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Episode 136: How To Manage Your Money To Gain Financial Freedom

by Heather Moulder | Life & Law Podcast

​Want to know how to manage your money so that you can achieve financial freedom (and have more control over your career and life)?

You’re not alone. In my experience, a large majority of lawyers feel like they don’t have a proper handle on their finances (and even feel burdened by golden handcuffs). Which shouldn’t be a surprise given:

  • The large amount of debt most lawyers have coming out of law school.
  • How easy it is to get sucked into presenting a specific lifestyle image as a lawyer.

And also: it’s not exactly something they teach in law school (nor is proper money management always intuitive – which is why there are people who go to school to be financial advisors).

If any of the above speaks to you, today’s episode is for you. And the good news is that things can change for the better… Starting right now.

Listen to today’s in-depth conversation with financial coach Rho Thomas to learn how to manage your money for financial freedom and control over your life.

Episode Transcript

[00:00:48]​ Well, hey there, everybody. This is Heather Moulder from the Life & Law podcast. Welcome to today’s episode, where we have another guest.

Today I want to introduce to you Rho Thomas. She is a former big law associate turned financial coach who believes that true wealth comes from having control. In her role as a financial coach, Rho helps lawyers master their personal finances to create freedom and choice in their lives. Through practical strategies and proven advice, she helps lawyers better manage their mindset and money so that they can improve their finances and start building wealth.

In addition to being a financial coach, Rho also hosts the Wealthyesque Podcast where she shares weekly strategies for how to improve your money mindset and manage your money to achieve true wealth. Welcome, Rho.

[00:01:32] Rho: Thank you so much, Heather. It’s a pleasure to be here.

[00:01:35] Heather: Before we get into the topic of the day, which is money and how to manage your money better (and your mindset), I want to get into your story. Because you are a lawyer (like me) turned coach and you got into a very different type of coaching than most lawyers who turn into coaches get into. Most of us do either some type of life coaching or more of what I do, which is career leadership and business coaching. But you got into something very different and so I’ve got to believe that your story leads us there.

So let’s get into it a little bit. First and foremost… Did you always know you wanted to be a lawyer? How did you even choose the law?

Rho’s Story: Transforming From Lawyer Without A Clear Handle On Her Finances Into A Lawyer Financial Coach

[00:02:18] Rho: Yeah, I wanted to be a lawyer since I was seven. And it started with, yes, it started with, I’m sure you probably got this too, like, oh, you love to argue, so you should be a lawyer. Oh, you always have this comeback. You’re always wanting to prove your point. So there was that piece from my family. But then also I loved watching legal shows with my grandmother. So I watched law and order and Matlock, and it just seemed fun.

Little did I know that that’s not most of what law is, but I was like, oh, that looks fun. I could do that. And then everyone in my life was also telling me that I should be a lawyer. And so I decided at seven that I wanted to be a lawyer.

[00:02:57] Heather: So then you went to law school. Was law school what you thought it would be?

[00:03:02] Rho: I don’t know that I really had an idea of what I thought law school would be.

[00:03:06] Heather: Okay.

[00:03:07] Rho: So I can’t say yes it was or no it wasn’t.

Lessons Learned From Law School (& Why It Was Different Than What She Had Imagined)

Probably no, though. Because I think law school is different from what most people expect.

I had done college, I had done pretty well in college without a lot of effort, and that was not possible in law school. You have to put in a little bit more effort to do the kind of work that I wanted to do to get to where I wanted to be in law school. So I guess in that regard, it was not what I expected, but I didn’t have super specific expectations.

[00:03:43] Heather: Did you like law school?

[00:03:46] Rho: Yeah, I liked it.

[00:03:47] Heather: I think for law school, for me, was exactly what I expected. But that’s because the biggest reason I became a lawyer was from this old show called The Paper Chase. I don’t know if you know what that is, but it was about two guys in law school with a really hard professor. And for whatever reason, I liked that. I liked the bantering, I liked the legal theory, I liked the arguments, I liked all of that. And that’s what kind of drew me into the law in the first place. So law school, for me was like, exactly that. And, yeah, it was stressful, and, yeah, it was hard, but I actually liked it.

[00:04:23] Rho: Yeah, same. And now that you say that, I remember, one of my professors in college knew that I was interested in law school, and he gave me the book. One was, I think it was Scott Toro was the author’s name, but I could be completely wrong in thinking of somebody else. But that book was his recount of being a 1L and just goes through what 1L life was like. I think the book was a bit more intense than my actual 1L experience was, but I did have, I guess, a little bit of an inkling of what law school might be like because of that book.

[00:05:01] Heather: Now, here’s what’s interesting, though, is I don’t think practicing law is anything like law school.

[00:05:06] Rho: Oh, definitely not.

[00:05:08] Heather: Which is a total shock to a lot of people when they get out and they start practicing. So give us an indication. So what kind of law did you go into and what kind of law firm did you join?

