105 | Money Trade-Offs

Many lawyers spend money without intention.

We often say “yes” to one thing without thinking through what we’re effectively saying “no” to. But every dollar you spend is a dollar you can’t use for something else.

When you’re not intentional with your spending, you don’t make the progress you could be making toward the things you truly value.

In this episode, let’s talk about the trade-offs lawyers make with money and how to think about your spending decisions.

Topics Discussed

• the basics of financial independence
• treating discretionary expenses like necessities
• thinking about the trade-offs of your money decisions
• how your spending decisions can cost you your time and freedom
• the concept of golden handcuffs
• the power of having more control of your finances

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Resources mentioned

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

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Email: hello@rhothomas.com

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Lightly Edited Transcript

You’re listening to Wealthyesque. We are a community of lawyers who believe that true wealth is having control of our time. I’m Rho Thomas, and as a busy wife, mom and former Biglaw associate, I know all too well the tension between the culture of the legal profession and pretty much everything else you want to do in life. That’s why each week, I’m bringing you the information and tools you need to improve your money mindset and manage your money to create true wealth. Because ultimately, it’s not about the money. It’s about the freedom and flexibility the money affords.

Hey friend. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today we are talking about the trade offs we make with our money and acknowledging the choices we make with our money. I did a presentation for a group on the concept of financial dependence and if you’re not familiar with financial independence, it is that you have enough in your investment assets that you can cover your living expenses and no longer need to work to earn money. And as I was teaching on this concept, and specifically the rule of thumb for reaching financial independence, which is to have 25 times your annual expenses invested. One of the attendees asked what she’s supposed to do because she and her family need their annual vacation to Hawaii. And I told her to first recognize that that’s a lifestyle choice that they’re making. And so if that annual trip is really important to them, and they like even then that’s gonna take them longer to achieve financial independence, and if they weren’t taking it or if they weren’t taking every year the thing that really struck me off question was the way she said it as though she had no choice in the matter. She said it like obviously can’t do anything. That’s why he’s just part of the business and when asked what to do about that, and what came to mind for me in that moment was how often we have discretionary expenses that we treated with the necessities to think about them as though we have no choice as to whether we spend on those things or not. And the thing I always want you to keep in mind is the trade offs of your decisions and the choices that you’re making with your money. Money that you use for one thing is necessarily money you can’t use for something else. Somebody this person is using for her annual family vacation in Hawaii, this money that she can’t use to invest in achieve financial dependence. And on top of that, the choice to go to Hawaii every year means you need to have more money. invested to achieve financial independence, because our annual expenses are higher. Now I’m not saying that the choice about Hawaii every year is wrong or bad. I think it’s absolutely fine if that’s what she and her family really want to do. But recognize that when we’re spending that money on it or the white or the bigger house or the nicer car or whatever it is for you. That’s money that you can’t put it toward your financial goals. So you have to decide whether those things are worth that trade off to you. In some cases, they might be but in some cases, maybe not. But many of us don’t realize the actual trade offs we’re making consider them when we are making some decisions. And when you become aware of those trade offs, then you might decide to make different choices. I say all the time that true wealth is having to hold your time but what happened for a lot of lawyers is feeling stressed out and all the things will work and find more and more stuff that can still feel better. When you do that though, you end up chaining yourself further to the other thing about as well worth taking over your income. You need more and more income to maintain those expenses. So if you think about how much your lifestyle costs now versus when you were in law school, I wonder if we’re starting out, right? Most likely your living expenses now are higher than they were earlier on your career or when you were in school. I posted recently about how we can have more freedom in our lives when we’re more intentional about how we manage our money and pay attention to how much we spend on things that we don’t actually care about. And someone on LinkedIn like older she had that post and he said too often we find ourselves feeling like we need a treat to make up for a particularly hard day or week. But the problem is that part of those rough days and weeks are a result of those quote unquote treats. Chatter you might have thought that comment was spot on. Because when you decide to treat yourself in vacation or Hawaii or to your house with a bigger car, those things inevitably increase the amount that you’re spending, which means you need more money to deal with them. So now you’re more dependent on the job because you need the money. And again hear me I am not saying oh by the things of your house, the car the trip, right? I’m saying make sure you’re actively choosing the trade offs that combine those things based on what you value. Too often we think