How law students can better manage their money

01 August 2022 By Lauren Croft

Financial education is important in all professions — especially for those going through law school, argued this financial educator and law-school graduate.

Paridhi Jain is a legal graduate turned financial educator and the founder of SkilledSmart, a money education company.

Whilst she originally studied law to get into social justice, during her practical legal placement (PLT), Ms Jain found herself working for the Cancer Council and determining whether cancer patients would be eligible for pro bono advice, which involved talking to people about their financial situation.

“You’re on the phone with these people and you’re realising that across the board, regardless of profession, age, income bracket, circumstance, people actually really struggle with their finances,” she said.  

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“And it can have a really catastrophic impact on their wellbeing, on their career, on all aspects of their life, really. And so that was really an eye-opening experience. And one that I think did influence the path that I ended up going down.”

In terms of the legal industry, many law students often feel as though money won’t be an issue — particularly for those choosing to go down the corporate or BigLaw firm route.

“There are avenues within law that you can feel fairly confident that within five to 10 years, you will be earning a really secure salary. And I think that breeds a certain level of confidence that can lead to a certain, I suppose, complacency around having to do anything else. But I think the other thing that I noticed was that there is also, because law is such a profession that is based on prestige and pride and that social justice element, there’s a disconnect in the sense that there is a sense of pride that we’re above money. That it’s like we care more about the impact and the people and the social justice and the profession of the law itself than we do about the money,” Ms Jain explained.

“And it creates this internal conflict because on one hand, money is necessary not just to survive, but to thrive in our society. But then we’re not trained, but we’re in an environment that can sometimes lend itself to seeing money in ways that make you feel greedy or selfish or shallow for wanting to feel financially secure.”

Therefore, there are a number of financial lessons Ms Jain wishes she was taught in her law school days — the difference between money and wealth being one of the key ones.

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“We tend to think that financial security comes from earning money and having an income. And actually, financial security starts from there, but ultimately ends up being about your assets and the wealth that you have. And a really common question that people ask in the finance space to gauge is if you were to stop working tomorrow, how long would you be able to last on your assets alone? And so that’s a really important concept to start thinking about. Financial security is about a lot more than just the money that you earn from your income.

“So much of financial security and success is actually dependent on what you do with that money, and I think because we have this notion that if I’m earning a high salary or I’m in a profession that will allow me to have a high salary, then I don’t need to worry too much. It ends up in this cycle where we might earn a lot, or we might earn a decent paycheck and we might be saving a little bit and so then we just don’t think too much more than that,” she added.

“There are four really key elements that I would break down financial success into. And that is, basically, earn, save, protect, and invest. And so, most of us kind of get stuck at that first step of just chasing promotion and chasing a bigger and bigger paycheck. But really, your ability to create financial success is learning the skills to do the save, protect, and invest part as well.”

To move from one step to the next, Ms Jain advised law students to take a more active role in managing their money.

“I think first giving yourself permission to start having a bit of an interest in it, would be the first step. The second step around saving, protecting, and investing. So, when it comes to saving money, it’s so much more than just budgeting. And I think that’s one thing that I think the finance industry hasn’t done a great job of is there is this notion that we just need a great budget,” she said.

“And actually, I think that inhibits a lot of people from saving because they think about a budget, and they’re like, ‘Oh my God, that makes me want to die a little bit inside.’ And so, they never actually end up learning how to save and the mindset around saving and the systems that can make saving really, really easy. And it doesn’t have to be this clunky spreadsheet that you have to type your receipts into every single day. And so, I think moving away from the mindset that saving has to be something that’s restrictive or boring, or deprivation based, or really complicated can start to encourage you down the road of, ‘Okay, how can I make saving really easy and fun and enjoyable?’ And that’s going to make it a lot more sustainable.”

And in addition to being able to manage their own finances, Ms Jain said these lessons could have a positive impact on lawyers’ professional lives, too.

“I think something that I see with a lot of legal professionals is that a lot of legal cases do have a financial component to it. Whether you’re working in family law, whether you’re working in commercial law, whether you’re working in conveyancing and settling properties and stuff like that,” she added.

“I think the more that you are actively involved in trying to strengthen your own financial capability, the better you’re going to be able to support your own clients through that process as well. So, money’s one of those things that I think it’s an incredibly transferable skill because it impacts so many areas of our life, both personally and professionally.”

The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full conversation with Paridhi Jain, click below:

 

How law students can better manage their money
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