3 Things Top-Tier Law Students Get Wrong About Money

I spoke with a financial aid officer at a top-ten law school a few months ago and wrote a piece for the SALT blog about it. It’s a basic description of common financial mistakes and ways to avoid them.

1. They Don’t Read Contracts Before Signing Them
Yes, even while passing their contracts courses, they sign things without reading them. One student came in to financial aid to ask for extra money because she hadn’t paid her electric bill all year—and owed $4,000.

Her lease specified that electricity was her responsibility, but she hadn’t read the lease, and her landlord hadn’t told her. Others sign important documents and then don’t keep copies, or don’t file them somewhere organized enough to find them again later.

How You Can Be Smarter

Double-check. Ask questions. Get answers in writing. Read documents before you file them away.

And get a file cabinet or at least a box with some folders in it. You may live in a digital era, but some paper documents you need to be able to find without Google.

2. They Don’t Match Their Spending To Their Income

Students who go straight from undergraduate life to law school are making all the same mistakes of early adulthood that others do. But they’re doing it without an income. They spend all the money they have. They eat out instead of cooking at home. They try to keep up with their income-earning friends, and they borrow too much money to pay for it.

You’d expect people who have a few years of life experience to do better, but they don’t. They are reducing their incomes to go back to school, but they are reluctant to go back to living like students again.

Both groups know they need to network and meet up with other students and participate in extracurricular activities. But those things can get expensive. Cutting everything out isn’t really an option, and it’s genuinely difficult to pick the right balance.

How You Can Be Smarter

This one takes practice. Get used to saying, “I’d love to, but that’s not in my budget.”

And spend some time looking for affordable alternatives you can suggest for student social events. For example, instead of expensive opera tickets, look into free nights at museums, book readings, or gallery openings. If your local sports team is expensive, check the minor leagues (you can get better seats anyway). If someone suggests a wine tasting, try doing it at someone’s house instead of a restaurant. You get the idea.

3. They’re Overwhelmed

There’s laundry and homework and dinner and all of life’s usual tasks, and getting your personal financial life under control demands uninterrupted time and energy. It’s even harder if you have additional family responsibilities, which is more common for graduate students.

Taking the time to gather all your financial information into one place—whether it’s a spreadsheet or Mint.com or another tool—requires some setup. But it’s important.

How You Can Be Smarter
Make an appointment with yourself and get a good look at your money. How much do you have, and how much do you owe? How much will the payments be? When will they be due?

If you’re not sure, make an appointment with the financial aid office at your school, and go over those numbers with them. Spend a few minutes a week tracking your spending and income, and you’ll be far less likely to run into unpleasant surprises.

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