Rho’s Legal Practice

[00:05:17] Rho: So I was a trademark lawyer and I went into big law.

[00:05:22] Heather: So how was that experience?

How Rho Learned (& The Surprising Person She Learned From) To Quickly Set Boundaries

[00:05:25] Rho: It was good. I got some really good advice while I was still in law school from a woman I had met who was also at a big firm. She was a partner at that firm, and I had met her at some sort of networking event or something like that and kept in touch with her. And so she told me coming into the firm that…

No one is going to monitor what I’m doing, help me set my schedule, tell me that I’m working too hard or any of that. She said I had to set that schedule up front and set those boundaries, and so I should set working hours that I pretty much stick to.

So whatever those hours are going to be, make it reasonable, but have these times when I’m answering emails, and after that time, I’m not. And so I did that.

I remember feeling very uncomfortable at first because as a first year, a lot of people were emailing us with different assignments. It’d be late at night and my classmates would respond to those emails. I didn’t. I would see them come in, but I just didn’t respond. I would respond in the morning.

I think that helped me to kind of weather the hard times, if you will, of big law, because I did maintain those boundaries. And so I never felt like I was burning the candle at both ends.

I will say that there were times, of course, that felt more stressful than others and things like that. But in terms of feeling like I had to be responding to things late at night or early in the morning, both times, I just didn’t have that pressure because I followed that advice and I had my set times that I was in with, of course, exceptions. Like if there were, say, a filing due and we hadn’t finished it, it’s not like “Oh, well, good luck, I leave at six.” Of course, I would still get on and help with those things, but my day to day was not like that.

Yes, You CAN Set Boundaries (Even With Clients & Colleagues)

[00:07:13] Heather: So you bring up a really interesting point that I want to take a moment and talk about for a second because of the number of very senior attorneys, either senior counsel, senior associates trying to make partner, or even partners themselves, who come to me talking about how they have no boundaries, they have no life. And initially they want to talk about how it’s the expectations of clients and it’s the expectations of colleagues and peers, and the expectations of the firm and the profession. I get it because I’ve been there. That’s where I was a couple of years into my career.

But there is this moment where you realize this actually has nothing to do with them and everything to do with you and your boundaries. And one of the kind of pushbacks I get a lot when I bring this topic up. And I will give you an example of somebody who said this to me when I said, you need boundaries… “Well, it’s not like I can leave at 5:30 or 6:00 every day, Heather.” Never did I say that!

You’re creating this straw man that doesn’t exist to excuse the fact that you’ve never created boundaries for yourself. Yes, there are going to be exceptions sometimes. When I was in the middle of my busiest season as a finance lawyer, in December, trying to close a deal by the end of the month, well, yeah, that meant late nights a lot for that month. But I knew it was part of the job, and that’s what we did have to do at that time of year. But it was a limited time period. Then everything would come to a crashing halt.

But that didn’t mean that in March, April, May, I would respond to clients or colleagues, or even when I was a younger associate partner’s emails at 10:00 p.m. When I saw them come across, or even at 08:00 p.m, when I saw them come across when I was already at home.

One thing I learned is if you do set those boundaries:

  • #1: You train other people to live within them.
  • #2: If they refuse to, it tells you very clearly who you do and do not want to work with because there are people out there who you don’t want to work with – clients included; and
  • #3: They will tell you if there’s an exception. They will learn, oh, well, she’ll get back to me tomorrow, and that’s totally fine. But if it’s not, they’ll tell you, “Hey, I actually need this tonight.” And they’ll ask the question, do you have availability? Can you do it? Right?

So you’re training them to be more reasonable. And the thing to note is most people who are sending emails late are not expecting you to get back to them and do the work that night. It’s when they’re thinking about it. It’s when they’re in the midst of something. And so, of course they’re going to send you the email because that’s when it’s on their mind. And they might forget if they don’t do it. You’ve got to remember that.

Hot Tip: Know Where The Pressure Is Coming From

[00:09:58] Rho: Yes, absolutely. And something that you said there reminded me of another piece of this partner’s advice. She said, you have to distinguish between external pressure and internal pressure, because sometimes there is that expectation, like you said, where it’s the end of the year and you’re trying to close this deal.

Yes, there is that expectation that you be there to get the things done, but a lot of times it’s that we’re Type A, and we’re trying to go above and beyond and we’re doing all the things. And so it’s that internal pressure that we put on ourselves to be there and that kind of thing.

Because, like you mentioned, your client who’s like, oh, well, it’s not like I can leave at such and such time. After my kids were born, I left at 430. Now, I might have still gotten back on, and maybe part of that, too, is different firms have different cultures, and even different groups within the same firm have different cultures. But my group was very much where as long as you get your work done. They weren’t concerned about what time you were coming in, what time you were leaving. And so I decided after having my kids, I wanted to have this time with them. And so I’ll leave at 430, but I also would come in a little earlier, too.

