don’t know what I’m doing’,” she explained.
“It’s like this shame and embarrassment and this feeling that we’ve gotten so far and now it’s a bit embarrassing to ask. [In my research, I’ve found that] the only people who are really trained in personal finances are financial advisers.
“Everyone else didn’t get that [training] at school or university, and they just have to make do and guess their way through it.”
For young lawyers coming through the ranks, Ms Jain posited, a three-pronged strategy should be employed: earn, save and invest.
“Most [young lawyers are] probably earning okay, so that’s a tick. Under the ‘earn’ bucket also falls personal insurances — total and permanent disability, trauma, income protection and death — some of which are already in your super fund, but essentially, they’re designed to mitigate the circumstance of you not being able to earn if something catastrophic has happened,” she said.
The second prong is saving, which Ms Jain mused is too “guilt-oriented”.
“It’s like, ‘You shouldn’t have that coffee, you should pack lunches’, and I’m not a big advocate of that, because I don’t think that stuff’s sustainable. I think you’ve got to find strategies that are sustainable for you, and the best way I’ve found to do that is to focus on what you get the most value out of,” she argued.
“If it’s travelling, great. If it’s eating out, great. Whatever it is for you, focus on a couple of things that give you the most value and then forget about everything else, because if that stuff’s not giving you value, it’s easy to compromise or sacrifice. But if you can focus on what you love and what gives you a lot of joy or fulfilment, then you can direct more of your resources towards that.”
Investment — Ms Jain’s third prong — is crucial, she said, because for the next generation of lawyers, if they don’t invest they won’t be able to retire, she said.
“Connecting to the idea that investing is your ticket to freedom is going to inspire [you] to actually want to invest and get on that journey,” she said.
“[Investment] seems like this mammoth task to understand, but there are a ton of apps and robo-advisers that make it really simply to get started on that journey. But, really, the block you need to address is the psychological one of overcoming that resistance or that fear that’s holding you back from wanting to take that first step.”
The mistake many lawyers — and others in professional services — often make, Ms Jain concluded, is not knowing how to use the money they’re earning in a way that “creates a fulfilling, awesome life”.
Knowing how best to achieve financial fitness, she said, “allows more of you to show up at the table” when you come to work.
“Once you’ve figured out how to leverage that massive resource that you have to create a beautiful life for yourself, that is on track for your goals financially, and on track for what you value, I think it just strips away so much of that stress and so much confusion and overwhelm.”
To listen to Jerome’s full conversation with Paridhi Jain, click below: