As a junior associate, your financial situation is unique. The combination of a lucrative salary from a demanding job, crushing student loan debt, lack of experience and education in money management, and limited time present a complex set of challenges. It’s for those reasons that many attorneys, two to three years into their careers, find that their financial situation is much the same as when they started: student loans remain daunting, money bleeds in all directions, and options in life feel limited.
After the Bar
Should Young Lawyers Hire a Financial Advisor?
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It doesn’t have to be this way, and the solution is quite simple—create a deliberate financial plan on the first day of your legal career. If you’re like most attorneys, you likely have more questions than answers regarding how to formulate such a plan. Instead, it’s prudent to reframe the question from “how” to “who” can help me.
A financial advisor with experience and competence working with young attorneys can be your fast-track to financial progress and success. More specifically, such an advisor can counsel you about the following key planning areas: debt management, cash flow, tax reduction, and investments.
Debt Management
Determining how to repay your student loans is one of the most important financial decisions you will ever make. A financial advisor can help you evaluate whether a federal income-driven plan or private refinancing will be a more cost-effective payoff strategy. Correctly answering this question could save you tens of thousands of dollars!
Cash Flow
It’s critical to devise a concrete monthly structure for spending and savings. A financial advisor can help you determine how much rent you can afford, when it’s wise to purchase a home, and how and where your savings should be allocated. Implementing the appropriate recommendations is the fastest way to grow a formidable net worth and create more options in your life.
Tax Reduction
Taxes will likely be your most significant expense throughout your career. A financial advisor can instruct how to receive eligible deductions and tremendously lower your tax bill to Uncle Sam each year, leaving more money to contribute toward your personal goals!
Investments
Traditionally, attorneys are risk-averse, which impacts their investment decisions and, consequently, their wealth trajectory. A financial advisor will help you determine what investment accounts to contribute to, how to diversify appropriately, and how to lower risk and cost. Investing need not be complicated, but the strategy should be calculated and intentional.
There are numerous other financial facets a financial advisor can help you to navigate, but the aforementioned domains are key areas to your financial success. Financial awareness is essential and having a financial advisor is a viable option to help you with this awareness to ensure sound financial health.