[00:11:08] Heather: Yeah. And that’s an important, well, a couple of points to make.

That internal pressure that we put on ourselves, we often don’t identify as internal number one. And number two, even when we do, we sometimes think, well, but this is what it’s required if I want to do the best or be the best. And you’ve got to remind yourself and remember that you can’t be your best if you’re not showing up as your best. And you can’t show up as your best if you’re not actually taking care of yourself. Which does mean boundaries. Yes, that’s part of taking care of yourself.

Pick The Right Culture For You & Your Lifestyle

The other thing I’d note is firm cultures can be very different. I think a lot of lawyers who are in one particular culture assume they’re all the same. Not all firms are the same. Even not all big law firms are the same, and not all groups within a firm are even the same. There are many cultures.

So, some of this is about understanding where you need your boundaries and starting to implement them, and if they’re not going to be respected, where you are needing to find a better fit for you. Because it doesn’t make it a bad place or bad people, but it’s not the right fit for you.  I made the opposite choice. So for me, because of the way my clients were and they always would build up as the day went on. And so I just could not do the go home early thing.

It did not work for me, but I could come in late. And it was interesting because it was hard for me at first because I’m a morning person who loves to get up and go in early and get the work done before the phone got started. But after I had my kids, I realized, you know what? I need to spend that time with my kids. So I would get up early and work out and do the things for me. And then I would have a couple of hours with my kids before the nanny would show up or before I took them into late daycare or whatever it was, depending on their age level and where we were at that point.

But that was my time and I guarded it like nothing else. And I would come in instead of at 730 or eight in the morning, at ten in the morning so that I would have that time with them.

So you’ve got to figure out you all, what’s best for you. Everybody has a different way, but it is absolutely doable. And it is doable in big law too, because both of us did that in big law firms and I did that as a partner as well.

[00:13:32] Rho: Yeah. I think the underlying point with both of our stories is that it’s possible to create a practice that works for you, for your lifestyle. And to your point, maybe that means going to a different firm or working with some different people. Because with my boundaries, I noticed there were some people that maybe I did a project or two for and then they never came to me for more work. That’s perfectly fine if you don’t like that I don’t answer emails or calls after x time, then we are not a good fit to work together. And that’s okay.

[00:14:04] Heather: Yeah, absolutely. Okay. So how long did you practice?

[00:14:09] Rho: Seven years.

[00:14:10] Heather: Seven years. So tell me, how did this transitioning out of law and into being a financial coach happen for you?

How Wanting More Financial Freedom & Control Helped Rho Learn How To Manage Her Finances

[00:14:18] Rho: Yeah, it started when I was maybe about four years into practice. That’s not true. Two years into practice. It was when I had my first child. And the firm that I was with at the time, I said at the time, it’s the only firm that I worked with. But they allowed for part time kind of policy where you could do a percentage of the billable requirement for that percentage of your salary. And so I was interested in taking advantage of that and doing a little bit less in terms of hours and things like that after I had my son.

I was on maternity leave, I was looking at the policy and talking to my husband about it. And so we looked at our finances to see if we could make a cut work, and our finances were a mess. We had a lot of student loans. We had a mortgage, car payments, like all of this, where we had all of these monthly payments coming out, and we just didn’t have the wiggle room to be able to have less income coming in.

I hated that because I don’t like being told what to do. I don’t like feeling constrained in that way. And so that set me on the path of learning about finance, because it’s like, if we didn’t have all these payments going out, then we could easily take this cut. And so I started learning about personal finance. And then a few years in, I started a blog – about 2018. I started a blog, and it was just a general, like, hey, this is what we are doing. This is how much debt we paid off. This is this new thing I learned, whatever.

And some of my friends and colleagues would ask about things, and I would do a one off session, helping people set up their budget or helping them map out their debt payment plan or things like that. And around 2019, I was thinking, like, oh, I could really help lawyers with this. I was having these conversations with people where they wanted to do something different. Some people wanted to be at a different stage in their career, like, maybe they didn’t want to be in a firm anymore. They wanted to go in house or even leave the law altogether, but they felt like they couldn’t make that move because of their finances.

And that reminded me so much of how I felt, wanting to do the part time thing and feeling like I couldn’t because of my finances. And so I just noticed this trend with a number of different people I was speaking with. So I was like, oh, I should do something to help lawyers. Maybe the blog could be for lawyers. And then, of course, it gets put on the back burner because life and all of the things.

I didn’t think anything of it until the world starts falling apart in 2020, and it’s like, okay, I’ve been saying for, I think at that point, it’d been a year, six months, something like that, where I was saying, okay, I think I could help lawyers. But I hadn’t actually taken steps to do anything with it.

