9 money tips for young lawyers
So you have entered the legal profession, that’s great! Perhaps you have been enjoying the feeling of having a professional income and having a bit of fun so far in your downtime. This article provides you with some practical tips to ensure you are heading in the right direction with your personal finances whilst continuing to have fun.
1) Invest in yourself and improving your income earning capacity. The greater income you have, the easier it will be to build personal wealth, maintain good employment and ultimately have a good life.
2) Live within your means. Spend less on your lifestyle than you earn. This is a basic idea, but say it to yourself again and make it a concept that is forever in your mind. If you are doing something different to this, change! Many people may already know this, but you need to LIVE it!
3) As in the famous and well-worn book, The Richest Man in Babylon, part of your income is yours to keep. Part of your income should always be put aside for savings and investments. Do this as a starting point, not as an afterthought.
4) Potentially starting a regular investment plan early and maintaining it as if it is ‘just another bill’ is a positive thing to do. Many people like this idea but don’t quite get around to it. If this is of interest, we may be able to help.
5) Keep a cash reserve so that, if the unexpected arises, you have cash available to address the situation.
6) Think about debt carefully. Many have too much debt! Whenever you use debt or borrowed money to buy an asset as an investment, additional risk is added to the equation. Beware of excessive borrowing because, in almost every economic downturn, those that have too much debt can get caught out where asset prices reduce significantly.
7) Start early to work towards accumulating a deposit for buying a home. Not everyone wishes to own their own home, and if this is the case, that is okay. Buying a home is a good step for those who wish to, but be careful not to buy ‘too much home’ or take on too much mortgage debt from the start. A large mortgage means a higher cost of living and less money left over for day to day living, investing or holidays.
8) Have a good quality superannuation fund from the start. Further, know that at some point in your working life, ideally from the start, you should make other investments, as your employer contributions into super alone are unlikely to be enough to get to your idea of ‘financial freedom’.
9) Protect yourself with quality insurances.
The last thought is not financial in nature but equally important. If you commit to look after your health, have regular exercise and eat well, then you will be able to enjoy the fruits of your toil ! If you can tick these things off, then your personal finances are heading in the right direction. We are always happy to have a chat over a coffee if you would like to discuss.
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