According to a MetLife study conducted shortly after COVID-19 lockdowns began, more than half of US employees were more concerned with their finances than any other aspect of their well-being. Even more striking, the National Endowment for Financial Education reports that nine out of ten Americans say the pandemic is causing financial stress. For young lawyers who are burdened with record amounts of student loan debt and entering the second economic downturn in a decade, these statistics might not be that shocking. A recent report published by the ABA indicated that the median student loan debt of new lawyers is $160,000. For these individuals, financial stress and worry have become a way of life. The toll that stress can have on your physical, mental, and emotional well-being should not be ignored.
The widespread nature of student loan debt has led institutions to study the impact that it has on those who have student loan debt. Research that controls for variables like age, education, and income indicates that debtors report significantly higher rates of depression, anxiety, and anger than individuals living without the burden of debt. Due to the pervasive nature and sheer amount of debt young professionals carry, young lawyers must understand the impact that debt may have on their health to optimize their mental and physical well-being.
Financial stress can manifest itself in mood disorders (e.g., anxiety and depression) and physical conditions (e.g., migraines, cardiovascular disease, insomnia, etc.). The problem is even more significant for young lawyers in the solo and small firm settings who might have an ownership stake in their firms. For these lawyers, financial stress and well-being issues can lead to a seemingly never-ending cycle of problems. Legal professional liability insurers regularly report that lawyer impairment due to well-being concerns is the primary cause of law firms reporting numerous claims in a single policy period. These claims can result in large deductible payments and increased policy premiums, which furthers the financial stress felt by these attorneys and further plunges them into depression, anxiety, and substance abuse.
What You Can Do to Fix It
Taking control of your finances and putting yourself on the path to financial fitness can boost your self-esteem and reverse some of these mental and physical effects. If you find yourself struggling with financial fitness, now is the time to act. There are numerous free online resources to help educate yourself, such as Smart About Money, a free service that enables you to create a customizable financial well-being plan.
As we move into leadership and management roles at our firms, we should consider approaching our employers about establishing financial wellness programs for all employees. In addition to the personal benefits reaped by each employee, these programs can also benefit an employer’s bottom line: increasing employee retention, employee productivity, and efficiency.
The 2021 ABA YLD Law School Student Loan Debt Survey Report examines the issues at the heart of the student loan crisis and offers recommendations. Read the report.
A lack of financial fitness is causing a well-being crisis in our profession. This is due in large part to the toll financial stress puts on a lawyer’s mental, emotional, and physical well-being. Financial Fitness: How Your Finances Affect Your Well-Being, an On-Demand CLE webinar that's free for ABA members, discusses the ways poor financial fitness can affect your life and practice. Watch the webinar to receive practical solutions to these financial issues from a certified financial advisor.