And I was thinking about how many people get to the end of their lives and they’ll say things like, I wanted to start a business or I wanted to go back to school, or I wanted to write a book or whatever it was. And so I didn’t want to get to some point decades down the line still talking about how I want to do this thing to help lawyers with their finances. So, I started putting myself out there on social media, sharing tips that I had learned over the years, and then offering to help people on a one on one basis with their finances.

That’s how it all got started. I started doing that in 2020, and then in September 2021 is when I transitioned from the firm to the business full time.

You Don’t Want To Regret Not Having Tried

[00:17:47] Heather: Okay, so a couple of things. First off, and this is not finance related, but I think this is a big point that you make that’s really important, this later in life thing where we look back with regret. I can personally attest to that because of my cancer. And I’ve talked about this before, but for anybody who has not listened to these specific past episodes, you may want to go back and listen, because I think there’s a lot you can learn from people who’ve been through these types of things.

I can tell you my cancer diagnosis was not good initially. There were some assumptions being made that were thankfully incorrect based on how aggressive my cancer was. But I had this moment where I sat down and I remember thinking about my funeral. Like, who would come? What would they say about me? What impact have I made?

And I compared it to the funeral of my grandfather, who lived a pretty good, long life and had impacted so many people. I had kind of known that, but it became very clear at his funeral, based on the number of people who showed up and what they were saying to us. And I’m like, I don’t know. This is something I need to do better, right?

And there were things that I knew I needed to do better as a mom. There were all these things. And the regrets you have, they have very little to do with the money, the accolades that you get, the career things, the big career goals that we set out to achieve and have a lot more to do with:

  • Who am I?
  • How am I showing up?
  • What are the things that could have made a bigger impact in other people’s lives?

That kind of a thing. And so I would just note that, right?

I do think that the pandemic was an opportunity for a lot of people to sit back and think through that. I think it was the one gift we got from it. The sad part is that it’s really easy to go through something like that, think you’re going to make changes and start, but then get sucked back into life as it was, or just life, living without thinking through and really doing something about it.

So, it’s just something I wanted to note that these are the things you think about. And I would say the one thing I learned is, I don’t think it’s possible to never have a regret, but I don’t want those big ones, right. I’d rather have a regret that I failed at something that I tried and it didn’t work out. And maybe I could have tried something a little differently or made a different decision, but at least I did try, right? As opposed to thinking, oh, my God, I always thought about that, but never even tried. There’s a difference.

[00:20:31] Rho: That was exactly the thought process that I went through in thinking about leaving the firm and going into my business full time. Because initially I thought that I would do the part time, maybe 50% or so at my firm and do this on the side as well. But I realized that having the full time to devote to this, I would be able to help many more people.

And I thought about, like, okay, if I were to go full time and I failed, it didn’t work out. What’s the worst case scenario?

[00:21:09] Heather: Right?

[00:21:09] Rho: What’s the worst that could happen here? Worst case scenario, I have to go and get another job. Well, I already have a job, so I’m living the worst case right now.

And then, best case, it’s more successful than I could even imagine that it could be. And I impact so many people. And I have all of this time, I’m doing what I love for my career. Right? And I mean, don’t get me wrong, I really enjoyed practicing law, too. I loved my practice area. I had an amazing group, which I think helped, but I didn’t feel like I was making the impact that I am now making.

I worked in big law, working for large corporations, enforcing their trademarks and things like that, which was fun, but it just didn’t feel as impactful as helping someone how to manage their finances better and to feel less stressed and to feel more confident knowing exactly how they’re going to pay this off. You know what I’m saying? Like that. More personal impact.

[00:22:17] Heather: Yeah. It’s funny, because you and I are so similar in that I loved practicing. I loved my clients. I loved my peers and colleagues. I loved my firm. There were so many things I loved about it. I was not one of those super unhappy lawyers who just needed a big change. But the experience, the cancer experience specifically – and frankly, a lot of it had to do with the people who came and took care of me and my family during that time, people who, some of them we hardly knew at the time – and how impactful that was, how very small things made a huge difference, even stuck with me and made me realize that I wanted to show up differently in this next phase and make a more personal impact on somebody’s life.

And so for me, if it was like, if I just help five to ten people through this, it’s enough, right? Maybe it’s not enough to make a living out of it, but it’s enough to have been willing to try, and I know I could at least do that. And so that was kind of my impetus for leaving law and starting this full time. So we’re very similar, I think, in that.

[00:23:26] Rho: Yes, we definitely are. A lot of parallels in our stories.

[00:23:29] Heather: Yeah. Okay, so tell me.

Why Learning How To Manage Your Money Starts With Your Mindset Around Money

I find that a lot of lawyers don’t like to admit they have problems around money. And I don’t know if problem is really the right word, but that’s how they think of it. I have a money problem. I make a lot, but I don’t have enough to do all the things I want. I have a lot of debt. The debt problem is a big issue. That law school, thank you very much, provides to us.

