299 | Making More Is Not Better

There’s a pervasive, false belief that making more is inherently better, but that’s not the case.

In this episode, let’s talk about why making more is not better and what really matters when it comes to your finances.

• • the desire of many lawyers to make more
  • a personal experience with the undesired consequences of making more
  • when making more causes you to take steps backward with your finances
  • a client story about the negative effects of making more on her finances
  • what you need to make additional income work for you
  • balancing the positives and negatives of making more

   

• My client Val’s episode
• Need help with your finances? Schedule a consultation here

Hey friend. Welcome back to the show.

Today we are talking about why making more is not better. Now I don’t mean this to say that making more is bad or that you shouldn’t make more money. But I think sometimes we get caught up in this belief that it’s always better to make more, we should always strive to make more, and I don’t think that that’s always the case.

I cannot tell you how many people have come on calls with me, and they tell me about how they should be making more because such and such firm is at this much at my level, and the such and such firm is always one of the firms in New York, the ones that are leading the way with the raises and bonuses and all that kind of stuff.

And the thing that I always tell them is to think about the level of work that they’re doing at their current firm, like the number of hours that they’re putting in and that kind of stuff. And if they think that would fly at these firms that they’re talking about, because that level of money, the additional money, comes with additional expectations. And I don’t think we always think about that.

If they are paying you at this higher level, they’re expecting more from you. You probably aren’t have a whole lot of free time, or the amount of free time that you have now. They’re expecting you to be in there working because they’re paying you top dollar to do it.

I remember back when I was at my old firm, and they were considering associate raises—these market raises in line with what other firms were doing. And I talked with our associate committee, like the committee that was the liaison between the associates and partners, and I was telling them that I didn’t want the raise.

I didn’t think that we should do the raises because I knew that the way firm economics work, we are an expense. Associates are an expense. And so if you are raising that expense, then you also are going to want to raise more money. The partners aren’t going to take that money out of their own pockets. They would expect us to bring in more revenue, and I didn’t want to do that. And sure enough, maybe six months later, a year later, something like that, they raised the minimum hours requirement after they went ahead and implemented that raise.

That was the first time that I took advantage of our reduced hours policy because I was fine at the salary that I was at. I was fine at the hours that we were at before, and so I decrease my hours to go back to what the original requirement was and go back to what my original salary was, and all of that.

So it’s just something to think about, like the added money, that added income is going to come with added expectations. It’s going to come with you being expected to bill more hours or you being expected to be on call more or that kind of thing.

The other thing to think about, though, is sometimes making more gives you this false sense of security, especially if you have not learned to manage the money that you already have. So a lot of times when you’re making more money, you start spending more money because you’re always expecting that more money is going to come in, and you don’t feel the need to track your finances as much because you know that this money is going to keep coming in.

One of my clients actually talked about this on her interview that she did on the podcast. She and her husband were living off of her husband’s pastor salary when she was in law school, and they were fine. They were doing well. They were able to maintain their lifestyle and all of that. They didn’t get into debt until she graduated and got into big law.

And it’s the same kind of thing that I’m talking about, where you’ve got more money coming in, maybe you’re not tracking it as closely, maybe you’re spending money before you get it, right? I’m gonna go ahead and do this. I’ll put it on this credit card. I’ll take out this loan because I’m expecting this additional money to come in.

And so you’ve got to be mindful of how you are spending your money, how you’re managing your money, all that kind of stuff because making more money does not automatically erase all of the problems. Sometimes, like in Val’s case, it can cause problems because you’re not changing your mindset.

So now again, this is not to say that making more money is bad. If you’ve got a plan in place, a system in place, for how you’re managing your money, making more money is going to be great because you know exactly what you’re doing. You know how to manage it.

Going back to my own story with my husband and me, when we got on our financial journey, we decided that we were going to get our finances in order and build our savings and pay off our debt and all of that, we started looking at how much money was coming in and deciding where we were going to put it. And we knew that as we got more money, we wanted to maintain our expenses about where they were. So we were very intentional about not allowing lifestyle creep to get out of control.

Of course, there still was some lifestyle creep. Like, I don’t think that anybody is just always living at the exact same level and never increasing their expenses at all, but it’s possible to do it in a more controlled way, and that’s what we tried to do. And so as we got raises and things like that over the years, our base level lifestyle stayed about the same, and so that additional money was able to go towards building us toward our financial goals faster.

So that is a situation where making more is positive because you’ve got that plan in place. You know how you’re managing your money, and so when you get more money, you already had a plan based off of the lower amount that you had. Now that additional amount can go towards getting you to your goals faster.

But again, my point is that making more is not always doing better. One of the key turning points in our financial journey was coming across people who were making less than us, who were doing better. It’s about how you manage that money and the lifestyle that you want, and how that additional income plays into it. If you want to have a certain lifestyle, a certain level of free time, a certain level of flexibility in your schedule, that might mean that you’re going to make less than someone who is willing to give up those things and be at a place that demands more but also pays a lot more. If you have a plan for that money, you decide exactly how you’re going to use it, you know that it’s going towards your goals and not just going right out the door, then having that additional money allows you to get to your goals faster.

But it’s not a one size fits all, check the box, black and white kind of thing that making less is bad, and making more is good. It can be both, and it’s all a matter of how you manage that money and what you want for your life.

So as you are thinking about your finances, don’t automatically think that making more money is the answer. Sure, making more money can help, but you’ve got to have a plan. You’ve got to be managing your money intentionally and deciding where you want that money to go, be directing the money towards your goals, all of that kind of stuff, so as you make more, you’re able to manage that money better as well, and you’re able to funnel it towards your goals.

So if you need help with managing your money better and actually achieving your goals, schedule your consultation at rhothomas.com/call, and let’s talk about how we can work together.

Alright, so that is it for this week’s episode. Hopefully it gets you to thinking about making more money a little bit differently, not as the end all, be all, definite answer to all of your problems, but as something that could help you, and you’re balancing it in terms of what you want for your life and how you’re managing your money.

Please take a second share this episode with a friend or two who you think would find it useful. That is how we get this information in the hands of more lawyers. And as always, I appreciate your support.

As we close out friend, I pray that you take the information you learn here, apply it in your life, and open up to the realization that wealth is available to you. As you do that consistently, week after week, you’ll continue to take steps to take back control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.