086 | Money Management at the Extremes

There are two extremes when it comes to lawyers managing their money.

On one side are the YOLO spenders—the lawyers who spend whatever without a plan or a thought about the future.

On the other side are the penny-pinching spenders—the ones who tell themselves they can’t use their money for anything other than paying off debt, saving, and necessities.

In this episode, let’s chat about why both extremes lead to negative consequences for your finances and a better way to manage your money.

Lightly edited transcript appears after the show notes.

Topics Discussed

• characteristics of the YOLO spender
• where YOLO spending often comes from
• the results of YOLO spending
• characteristics of the penny-pinching spender
• the results of penny-pinching spending
• the difference between deprivation and delayed gratification
• the solution for lawyers at these extremes

Listen to the Episode

Resources mentioned

Episode 34: “I Work Hard. I Deserve It.”

Episode 77: When the Willpower Runs Out

Work with me

If you’re ready to learn the mindset and strategies to master your money, let’s schedule a call.

Connect with me

Social media: Instagram and LinkedIn

Email: hello@rhothomas.com

Recent Episodes

Lightly Edited Transcript

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. So today we are talking about the extremes of managing money. If we put people on a spectrum, like the way people manage their money on a spectrum, on one end of the spectrum would be the people who say YOLO and spend whatever they want. whenever they want, as long as there’s cash or credit available, and at the other end will be the people who strive to never spend any money beyond the necessities and responsible things. If you’re on the YOLO end of the spectrum, you’re spending whatever you want without a plan. You’re not thinking long term. You’re not thinking about what you want for the future and how your present decisions will impact that future. You see that you have the money or credit available and you want this thing so you buy the thing. It’s very much driven by instant gratification. It feels good in the moment to spend the money and that’s all that matters. By YOLO people are not prone to giving much thought to their purchases, and often YOLO spending comes from that thought I work hard I deserve it, which we talked about back in episode 34. But when you are thinking you work hard and you deserve all the things and you’re feeling entitled and you use all of that to justify spending whatever you want. You’ll end up with a lot of stuff you don’t really care about, and little money to show for all the hard work you do. All of your present spending will jeopardize your financial future. And what I’ve seen is lawyers who spend in this way often can’t fully enjoy it, because in the back of their mind, they’re feeling anxious about whether they can actually afford this or they feel guilty that they shouldn’t have spent so much or they feel ashamed about the state of their finances in general. So it’s almost this roller coaster ride of feeling the high of spending but then the low of all their uncertainty about their finances. I think most people can see how the Yolo extreme can lead to negative or undesired consequences. But the same is true for the other extreme, the people who spend as little money as possible. If you’re on this end of the spectrum, you’re telling yourself you can’t spend any money and you can only use your money for responsible things. I can’t buy this thing that I want because I have to save or I have to pay off debt. I have to whatever responsible thing you tell yourself you have to use your money for. This was my story. At first. I was like oh, I can’t spend on anything that’s not essential, right? It’s not responsible. And if we did happen to spend on something like ordering takeout or something like that, then I would feel guilty about it. You’re only able to keep up with that way of managing your money for so long. I’ve talked to lawyers who make more than enough money to be able to pay for the things they want and still make significant progress on their goals. But in their minds, it’s bad to spend on something that they want when they haven’t achieved the goal yet, and so they will deny themselves the things they want all together and try to stay focused only on achieving their financial goal. For example, I was talking with one lawyer who makes about $200,000 a year but she’s not allowing herself to go out to eat not going to restaurants even though she wants to because she has to own that. And as I said this was me too in the beginning and I told her like girl you can afford to go out to eat sometimes I think you’ll be okay. What happens though, is a lot of times when you’re penny pinching and telling yourself you can’t spend on anything, and you can only use your money for these so called responsible things and you’re feeling miserable the whole time. You may be able to keep it up for a while. But eventually you’ll likely fall off track and splurge and end up setting yourself back because you feel like you’ve been deprived for so long. It goes back to our conversation in Episode 77. About willpower. When managing your money feels like deprivation and you’re just trying to willpower your way through. You’re not going to stick to it long term. When you make it into these things that you have to do and you can’t do, right I have to save this money, I can’t spend on that thing. You’re only going to be able