10 Financial Mistakes Lawyers Make
The financial life of even experienced lawyers is often quite complex. We live in a world where finances are very complex and unfortunately, lawyers don 't alwa
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The financial life of even experienced lawyers is often quite complex. We live in a world where finances are very complex and unfortunately, lawyers don 't always have enough knowledge and skills in this area to do everything right. But many mistakes are too typical, so in this article, we would like to tell you about 10 mistakes often made by lawyers.
Here is an example of 10 financial mistakes that lawyers make:
No Savings or not enough.
A rather large percentage of people believe that it makes no sense to save money and save it for some uncertain purpose. Especially it is characteristic for young people who have just recently begun to earn money on their own. Lawyers must have a higher level of savings than the general population. To succeed in this area, you need to save more than 5-10%. This is because lawyers go to work later than most other people.
Live to the fullest.
The profession of a lawyer is complex and very often requires a lot of time and effort. Accordingly, after a hard day, you will want to go with friends and relax to the fullest. As a result, it is easy to overdo it with entertainment, expensive alcohol, and food.
The financial and physical costs of such excessive consumption can be high as well as excessive. You should think and calculate: it is worth it?! Because after a hard day, it’s better to save money and go home to rest in a relaxed atmosphere.
To be ignorant about the company's benefits.
When applying for a job, many lawyers do not fully know all their privileges. To avoid this, you need to familiarize yourself with the services provided by the company for which you work. Thus, you can save on mobile communications, lunch or receive additional education for free.
Bad tax management.
Few people know that some types of tax deductions can be turned in their favor. Financially successful lawyers manage their taxes and use tax-advantaged accounts. They use tax-advantaged accounts before investing in taxable accounts.
One of the most successful tax lawyers is considered to be Monica Reyes Rodriguez. She is also the founder partner in Reyes Abogados Asociados. Besides, Monica Reyes Rodriguez is also a writer, art critic, and editor. She specializes in art history, art preservation, history, literature, finance, technology, health, and travel.
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Bad Debt Management.
It is no secret that many lawyers graduate from the law department with substantial debt, that has appeared during their university studies. The habit of becoming indebted to any need sooner or later will lead you to a financial hole. How to get out of these debts?
To prevent this from happening, besides investment capital, it is also necessary to create an “airbag”. For example, set aside every month 5% of your income for investments and the same amount for stock. Its size should be equal to income for 3-6 months of your work. Also, if necessary, you can take part in this money (with subsequent replenishment) instead of making a financial mistake, take a loan.
Having decided to invest, first of all, determine the period for which you are ready to invest money, and only then proceed to the choice of an investment instrument.
To be confident in your nearest richness.
We all dream of getting rich quick and are confident that we know the formula for success. But often we encounter difficulties. If you do not plan your budget correctly, then your legal education will never help you achieve wealth.
Lack of a clear financial plan.
This item follows smoothly from the previous one. Your financial plan should include all items of income and expenses. To determine your overall investment goals and objectives, you can fill out an IPS (an Investment Policy Statement).
IPS characterizes the strategies that were used to achieve these targets and provides unique information on topics such as asset allocation, tax rates, and fiscal targets. If you do not have a written plan, then everyday events will affect your fiscal decisions.
For your money to benefit you need to answer some questions for yourself:
- Where do your fiscal assets reside?
- What asset types will you utilize to meet these targets?
- What are your short and long term fiscal objectives?
- What is your efficient tax ante?
- What kind of belay do you have and what does it cover?
Overpayment for investments.
Many novice investors lose their deposits due to incorrectly assessed risks of one or another investment tool. If all your friends' lawyers prefer to invest in expensive stocks, hype or trust management, this does not mean that you should do like they do.
Buying a house or apartment on credit.
At the beginning of their legal career, many decide to buy a house or apartment on credit. They think that they will waste to the wind their money if they rent an apartment or a house. Therefore, they decide that it is better to invest in their property.
This doesn't always work well. Overpayment at one percent will increase the cost of the apartment/house compared to the original price by 2-4 times. And this is not a trifle, but tens or even hundreds of thousands of dollars. To take such a crucial step you must carefully weigh the pros and cons.
In conclusion, we want to say that we hope when you read this article, you can avoid financial errors. And also remember the folk wisdom in which talks that a stupid person tries to justify his mistake, while a smart person tries to correct it. Therefore, even if you have made an unfortunate mistake in your financial activities, do not give up. Make every effort to prevent this from happening again.