You crushed law school and the bar despite challenges. But six-figure student loan debt can trip up your finances. Along with racial wealth gaps and biased compensation, education debt complicates money matters.
If you’re a Black lawyer trying to level up your finances, use these pro tips to take control.
1. Earn Top Dollar at Large Firms and Corporations
Know your true value when negotiating salary right out of school. Despite equal qualifications, Black lawyers may earn around 8% less. Combat pay discrimination by arming yourself with industry data on salaries at top firms like Davis Polk, Covington & Burling, and Debevoise & Plimpton as well as major banks and Fortune 500 legal departments. Highlight your law school achievements and demand compensation that reflects your worth from employers who can readily afford competitive pay.
2. Create a Budget to Crush Debt
Build a detailed budget aligning expenses with values and goals. Factor in an aggressive student loan repayment plan along with bar dues, professional wardrobe, daycare if needed, retirement contributions, and discretionary spending. Categorize outflows as needs want, or financial priorities. Revisit and adjust categories as your income and expenses evolve. Sticking to your budget plan makes conscious spending decisions easier while freeing up cash flow to demolish debt.
3. Start an Emergency Fund
Aim to build at least a small starter emergency fund of $500 before tackling student loans. Then continue growing your rainy-day fund to 1-2 months’ worth of expenses. Automating any surplus income into savings gives security if you lose your job or a major client. Having a cushion allows you to leave toxic workplaces and negotiate job offers from a stronger position.
4. Make Education Debt Repayment Priority #1
Obliterating student loans should be goal number one. Start by refinancing high-interest debt to lower interest rates and monthly payments. Then put any extra dollars toward demolishing the highest-interest loan first while making minimum payments on the rest. Once crushed, roll that payment amount directly into the next highest-interest debt. This debt avalanche approach helps repay aggressively so you can move forward faster financially.
5. Build Wealth Through Workplace Accounts
Immediately sign up for 401(k) plans, profit-sharing, and other job benefits like matching contributions or stock options. Max out annual contributions and automate so investing happens consistently without thinking. Increase retirement contributions each promotion cycle and bonus season. Compounding growth in these tax-advantaged accounts builds wealth over time as the student loan debt burden lifts.
6. Create Additional Income Streams
Bring in side income through legal consulting, referrals, book deals, speaking engagements, or teaching. Just ensure side gigs don’t conflict with full-time job obligations and ethics rules. Developing additional streams not only helps repay student loans faster but also diversifies your money sources. Explore opportunities carefully to find the right fit.
7. Safeguard Your Earning Potential
Disability insurance replaces income if you can’t work due to health issues. Obtain enough coverage to sustain your lifestyle if paychecks ceased. Also, secure term life insurance to protect family finances in case of tragedy. Review job-provided policies and supplement if inadequate. Insuring income earning potential provides peace of mind.
8. Invest Cautiously While Paying Off Debt
Keep investing simple while tackling student loans. Opt for low-fee, hands-off diversified funds like index ETFs and target date retirement funds rather than individual stocks. Avoid high-risk speculative bets or trying to get rich quickly with education debt payments looming. Stay the course with prudent financial moves while maintaining an intense focus on debt demolition.
9. Give Back to Inspire Future Attorneys
Look for opportunities to help aspiring lawyers, especially students of color who face barriers. Take on pro bono cases, volunteer at legal clinics, or serve on bar association diversity committees. Mentor new attorneys starting out. Sponsor scholarships, internships, and mentorships to open doors for underrepresented minorities. Paying it forward helps inspire the next generation.
10. Find Your Tribe
Groups like the National Bar Association provide career development, mentors, and a sense of community with fellow Black legal professionals. Surround yourself with a tribe of attorneys who understand the pressures and obstacles you face. Their shared knowledge, networking, and accountability offer support as you build financial freedom.
Keep representing with confidence. With shrewd money management, you can maximize income potential, build wealth, and thrive financially.