about our spending as if we don’t have a choice, just like a participant in that condition with the annual vacation to Hawaii. We think about it as if it’s just what it is right? It is what it is. There’s nothing I can do about it. This is just the amount I spent, but you’re going to live your spending without intention without having a plan without any consideration for whether you really care about things you’re spending on. Then you’re making a lot of unintentional trade offs and choices that impact other areas of your life. I know people who make multiple six figures a year and have made over six figures a year their entire career over a large portion of their career, but don’t feel like they can afford to do something different, even if they’re ready to leave those jobs because they’re not certainly not a good fit anymore. It’s a big part of why I do the work that I do because nobody should feel trapped in something they don’t want to do anymore because of money. Nobody should feel stressed because of money. Nobody should feel burdened by money problems, especially when you make a six figure or multi six figure income and there are some slight tweaks you can make to the way that you manage your money to have a different outcome. Open yourself up to having options to not be chained to the job. Right if the classic golden handcuffs actually years ago, I did an impromptu informal training for all the first year associate in my forearms Atlanta office where they only wanted to come to my training somebody that didn’t want to let them buy them lunch and forget how much room and I wanted to talk to them about golden handcuffs. They were just talking out and I had seen so many people over the years make decisions that ended up destroying their options for what to do and now they have this mortgage or that car payment or this whole tuition or whatever. And so what I was telling the first years was basically like you might really like to do it right now. But there might come a time when you want to do something different and there are trade offs in making certain purchases or certain decisions now so rather than living at the outer edge of your income from jump, making some slightly different decisions can help you have more options more flexibility available to you later. That’s why all this is so important, right? It’s not just about paying paying off debt or saving. I mean I enjoy all that stuff. I’m not gonna lie but I know you don’t care. What you do care about is having more of your time. What you do care about is being able to leave a stressful or toxic job without worrying about money. What you do care about is not having someone else have so much say in what you can and can’t do. So many people request time off or maybe they want to do something other than normally take extra unpaid vacation time or something like that. And they had a higher up or supervisor tell them no. And many people in that situation would just feel stuck and accept it as the way it is, but the people who’ve been managing the finances the way we talk about here when they got that no, they decided to do it anyway. And either affirmatively put in their notice or were unfazed by the threat of losing their job. And you’d be surprised how quickly the supervisors changed their tunes. Right? When you have your finances under control. You have that kind of control over your schedule, over your career over the things that matter to you. And it’s such an amazing place to be like I felt so free practicing. When I got to the point I didn’t need to be there. Imagine the kind of practice you could have the way you could craft your career, the risks you might take, the things that you would propose, the way you would approach your cases, the way you would approach interactions with more senior attorneys if you knew you didn’t need to be there. That’s part of the trade off you’re making. Well, you’re not managing your money intentionally. When you’re making default choices and not questioning them, every time I do anything else with clients, they’re always surprised. I think they’re in there because most of us don’t pay attention to our spending just in the money. I’m looking at all as much. But you can intentionally plan what you spend and what you don’t and what those who are paying off debt and what goes toward investment in building wealth. And you get to decide whether you might be in the same place financially five or 10 years from now, or even make some differences just now that people will remember that there’s always trade off. Everything that you buy everything you do. Every dollar you spend is money you can’t use for something else. So make sure that you’re being intentional. It starts with acknowledging the responsibility that you have for your own finances and choices that you’re making to get to where you are now. From there you can make different choices if you have a plan that leaves you having more control over money and ultimately your time. That is exactly what I do with my clients. So if you’re interested head to rhothomas.com/call and let’s talk about how we can work together. I’ll help you put together a system to manage your money where you intentionally decide where it’s going. You know exactly how much you need to achieve your goals and know exactly how to get there. So head to rho thomas.com/call now and schedule your consultation. Alright, that’s it for this week’s episode. Connect me on social media I am on LinkedIn rho, Thomas and Instagram at I am rho Thomas. Subscribe to the show and leave a review both of which help more people to find it and please think of a friend or two who would benefit from this information and share this episode with them. As we close out friend, I pray that you go forth with the realization that you are infinitely worthy and that wealth is available to you. Take the information you learned today. Apply it in your life. And as you do that consistently week after week, you will inevitably take steps to regain control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.