Money tips for new lawyers (or OFWs, doctors or those with high-income jobs)

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Resist the call to hyperspend

To all those who passed the 2017 bar exams,* welcome to the legal profession. Most of us hurdled eighteen years of school and a year for bar review, exams, and waiting for the bar result—most of it unemployed and without any significant income. So when that real job comes right out of law school, accompanied by that real paycheck,** that money feels like the most money you ever earned. Coupled with making that “real” money in your twenties, your natural instinct may be to party and make it rain! Before you do that, here are some things to consider.

 

1. Know that your high-salary won’t be around forever.

 

It is basic that money is not a renewal resource and the same goes for a high salary. Sh*t happens, you may get sick, lose your job, or get bored. For female lawyers in particular, working at a law firm isn’t forever if you want to get married, have kids or become a stay-at-home wife. Staying in a high-stress job will also be difficult if you have health issues.

Make a timeline for how long you see yourself in your current job. If your current job is a mere stepping stone towards that holy grail dream job that you see yourself growing in, then plan accordingly, especially if that holy grail job entails a pay cut (as most dream jobs do). For women, if you see yourself settling down anytime soon, you will naturally want more time to yourself and to your new spouse. Give yourself three to five years to gain that needed experience. Save as much as you can while waiting for that dream opportunity to come so when it does come, you can afford to take that chance.

 

2. Plan big but don’t spend big.

 

You might just be a first year lawyer or in the beginning stages of your career but don’t be afraid to plan BIG! Libre lang naman mangarap (It’s always free to DREAM). This is one of those rare stages in your life where you can afford to dream without any baggage weighing you down. Your whole life is ahead of you so don’t be afraid to make big plans—what seems impossible right now may become possible in the future, with a little bit of financial planning on your part.

The pleasure is in the planning but don’t become a big spender yet despite the sudden surge of money. Don’t act rich before you become rich. Resist your peers / bosses’ proddings for you to hyperspend. Learn to budget and actually stick to one. Yes, you’ll need to “invest” in corporate wear but wear those things to the ground before buying new ones. Keep your fixed costs low so avoid buying stuff which requires recurring costs like maintenance fees, monthly fees, insurance and the like.***

 

3. Your housing expense will be your biggest expense.

 

If you live on your own, housing will be your biggest expense. Resist the urge to buy too much house at the moment, unless you have saved a substantial downpayment (50% or more). Rent conservatively and don’t be afraid of getting roommates. Generally, your rent cannot exceed 25% of your paycheck but challenge yourself and go for a much cheaper but secure place.

4. Learn to say NO.

 

This is an issue for OFWs or even other professionals who have dependents (parents, younger siblings, children). You, the high-income earner may sometimes be unjustly treated like an ATM, one who is expected to fork over unlimited amounts of money upon demand. People may expect you to foot the bill at most dinners, trips or other gatherings. This is unjust as you’re just starting out, finding your place in this world. You have yet to save an emergency fund or save for those big dreams you have. How can you help others if you can barely pay your rent?

Keep a budget for loved-ones and stick to it, learn to say no to unreasonable demands and make sure that money you fork over is used properly. When you get home you may hear snide remarks for this but just bear them or better yet, just leave so you don’t have to hear snide comments anymore.

At the end of the day, it’s your money so spend or give as you see fit, while ensuring your own future retirement as well. Living within your means entails giving only what you can comfortably afford to give. Learn to say NO.

 

How do you handle suddenly making “real” money?

George

Footnotes:
*Results released this 2018
** A high-paying salary isn’t limited to the law industry, it is the same for OFWs, doctors, real estate brokers, etc.
***E.g. depreciating assets like boats, cars, gadgets, gym membership or even a monthly phone plan (go prepaid lol) which require maintenance fees, annual insurance, fuel, monthly bills bills bills. You just don’t need these when you’re just starting out. Your employer may provide these for you in the future as you go up the ladder (in the form of car plans, phone allowance or company phone plan, free gym membership, etc.)

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