Financial Do’s and Don’t’s (FOR NEW LAWYERS!)


Angela (00:00):
Hey guys, welcome back to my channel, the number one place for new and aspiring lawyers
on all things law school, the lawyering life, and the legal industry. I’m so excited about today’s video because
we are talking about an insanely important topic for new lawyers in particular, which
is how to manage your money. Because for new lawyers coming right out of
law school, starting their legal careers for the first time, you’re talking about people
in hundreds of thousands of dollars in debt and making in some cases hundreds of thousands
of dollars in income for the first time. And so those two things colliding together
oftentimes lead to very bad financial mistakes and, and financial pitfalls. And so understanding and learning what those
are and how to get out of them so that you aren’t stuck in a career that you hate or
in a life that no longer brings you happiness is so, so, so important. Angela (00:46):
And financial independence and financial freedom are very big components that feed into that. And so if you are interested in learning about
the biggest financial mistakes that young attorneys tend to make and how to avoid them,
then keep watching. I’m so excited for today’s video because we
have Erol Atac a tech of the Armstrong and Atac tech financial group LLC based out of
Chicago. He’s a co-founder, he’s a financial strategist
working specifically with young lawyers who are starting out at law firms. So Erol, thank you, thank you, thank you so
much for being here and welcome. Erol (01:16):
Hi, Angela. Thanks so much for having me here. Angela (01:19):
Okay guys. So it’s important to know that this is not
a sponsored video. Erol cannot give specific financial advice
to you guys as a general audience, but we are going to be talking about really important
financial factors that affect all young attorneys as you move through your careers, as you begin
your careers. And so that’s what the focus of today’s video
is because this is such an important aspect of starting out your career as a lawyer. Okay. So first question, biggest question. What are some of the biggest financial difficulties
that you see young lawyers having on a consistent basis? Erol (01:51):
The biggest financial difficulties that I’ve seen young attorneys with, number one, and
this may not be a shocker, student debt. It’s not uncommon to see associates with over
$250,000 as student debt with also very high interest rates. And so the high interest rates oftentimes
that I see, give me a panic attack because the banks are taking more money out of their
pocket than they perhaps should. And so this could be an opportunity where
you may be able to save thousands, tens of thousands of dollars on student loans. The second is savings for future. Associates typically what I’ve seen work somewhere
between 70 to a 100 hours, basically working 24/7 right? And so they oftentimes lack the time and energy
to focus the financial future as well as the financial today to live it the way that they
want. A third, and I call this more of the Hollywood
effect, more of the riches effect. It’s, it’s where you start helping family. You know, you may not necessarily come from
a wealthy background as an associate, but out of nowhere you’re making somewhere one
150, 190, 200 and above, and then out of nowhere you, you either help family parents, or you
may be helping cousins, relatives that you may have not seen for the past decade. Angela (03:25):
In addition to the biggest financial difficulties you’re seeing that you just talked about. What are some of the biggest spending habits
that maybe young attorneys do that get them into trouble? Erol (03:36):
Yeah, so I don’t know if this is a fun one or a scary one, but essentially what I see
is two major ones. The first one, food delivery. Ride share. Erol (03:49):
All of you out there who are associates, you will be working ridiculous hours, day and
night. And so that oftentime means that you’re not
meal-prepping as much. You don’t have as much time to take maybe
public transportation, or you’re just eating out a lot in general. And so I have seen cases and scenarios, not
just one, but multiple cases where someone will spend 150 a hundred dollars a day on
ride share and food. Number two, saving up for big ticket items. And what I mean by big ticket items, is like,
it could be fun, it could be your home, it could be a condo, it could be a car. And what I oftentimes see is coming out of
law school and starting at a big law firm, typically you’ll start making $190,000 with
a $15,000 bonus. That’s a lot of money that you come into,
right? Erol (04:42):
You work for it, you earn it, you deserve it. But then you’ll end up spending maybe three,
four, I’ve seen $5,000 a month on rent, on a mortgage. And what that in essence does is gives you
less of an opportunity to plan for your future. And I’m not just talking about planning for
retirement, I’m talking in standpoint of you may be creating an opportunity of creating
your own golden handcuffs in your career. Or you may not be taking advantage of savings
for your future, where you may be missing out on compound interest, which is the younger
you start, even if it’s at a smaller bit, the more time it has, the faster it’s going
to be growing the older you get. Angela (05:35):
And that is so amazing that you are talking about this specifically because I love talking
about this topic, the, the problem of the golden handcuffs of spending too much money,
too early, of getting comfortable with a lifestyle that’s sort of an elevated one that you don’t
necessarily need or even maybe necessarily even want. Um, that puts you in this situation, not only
like you say, not to be able to plan for your future and to save money and to take advantage
of compound interest and all of the things that set you up for life, you know, 5, 10,
15, 50 years down the road. Um, but also don’t in the short term, don’t
give you the freedom to, for example, walk away from a job that you don’t want to be
working at anymore. So you know, in big law there’s a lot of turnover,
but there’s people who stay, you know, 4 or 5, 7, 10, 15 years, when if they had planned
correctly, they could have stayed for two or three, paid off student loans and then
go and get the job that they really want. So talking about spending, saving, budgeting,
what are some of the biggest misconceptions that you see young attorneys having over and
over with respect to these topics? Erol (06:41):
I have three for you today. Number one is how much you spend on rent or
mortgage. So percentage of your income that should be
going towards rent or mortgage. What we’re taught is like 30 to 33%. Who gave us those stats? Why is that the magic number? Who created that rule of thumb? Why does one size fit all? It doesn’t, that’s the thing, right? Number two, student loans, the name of the
game is paying them off, right? It’s that thing that you got so that you could
be an attorney so that you can practice and do what you love. Um, oftentimes the thing that scares me more
than how much you owe is actually the interest rate. I’ve seen anywhere between 3% to 12%. I’ve seen fixed, I’ve seen variable. I get a bit of a panic attack when I see that
interest rates are higher. There are strategies to go about paying it
off. Erol (07:46):
Some people want to pay it off super aggressively. Some people want to play the slow game on
it. Some people are just like, yeah. It’s a preference thing and at the same time,
one size does not fit all for that either. Number three, tax considerations. I’m not an, I’m not a CPA, I don’t give tax
advice, but I do know how income works as well as savings for the future work. So I see many young attorneys typically, let’s
just say $200,000 is what they’re making, um working at a big law firm. But they don’t take into consideration federal,
state, local, food, um, sales tax, like all these different taxes that could swing anywhere
from 30% to 50%, maybe even sometimes more depending on spending habits going to uncle
Sam. And so if we’re strategic about how we save
our money, we can be tax smart about our future too. Angela (08:51):
And I think that’s such a good point. And I’ll link in the description below a video
I made, what I made versus what I spent for my two, my first two jobs out of law school,
cause one was a federal judicial clerkship in Dallas, Texas and one was working at a
biglaw law firm in New York city. And I specifically talk about that, what you
just mentioned that there’s the differences in the tax bases because just like you said,
there are some states like New York, for example, that we’re not only going to pay federal tax,
you’re also paying state and city tax. And then as opposed to living in Texas, for
example, where we don’t have state or city tax. And so that is a huge consideration. It is really important. Just like you say. Well Erol, thank you so, so much for being
here with us today. I love all, uh, all things financial planning. I think it just creates so many wonderful
opportunities, um, in your life and especially for young associates, uh, young attorneys
just coming out of law school or working in the first few years of their job. This information is vital, vital to understand
and to apply. And so thank you, thank you again for being
here. Erol (09:52):
Angeles. It’s absolutely been a full pleasure for me. I’ve really enjoyed this and I think you put
out such great and terrific valuable information for those young attorneys, associates out
there, and I’m honored to be a part of it too. So thank you. Angela (10:06):
Excellent. And guys, I’m going to link in the description
below all of Erol’s contact information, a description of the services that he provides
to young attorneys in case you guys are interested or want to reach out. I’m also going to link in the description
below some financial planning documents, sort of a get-start guide, um, that is going to
link to his website in case you guys want to follow up and learn more. And so, like I said, it’s not a sponsored
video, but it is such vital, amazing financial advice that I want you guys to be able to
have access to and to be able to apply in your own lives. And so it’s been a pleasure Erol and we’ll
see you next time. Erol (10:44):
Thanks Angela. Take care.