And so, where do you find, when people first come to you, where do you find them? And what is that mindset that they have around money and their so called problems with money?

The Shame Of Feeling Like You Aren’t Managing Your Money Well

[00:24:13] Rho: There is a lot of shame around it, and I think there’s a lot of shame around money, generally in our society. But I think that it’s heightened for lawyers because we are used to being Type A, the ones who’ve made it. We are used to doing things the right way, all of that. And so I think when there’s this area that we aren’t managing the way that we want to or the way that we think we should, then there’s a lot of shame around it. So there’s definitely that.

A lot of what you said with thinking that I’ve got this problem or I’ve got a lot of debt, a lot of people think that their debt is really overwhelming, and so they don’t know how to manage it, what to do to pay it off, that kind of thing.

And then there’s just the general unknown, if you will, with their money. Most people aren’t really familiar with their cash flow, how much money they’re bringing in versus how much they’re spending out and where that money is going and that kind of thing. And I think when you have those unknowns like that, then it makes it feel scary. It makes it feel more overwhelming, maybe, than if you had more of a handle on it.

I often liken it to a child who’s afraid of the dark or who’s afraid of the monster in the corner. But when you shine a light on, it’s just a jacket on the chair. The same kind of thing with our finances, where when you have all these unknowns, you don’t know what’s happening. It can feel scarier than if we just shine a light on it and see exactly what’s happening. So at least you have the lay of the land, and you can create the plan to move yourself from where you are now to where you want to be.

[00:25:57] Heather: And I would guess, knowing lawyers the way I do that, the answer, the starting point, is shining that light and getting more clear around, okay, what am I bringing in? What am I spending? So that you can then make some better decisions around it. I mean, you can be intentional, but the thing that is stopping them is that shame and embarrassment and not wanting to even do it. Right?

[00:26:24] Rho: No, that’s exactly right.

[00:26:26] Heather: So how do you deal with that now? Maybe by the time they come to you and hire you, they’re already at least to the point where, like, oh, no, I’m willing to. But do you encounter that?

I guess, kind of that internal, like, oh, no, but I don’t want to. And if so, how do you help your clients to get comfortable enough to where they’re willing to do it?

How To See Money More Objectively

[00:26:51] Rho: A big part of the work that I do with my clients is helping them to see money more objectively, because I think a lot of times that shame, that unwillingness to look at the finances, all of that comes from the way that they’re thinking about it.

A lot of times, I think lawyers think about their finances almost as, like, this scorecard, this picture of who they are. Like, Oh, I have this much debt or I have this net worth, and so I’m somehow bad because I’m not managing my money well. And I don’t know if I’m articulating that properly, but it’s like the money is some sort of reflection on them as people versus it being a separate thing.

Yes, it’s something that we need in our lives. We use it every day, but it doesn’t mean anything about you as a person, even if it’s not where you want it to be. And so a big part of what we do is helping them to decouple who they are from the money that they have or whatever their money situation is. So, that’s the first part.

And then the second part is, now we are not thinking about money as a reflection on ourselves, and these things happen kind of in tandem. It’s not like a step one. We do this and then step two, but they happen in tandem. But the next step is actually getting those pictures of what’s happening. And so we’re going to go through. Sometimes I do it with them, but often they take the tools they go through and look at the numbers themselves, and then we can come back and talk about your thoughts about it, your feelings about it, and start to help you shift those thoughts and feelings. If it’s, again, looking back at the reflection of me and having these negative thoughts, these negative feelings about myself because of what I’m seeing here, a couple.

[00:28:48] Heather: Based on what I know on mindset, because all of us coaches – a lot of what we work on is really mindset because a lot of times, everybody knows the things they could be doing but it’s the stuff going on inside of your head that’s preventing you from even facing that to do it right.

And I’m guessing that once you kind of get into that first step, that’s when it opens up to being more willing. Because what I find is the more we ignore, the more we pretend, the more we shy away, the worse it feels, the more the fear grows.

And so, once you do shine the light, it’s like, oh, this isn’t as bad as I imagined it would be. Do you see that a lot?

[00:29:38] Rho: Definitely. I see that a lot. And then I also think the looking at your finances more regularly almost helps. To desensitize is not quite the word, but you know what I mean. Like, you’re exposed to it over and over again, and so it becomes just a piece of life, just something that happens versus it being this unknown thing that it’s a big deal and I’m afraid to look at it.

[00:30:07] Heather: Yeah, absolutely.

A question I have is, do you also see that at least some lawyer clients have shame around the fact that they even make a lot of money in the first place?

[00:30:23] Rho: I have seen that some, but what I see more often is people in denial that they are, say, upper, middle class or upper class. Everyone thinks they’re middle class.

Like, no, you’re not at all.

[00:30:41] Heather: That thought process is somewhat related to this, there’s somehow shame around the fact that they do make good money and they do have a lot of money if you’re just at least looking at what they’re earning.

