The Financial Advice All New JDs Need to Know, From a Lawyer Who’s Been There

It’s law school graduation season, which means the newest generation of lawyers has officially entered the playing field. If you’re anything like me after I graduated from Northeastern, you’re probably spending every waking minute studying for the bar exam and daydreaming about the moment you see your name on the pass list. While you might not feel like you have room in your head to think about anything else, managing your finances in advance of your first post-bar paycheck is one of the most important ways to set yourself up for financial success as a new attorney.

It might be hard not to rely on the fact that you’re likely to have a high salary as a young lawyer, but after three years of living off student loans, it’s essential to start thinking about how you’ll responsibly handle your finances. Soon, you’ll be dealing with law school loan repayment, the costs of taking the bar exam, and resisting the pull of lifestyle inflation—all of which can be pretty complicated stuff when you don’t have a plan. Trust me, even though you might have a million other things on your plate, anyone with a newly-minted JD will want to keep this financial advice in mind.

1. Yes, you have to budget for the bar

After graduation, your only priority is studying for the bar exam. As you immerse yourself in obscure fact patterns and obsolete contracts rules, everything else is pushed to the side. I’ll say it now: Studying for the bar is a full-time job, but unfortunately, it is a job that doesn’t pay.

Even if you eliminate social events from your calendar, cancel your cable, and subsist solely on cereal eaten in front of your glowing computer screen, you have to account for your cost of living while you’re not working. Whether that means living on savings, taking out a short-term bar loan, or relying on an advance from your post-bar associateship, don’t put yourself through the stress of dealing with an overdraft alert two weeks before test day. When you make a bar budget, don’t forget to include bar exam incidentals like your hotel room and lunches at the testing center (and, of course, any celebratory drinks). Getting your finances in order before you start studying will keep you from wasting precious brain space on your bank account.

2. Don’t forget to make a plan for repayment

Thankfully, most loan providers offer a grace period after graduation. If you’re anything like I was, your plan is to use this time to think about your loans as little as possible, except to wish that you’d wake up tomorrow miraculously debt-free. Obviously, this is not the most helpful approach.

About a week before I had to start repayment, I realized I hadn’t selected a payment plan from my loan servicer. Because I rushed my decision, I had no idea how much I would owe each month until my first bill arrived. My willful ignorance put me in a position where I had to scramble to readjust my budget in order to make payments. Learn from my mistakes, and take some time during your grace period to get to know your loan servicer,
choose a repayment plan, and set up automatic payments.

3. Focus on paying off your student debt and reducing your loan amount

Once you’ve set up your repayment plan, start budgeting now for paying off that debt. And while you’re getting acquainted with your loan provider, put on your lawyer hat and read the fine print. If you have loans from several different sources,
think about consolidation, which can potentially lower your interest rate. If you’re stuck with a high-interest rate, look into refinancing your student loans, which can be a way to lower your interest rate and pay your debt off sooner.

In other words, the lower you can push your interest rate, the less you will pay overall. The easiest way to get ahead on paying your loans is by lowering the total amount you’ll end up paying, and not getting stuck in a cycle of only paying down interest.

4. Be realistic about your new salary

If you’re lucky enough to have your post-bar job nailed down, you’re probably already daydreaming about your first post-grad paycheck. Personally, I took to browsing home goods blogs, and when my first direct deposit hit my account, I immediately bought all new bedding. Most of my classmates did something similar, buying everything from a small piece of jewelry to a new car to celebrate their success. The key to not blowing your budget is to figure out what your first paycheck realistically has to cover. Mine needed to pay rent, a credit card payment, and a big trip to Costco to stock up on all the essentials I neglected while I was studying for the bar without an income. The bedding I bought felt like a splurge, but knowing that I didn’t blow my entire first paycheck on this treat made crawling into bed all the sweeter. My advice? Take stock of what you really need before making lifestyle upgrades, and make sure your budget accounts for them.

Part of establishing
career bliss as a young lawyer is making a plan for your finances well before you start raking in the dough. If you start setting out how you’ll address your financial future now, you’ll be able to put all your energy towards the highlights of your new career: winning your first case, making connections with your new coworkers, and settling into a new firm. Now that you’ve got this information in mind, you can get back to other pressing issues—like continuing to study for that bar exam. (Good luck, by the way!)

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