This month marks the first installment of The Money Confidante, a new series on money for women attorneys. Over the coming months, I’ll be covering everything you need to know about money but didn’t want to ask (at least not in public).
Money is a topic that brings up anxiety, fear, shame, and a host of other emotions and my goal will be to reduce those feelings, and to give you the information and the tools you need to make smart financial choices so you can live the life you want.
I’m going to put this out there: Everyone you know is NOT better off financially than you, and does NOT have their financial house in order, regardless of how they may seem. I have dug into the numbers for many women professionals and can tell you that having a fancy car or a big house doesn’t mean someone is financially on track. I am going to focus on what YOU need to do, so that you are on track to where you want to be financially.
To kick this off, I’m going to start with one of the biggest financial issues that derails women attorneys from financial security –spending.
Where does it all go???
Do you know where your money is going? Do you know how much you spend monthly and on what? Is there money left over to save for important goals you have?
If you answered NO to these questions, you are not alone.
Not knowing where your money is going is the number one derailer for women professionals, and an especially big issue for women attorneys. There are two reasons for this: First, many attorneys get paid irregularly, but have very regular expenses that must be paid, like mortgages and estimated taxes. And second, many women attorneys tend to spend a good portion of what they earn. This may bring a short term sense of happiness, but it doesn’t get you any closer to reaching financial goals you might have.
By not knowing where your money is going, you may feel caught in “golden handcuffs,” where the increasing cost of your lifestyle keeps you in a position you may no longer enjoy, or just plain results in not being able to find the money to put toward more meaningful goals.
If this is one of your challenges, here are a few different solutions to try:
1. Track your spending. If you know where your money is going, you can choose to have it go elsewhere. Find a tool you like to track your expenses for a few months so you can see the trends in your spending. A couple apps to consider are Tiller Money, and You Need a Budget.
2. Use different accounts for your fixed and discretionary expenses. Fixed expenses are bills you need to pay monthly for basic living like your mortgage, and they are fairly consistent. Discretionary expenses are those you want but don’t need. Segregate these expenses into separate bank accounts so you can stay on top of your spending. Check in on the accounts once or twice a week to know where you are.
3. Pay yourself a consistent monthly income. This is especially helpful for solo attorneys and partners who are not paid on a regular basis. When you receive payment quarterly, or sporadically, keep it in a high interest bearing savings account. If you know your monthly costs of living, (because you’ve tracked it and know what you need for fixed expenses), you can “pay” yourself from your savings account just enough to cover that monthly amount in the bank accounts you use for spending. I suggest “paying” yourself twice a month to help with budgeting. Keep the pay consistent, and it will help you to keep spending consistent.
4. Set up auto transfers for any savings you want. Look at your discretionary budget, decide what you are willing to carve out each pay period for your goals, and then set up an auto transfer to a savings account for that goal for each time you are paid. You will be amazed at how quickly you can save for your goals when you are intentional about saving.
By knowing where your money goes, you can choose to spend it where it matters most to you. Just a little time spent here can make your life richer.
Let me know if these tips were helpful for you, and what topics you want to hear about!
Bridget Venus Grimes is President of the financial life planning firm WealthChoice, and is passionate about helping women attorneys make smart financial choices and live the life they want.