I see that a lot.

Not so much in my clients, although it does come up from time to time, but just practicing for 18 years and kind of watching lawyers and how they behave when it comes to money and noticing that there’s some level of that.

And I just wonder how much of that also relates to this inability to manage it. Because if you’re not willing to admit you make it enough of it, and you don’t want to go there because you feel embarrassed or ashamed or guilty or whatever the word is for you, then I would think you’re not then going to manage it very well.

[00:31:39] Rho: Yeah, I would 100% agree with that. And I can see how what you’re seeing is almost another side of the same coin of what I’m seeing with people thinking that they’re middle class versus where they are. And I think you’re 100% spot on with the fact that if you believe so, for example, a lot of people believe that wealthy people are bad, right? Or that having money is bad, or whatever that is like associating the money with something negative. And so if that’s the case, then you’re not going to manage your money in a way that you have more of it, right?

You’re not going to take those specific actions to have more money, because in your mind, even if it’s a subconscious thing, in your mind, having money is bad and you don’t want to be bad. So I can see that for sure.

[00:32:33] Heather: Yeah. It’s just an interesting thing that I’ve noticed. And I actually had a podcast earlier this year on this very topic because it came up with a client, and I would just say this a go back and listen to the podcast if that’s something you think you might suffer from. But money isn’t bad. There’s nothing wrong with making a lot of money. You get to choose what you do with that money.

Seeing Money As A Tool (Not A Good Or A Bad)

[00:32:53] Rho: Yeah, no, I say all the time that money just amplifies who you are already, and money is just a tool that we use in life. And so it doesn’t have to be good or bad, and it doesn’t have any reflection on who we are as people. But if you are a generous person when you have more money, you’ll probably be more generous if you are a stingy person, if you get more money, you’ll just have more money to be stingy with.

But I do think that separating out the money from who we are and looking at it more objectively and not as good or bad, lends itself to managing it better. I think that’s critical to being able to manage it better.

[00:33:38] Heather: Absolutely. Okay. So once people kind of face down their fears and their shame and their guilt and all this other stuff around money, start to figure out, looking back and figure out, okay, what am I bringing in versus what am I spending? How do you tend to, and I know every case is very different. Right. Everybody’s very individual, but you probably see some themes that people could walk away with today.

What are your kind of top tips for how to start managing your money better?

Tips For How To Manage Your Money Better, Gain Financial Freedom

Tip #1: Clarity Around What Is Most Important

[00:34:08] Rho: So number one, I would say, is get really clear on what’s important to you.

I have my clients do the top, say five things that are important to you in life, not necessarily related to looking back at what you spent on, but just in life. What are the top five things?

For some people, it’s family, it’s religion, it’s these things that aren’t necessarily tied to money. But then sometimes people do have things that are tied to money. I like good food, I like convenience, I like looking good, things like that.

The reason that I have my clients do that is we want to see how much of the money that you’re spending is going to these things versus how much you’re spending on everything else. And often when we get in there, they’re spending a lot of money on stuff that they don’t even care about, and they just don’t realize that they’re spending so much.

When we can look at the things that are important to you, then you can start making sure that you are using your money in ways that support those things. So that’s number one.

[00:35:10] Heather: Absolutely.

[00:35:11] Rho: Okay.

[00:35:11] Heather: So just a comment on that. And I will say, because we had to do that when I left the firm. I mean, I was a partner in a firm. I made good money. Not that my husband doesn’t make good money, but we had a dual income that allowed us a really nice lifestyle, and we had to take a look because I was starting from scratch, and I knew it would take a while.

And frankly, I’ve been very intentional about how I’ve built this business because my kids were one of the reasons I did it, and I knew I didn’t want to work over a certain amount, and I wanted to be more flexible and to be there, which meant not growing this business as big as I could. I’ve done that very intentionally. So we had to do this kind of like, look back. It wasn’t that we were spending, we were still saving and we were still able to whatever, but we were making a big life change. And it’s interesting when you do that, how much money you might be spending.

We went out to eat a lot more.

There were a lot of things we just really cut back on because I’m like, that’s not important. What was important to us was paying for our kids school, because where they are was very important to them and their education and their social and mental health, even.

And that was kind of the preeminent thing. And so a lot of clothing went out the door, too. A lot of stuff I didn’t actually need, though.

It wasn’t that important to me at the end of the day, and I wasn’t going to need it if I was working from home. And so I think people would be surprised if they went through with that mindset of what are my real priorities and determine that first, it’s a lot easier than to cut stuff out than you’d imagine.

[00:36:53] Rho: I completely agree. And one of the things that tends to be most surprising for people is how much they spend on things like eating out. Especially with the rise of services like Doordash and Uber Eats and all that, there tend to be extra fees on those. And so people think that they’re spending x and usually it’s like one and a half times that.