15 Comments

  • More questions about new lawyer finances? Let me know in the comments below!!

  • Great video! This resource will be immensely useful to me in the near future.

  • I love you channel it is going to help to choose me to choose Law as a career please make videos on prelaw undergraduate law

  • You make the videos in which people want to see. Thank you.

  • Great information. Thankfully my law degree won’t cost as much getting one in the states, which will allow me to focus more money on savings/ paying of my student loan.

  • Good contents thank you

  • Love this!!! Thank you!!

  • This video is amazing! Thank you for spreading a good message to society!!

  • $190k our of school?! Missed my calling 😂

  • 3L echoing what Erol just said @ 9:57 – thanks for the amazing info., Angela!

  • The advice Erol provides here to young attorneys is also applicable to young highly educated professionals, such as doctors, nurses, veterinarians etc. Great advice!

  • Just binge watched your channel. Really good information here. I would love to hear about a day in the life of a Corp lawyer, (what are you doing for 80 hrs a week) , passing the bar , (did you pay for a formal class) , and deciding which internship is right for you. In the mean time , I’m working my way through all of your informative videos. PS- would like your honest opinions on T14 law schools. Is it just prestige. Or does the curriculum somehow put you head and shoulders above everyone else. Yale Law is my holy grail.

  • I learned that you should not immediately adopt a lifestyle that will make you rely on your high income. It makes switching jobs hard or impossible if you ever want to do something different that pays less.

  • These are great tips and great advice to young lawyers. I know young Lawyers who went around buying very expensive suits and then going into work to photocopy documents. A good suit is a must if one has to wear a suit but it's not necessary to take a loan to buy clothes that will rip while you are running everywhere doing new entry lawyer admin kind work.

  • Hi I’m a criminal justice major working on getting into law school, but I was told that because of my hair style I won’t make it as a attorney due me have neat and well kept dreadlocks. Any suggestions for me on the topic?

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