to keep up with that for so long. And if you continue to try to deprive yourself, you won’t be able to stick with it long enough to actually see the benefit that you’re looking for long enough to actually achieve the financial goal you’re trying to achieve. And don’t get me wrong. You might still choose not to spend on some things right to delay gratification in the short term to achieve your goals in the long term. But you don’t have to completely cut out everything that’s not quote responsible to do it. And you know if you’re depriving yourself versus making a choice in service of your future goal, by the way it feels deprivation feels heavy and awful, right? It sucks delayed gratification is lighter, it feels more responsible. You have in mind what you’re working toward, and you’re willing to delay gratification for now, to get there. In both instances in both extremes. You want to find a middle ground right a middle of the road way to manage your money, something that is more balanced. On the low side. You want to rein in your spending a little and on the manufacturing side. You want to give yourself a little more breathing room. The way to achieve that regardless which side you fall on, is to create a budget for yourself that provides the space to spend on the things you want and give yourself a set amount to spend on those things. So how much money are you going to spend just for you? My clients have all kinds of interesting things just for themselves in their budgets. And the key is it’s their budget, so they get to make the budget. They get to make the rules for what they’re gonna spend. And you can do the same. If you want to go out to eat, decide how much you’re gonna spend going out to eat each month and stick to it. If you want to buy new clothes each month, decide how much you’re gonna spend on that and stick to it. If you want to just have money to spend on whatever you want each month, you decide how much that is and then you stick to it. That way if you’re any venture, you give yourself leeway to have fun to spend on things that you just want that aren’t necessarily responsible because you plan for it. And on the other side, you give yourself some boundary some parameters to stay within so that you can do the things you want to do but also still make progress on your goals. And you’ll find that doing this process of deciding how much you want to spend ahead of time and sticking to it isn’t as bad as you might think or as restrictive as you might think. Because you’re literally giving yourself a pot of money to spend on things you want to spend on. The funny thing is it tends to feel more uncomfortable for my penny pinchers than the YOLO spenders because they’re not used to spending on fun things. But listen, when you make a plan for it, you’re literally giving yourself permission to spend on this thing. And you know that you’ll still make progress on your goals. There’s nothing to say that you have to spend everything that you put in that budget anyway. So you don’t have to spend all the money on fun stuff. If there’s still money left at the end of the month. You didn’t spend it on, you know going out or whatever the thing is for you. You can put that money towards your goal if you want to. But the key is to have balance. You can’t just be YOLO spend it all I’ll deal with the consequences later. And you can’t be like oh, I can’t have anything I have to be restricted until I achieve my goal. In both instances, you want to have balance on the other side. If you just spend everything and never think about the future. You won’t have anything to show for all the money you’ve made all the time that you’re putting into your career. On the penny pinching side. If you just hoard all your money, or only use it to pay off debt or save, you won’t really experience life. Plus, you’ll only be able to keep it up for so long. So when you’re spending nothing and telling yourself I can’t I can’t I can’t write I have to do this. At some point you’re likely going to get tired of it and just go spend. You want your money management to be something that is sustainable, something that you can keep up with. And you want to change the way that you view money and your relationship with it. Because when you do that, that’s when you’ll get out of those extremes and get into the balance that takes to manage your money in a way that leads to actually achieving your goals. If this sounds good to you, but you’re like, I’m not sure how to do this. This is exactly the work I do with my clients. So head to rhothomas.com/call and schedule your consultation and we can chat about how we can work together. Alright, so that’s it for this week’s episode. Come connect with me over on social media. I’m most often on Instagram at I am rho Thomas and on LinkedIn, subscribe to the show on whatever platform you’re listening on and leave a written review, both of which help the show be seen by more people. And of course another way to help is to share the show with a friend or two who would find the information useful. Okay, as we close out friend, I pray that you notice if you’re falling on one of the extremes of money management that we talked about today, I pray that if you find yourself in that place, you make a plan to manage your money in a more balanced way and make sustainable progress towards your goals. And as always I pray that you continue to take steps to regain control of your time, build wealth and live the life of freedom and choice you deserve. Talk to you later.