So when you can have this idea of the things that are really important to you and then go back through what I actually spent on in the last month, last month or two, you can see, okay, maybe I don’t care so much about food, and so maybe I don’t spend as much as I’m spending on food.

[00:37:34] Heather: Right.

[00:37:34] Rho: That’s just an example. And then the other thing, there are.

[00:37:37] Heather: Things that people spend a lot of money on, they don’t realize how much.

[00:37:41] Rho: Yes. Especially because it feels like a small purchase in the moment. But over the course of a month, that adds up a lot.

[00:37:50] Heather: And over the course of a year.

[00:37:52] Rho: It really adds up. Yeah, that too.

[00:37:54] Heather: Okay, so that was step one. What else would you do?

Tip 2: Balance Your Spending

[00:37:58] Rho: The other thing I would say is to make sure that you’re balancing your spending among your needs, wants, and goals, because often people are spending a lot of money on the things they need and want, and then the goals just kind of go out the window. That’s why you find people not saving the way that they want to or paying off debt or whatever – because the money is not there, because it’s going to these other things.

One guideline that I give there is: try to keep your needs to about half of your take home pay or less.

The reason that I say that is if you have 50% going to these needs, right, your housing, your food, I guess beyond restaurants, right. Groceries and things like that, transportation, your utilities, just things that you need, then that’s 50% of your money that’s available for things that you want and for goals that you have.

What often happens is people are in housing or in cars or things like that that are a bit too expensive for their incomes. And so when you’ve got these large expenses taking up a huge percentage of your income, it makes it a lot harder to do the things that you want and still achieve your goals. So that’s the guideline there. 50% going to your needs, and I say about 25% or less going to your housing and 10% or less going to your transportation. And that gives you plenty of room for the other things that you want to do.

Let Go Of The Ego (& Get Creative With The Necessary Expenses)

[00:39:28] Heather: I’m sure you get pushback on the housing, especially, maybe even the cars, because there is something about, I don’t know what it is. And it’s not just lawyers, but lawyers definitely have this problem where we overspend on luxury cars, wanting to be in the right. This is not something, thankfully, I ever cared about. We always had Hondas that we got from an uncle who owns a Honda dealership. So it was really awesome because we got it for just over nice.

But the housing, I’m guessing that’s a little harder. People kind of. That gets caught up into who they are somewhat too.

[00:40:04] Rho: Yes, sometimes. Yeah. And one thing that I tell people is when you’re thinking about, especially if you’re not where you want to be financially, right, when you’re thinking about what you’re spending on the house, the car, whatever you have to think about, is it more important to me to stay in this house, to stay in this car, or to pay off this debt, to free up this money, to save, to have that flexibility, to go to the different job that maybe pays a little bit less?

It’s okay if it’s more important to you to stay in the house or to stay in the car, but know that that is the intentional choice that you’re making.

[00:40:40] Heather: Right.

[00:40:40] Rho: I want you to make the choice intentionally versus feeling like, oh, well, I just can’t do this. No, you can do it. It’s just like what we talked about with your practice. There are so many different ways to have the practice that you want, just like there are so many different ways to have the lifestyle that you want, the financial situation that you want.

You just have to decide what’s more important to you. And so if it’s more important to be in this house or this car, perfectly fine, but then don’t beat yourself up about why I’m not able to save or I’m not able to pay off debt. If that’s not as important to you, give yourself that permission. Like, you don’t have to do those things just because you think that’s what you’re supposed to do or what other people say you should do.

[00:41:21] Heather: Well, and I think oftentimes if somebody isn’t initially making the choice to sell the house or downgrade or whatever it is, they might eventually get there because they then decide they’re ready.

Sometimes I think we’re just not ready in the moment. But the biggest issue is when you don’t give yourself that choice in the first place. A lot of people do end up choosing, no, this is actually more important to me, and I don’t need this. I can downsize. I can rent for a couple of years so that I can then one day pay off all this debt, have a plan for that, and then go buy the house I actually do want and can afford. Right?

[00:42:02] Rho: Yeah. And something that you said there, though, also reminds me of the way that we often think about things.

It’s like, there are ways to decrease your housing cost that aren’t sell the house. Yeah, but we often are like, oh, that’s what it has to be.

I heard a story once in a lot of personal finance forums and listen to podcasts and all of that, but this was a situation where two women had gotten divorced and they wanted to stay in the area that they were, like, with the school that their kids were in, and they couldn’t afford on their own to stay in the houses that they were in with their spouses. And so these women went in together on a house, or one of them moved into the other’s house or something like that, because being able to split the costs made it more affordable for both of them and their kids were able to still stay in that school district.

And so it’s thinking outside the box, like, what are all the things that you believe about money or you believe have to be? And how could it be that something else is true? Like, what else could be true about the situation.

[00:43:13] Heather: Don’t assume and get creative.

