266 | Work With What You Already Have

Do you believe that all your money problems would be fixed if you made more?

It’s a common belief, but for lawyers, it’s typically not accurate.

In fact, most lawyers would be better off if they learned how to work with the money they already have.

In this episode, let’s talk about why it’s a mistake to believe that more money will fix your problems and why it’s more important to learn to manage what you already have.

• • the mistake of believing that more money would solve your money problems
  • the unproductive way most people manage their money
  • a personal story of making good money but not managing it well
  • why additional income is often wasted
  • why it’s critical to learn better money management skills
  • the surprising way my clients end up with more money without getting raises

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You’re listening to Personal Finance for Lawyers. 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.

Today we are talking about using the money that you already have more effectively, basically learning how to work with what you already have.

I thought about the concept for this episode because of a number of conversations that I’ve had over the years, but recently about people wanting to make more money. They’re thinking about whether they should go to another firm that pays more. They’re looking into whether they could do some sort of side hustle or get a second job or things like that and the idea is if I had more money coming in then I would have a better financial situation. Then all of my problems would be solved. That is a fallacy.

That’s not true.

And so I wanted to talk about the importance of using the money that you already have more effectively because often if you can just use what you’ve already got more effectively, you can eliminate the financial issues or pressures or whatever that you’re feeling.

To be clear, I don’t think that there is anything wrong with making more money. I think that that can be great. However, if you don’t know how to manage the money that you already have then oftentimes when you make more, you’re going to manage it in exactly the same way, and you’re going to end up in the same position.

So when I think about the importance of managing the money that you already have of using what you’ve got and working with it, I think about the fact that so many people don’t know what’s happening with their finances. A lot of people are looking at their bank accounts and that’s how they make decisions about whether to buy something or whether to do something or that kind of thing.

And that’s not a good way to manage your money. If you are not planning how you’re going to use your money, you’re going to end up spending it all. And then if you end up getting a raise or some increase in your income, that money is just going to get spent too, because again, you’re not planning for it.

So you want to make sure that you are making a plan for what you’re going to do with the money that you already have, and when you do that, then you’ll see that your financial situation is a lot better than you think it is.

So using my own example, I was making six figures and my husband and I were staying stuck in the same place because we weren’t making any kind of plan for how we were using our money. We weren’t creating any kind of budget. We didn’t have any plan for paying off our debt, anything like that.

Our main goal was to not end up with credit card debt, so we would pay our credit cards off at the end of the month, but pretty much everything else was being spent. And there was no kind of intention behind how we were using that money.

When we started looking at our finances and looking at how much was coming in and how much was going out and all that kind of stuff, we had like $150 at the end of the month, like that was the gap between our income and our expenses.

And so by changing the way that we were using our money, by changing the way that we were spending, being more intentional with how we spent, we were able to increase that gap.

So we started getting our finances under control first, and then as we got raises and we got bonuses and stuff like that, we manage them in the same way. We made sure that we weren’t just spending those things.

That’s what happens a lot of times is people will think, “oh, I just need to make more money.”

And then you make more money and well, now I can afford this thing that I’ve been wanting to have, or now I can go and get this treat or this luxury that I’ve been getting every once in a while. Now, I’m doing it more often.

And then that thing that once was a treat or once was a luxury now is a part of your monthly habits. Now it’s something that you’re doing all the time. And so it’s another expense that’s pulling at your income.

This is how people make more money and they get to the point that they still feel like they need to make more. It feels like more at first and then you fall into your regular money management habits and that money just slips right through your fingers.

So you want to make sure that you are properly planning for your finances and you are looking at how much money is coming in, deciding where it’s going to go, how you’re going to use it. Otherwise you don’t get the benefits of the additional income. Like if you don’t know how to manage your money, you’re going to make more and it’s not going to feel like it. You’re not going to get the benefit of it.

When you learn how to manage the money that you’re making now, then you’re able to take those same habits to additional income that you bring in. You learn how to create more cash flow, how to be more intentional with your spending, how to save more, how to start paying off your debt.

You do that now with the income that you have now and then you’re able to do those same things as you make more, but if you never learn how to manage the money that you make now, you’re never going to be able to manage additional income.

The additional income is not going to be the solution that you think it’s going to be, because the underlying problem is not how much you make, it’s how you manage the money that you’re making.

So let’s make sure that you are managing it effectively, make sure that you are doing everything within your power to improve your financial situation, and then once you make more money bringing that mindset, that skill set to it, then you’ll actually be able to get the benefit of that additional money.

You don’t have to wait until you make more money to put yourself in a better financial position. You can start managing your money better now and when you manage the money that you have now better you’ll be surprised at how much better you feel about your finances.

A lot of my clients are often surprised that they have more money, they have more savings, they have less debt, even though they haven’t gotten a raise. And it’s all because we are using the money that they already have more effectively and they’re able to use it with intention and moving towards goals that they have versus treading water and staying stuck in the same place because there’s no plan.

So let’s work with what you already have before you start looking to some outside source. Right? The income, the additional raise, the bonus, whatever, before you start looking to those things as the solution, let’s work with what you already have and start improving your situation now.

Alright so that is it for this week’s episode. Please take a second and share this episode with a friend or two who you think could use this information. Sharing is the best way to spread this information to make sure that it gets in the hands of as many lawyers as possible, 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.