You stayed in school longer than most of your friends. You borrowed a lot of money. You put your dreams ahead of everything else, while your friends were already establishing their lives. It's a familiar road for all new lawyers.
Now the paycheques are coming in and it's time to focus on three money habits that will set you up for financial success.
STEP 1. SIDESTEP LIFESTYLE TRAPS
There's so much to do and so many ways to spend money. You rent a place, buy a car, join a gym, eat out, order in, shop online and before you know it your lifestyle consumes your entire paycheque.
To avoid lifestyle creep, have your bank automatically move 10 to 15 per cent of your take-home pay into savings. You'll quickly learn to live on 85 per cent of your after-tax income and this habit will pay off immensely as your income grows.
STEP 2. MASTER CASH FLOW
Cash flow. It's about money in and money out. Your paycheque shows up in your account. Some goes to savings automatically. The rest goes to expenses. The sooner you start putting your money to work for you instead of spending it, the sooner you'll start building wealth.
To master cash flow, review your salary and expenses with your Lawyers Financial advisor. Together, we can determine:
- The best combination of registered and non-registered savings accounts for the money you'll save in Step 1.
- How to take advantage of every wealth-building program offered by your employer, such as group benefits.
- The optimal way for you to balance paying off your student debt with investing for the future.
STEP 3. SET GOALS THAT EXCITE YOU
Budgets are boring and they can feel restrictive. On the other hand, success is exciting.
When you can see your life changing because of your financial decisions, progress becomes addictive. Your job is to think about how you want to live and the impact you want to make on the world. You might want to:
- Start a family.
- Donate time and money to charity.
- Plan ahead for early retirement and an encore career.
Our job is to help you make it happen. Your Lawyers Financial advisor is here to help you decide on the best way to do some good right now and plant some long-term seeds for the future.
MAKE THE FIRST YEARS COUNT FROM DAY 1
Avoid lifestyle creep, manage cash flow like the CEO of your own life, and set goals that will inspire you to excellence. Establishing these positive financial habits early in your career will put you on a path to unlimited possibilities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.