[00:43:19] Rho: Exactly.

[00:43:19] Heather: Because you never know.

[00:43:20] Rho: Things are rarely black and white.

[00:43:22] Heather: Yeah, well, we lawyers love to see everything is black and white.

[00:43:26] Rho: Right? Yeah, but we’ve got to find the gray, because then you can get to a creative situation like these two people did.

Tip 3: Set Aside Money For Fun

[00:43:33] Heather: So before I let you go, a final question. Before any final thoughts that you have, I would expect that sometimes people might go a little too far in setting a budget.

What advice would you give somebody who is getting a hold of their finances, setting a budget for themselves, trying to stick to it? What is the potential problem with that, and how would they steer clear of that?

[00:44:07] Rho: I have definitely seen people that go too far, and one way that I teach my clients to combat that is to have fun money. So you have this money that you set aside that is just for you to have fun.

That actually came out of my husband and I having some fights. Fights, like some tension early on in our marriage about things that the other person was spending on. So for me, I spent a lot on makeup, he was spending a lot on coffee, and I don’t drink coffee, and he doesn’t wear makeup. And he’s just like, well, why are you spending so much on this and why are you doing that?

So we decided to have this money set aside that we could each spend however we wanted to.

That has also translated to my clients who don’t share finances with a partner. It’s a way for them to have this money set aside that they can spend however they want to, but know that their needs, their goals are still accounted for or still taken care of.

So I would encourage everyone to set aside some amount of money that they spend on whatever they want to, because having that money set aside to spend however you want kind of helps you to stay on track with the other things. You know that you’ve got some fun that you can have, you’ve got some money that you can spend there, no questions asked. And it’s not taking you off track from your other goals.

[00:45:31] Heather: Yeah, I would say you don’t want to be so self restrictive that people do. I think of it, like, as dieting. Right.

Remember That It’s About Long-Term Habits

The whole point, I would think, is to set up really great habits for the long term, to live by, for always that feel good, that enable you to pay the things you need and also to put forth money towards your goals and then have the fun for the things you want that aren’t needs and might not be goals, but are there for you to have fun with. Just like with a diet, you want to have a healthy overall kind of habit of eating pretty healthy, but allowing yourself to enjoy some good things that aren’t technically healthy upon occasion so that you can have fun.

[00:46:18] Rho: Exactly. Because I find sometimes people try to deprive themselves too much. Right. And you are living in this deprived state, I can’t have this, I can’t have that. I can’t do this. I can’t go here.

And after a while, it gets to the point where you’re like, well, I just want to have fun. And then you just go completely the other way and it ruins all of the progress that you might have made doing the thing, the deprivation.

I liken it a lot to crash dieting where people are like, I can’t do this, I can’t eat this, I can’t, can’t, can’t. And maybe you get to that goal, but it’s not sustainable. And so setting up some allowances for yourself, both with dieting, with your finances, allows you to do it in a more sustainable way so that when you get to the goals, you’re able to keep going with the lifestyle that you have created for yourself versus it being this crash diet approach of, let me just cut out everything and get to this goal really quickly.

[00:47:22] Heather: I think that’s great advice, and I think it’s great advice to pretty much end on. Any final thoughts before I let you go?

Learning How To Manage Your Money Final Thoughts (To Live By)

[00:47:29] Rho: If anyone out there is struggling with their finances or is feeling overwhelmed or anything like that, know that this is not last, this is not the end for you. You can turn things around. You didn’t get into the situation overnight, so you’re probably not going to get out overnight. But if you will take the steps toward the goals that you have, if you will make decisions that lead you to the place that you want to be, you will eventually get there.

Just know that it does not have any bearing on who you are as a person. You are still 100% worthy, all of the things, even if you have credit card debt or student loans or whatever else you think might be an issue with your finances. So just know that this is not the end. You can turn things around and it doesn’t have any bearing on you.

[00:48:29] Heather: Thank you so much for joining us today. Why don’t you tell us where people can find you?

[00:48:35] Rho: Yeah, you can find me at my website, which is And then I’m also Rho Thomas on LinkedIn.

[00:48:44] Heather: All right, people, please go find her. Follow her. I do follow her on LinkedIn. She’s got some wonderful information and news out there that people can follow. And just thank you so much for coming on today.

[00:48:56] Rho: Thank you again for having me.

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About Rho Thomas

Rho Thomas is a former Biglaw associate turned financial coach who believes that true wealth comes from having control. In her role as financial coach, Rho helps lawyers master their personal finances to create freedom and choice in their lives.

Through practical strategies and proven advice, Rho helps lawyers better manage their mindset and money so that they can improve their finances and start building wealth.

In addition to being a financial coach, Rho also hosts the Wealthyesque podcast where she shares weekly strategies for how to improve your money mindset and manage your money to achieve true wealth.

Here’s how to connect with Rho: