This for you who don’t love the law. You often wonder if you should do something else, if you chose the right career path, if you have wasted a big chunk of your life as a mercenary of justice. If you divvy up your time the way you want to, your priorities would be ordered from highest to lowest: family, travel, exercise, beach, reading, work, Netflix. But an accounting of how you actually spend your time shows your priorities are backwards, starting with work and work-friends, then moving on to Netflix and sports-watching, and last and least, family. Reflecting on this strange arrangement is painful. After all, your work-friends will disappear the second you retire. You will not miss them, nor your work, when you retire. And Netflix and sports-watching, at least the shows you choose to watch, offer you no wisdom. Meanwhile, your kids are at their cutest right now and you don’t see them. Perhaps this Faustian bargain is justified: in exchange for a sacrifice of priority-ordering, you have or will achieve power and reputation. But the truth is, deep down, you don’t care about such Marvel-comic values. In which case, you have, unwittingly, ended up with a loser’s bargain: in exchange for a sacrifice of priority-ordering, you will, when you are too old to enjoy it, eventually achieve right-ordered priorities. It would make sense, then, to better the bargain by shortening the duration of the sacrifice, so that you will indeed be able to achieve right-ordered priorities while you are still young. And this is the goal of the FIRE lawyer, to achieve enough financial independence to retire early.
To do this you must accumulate enough net worth (your assets minus your liabilities) so that you can live on your savings. The more money you save and the less money you owe, the higher your net worth. There are at least three ways to grow your net worth: increase your income, reduce your expenses, and grow the money you have already saved.
Reducing expenses is perhaps the simplest way to increase net worth. You don’t have to become a better lawyer, bill more hours, market yourself more, attend more conferences, or improve your bona fides. You just have to keep chugging along at work. On the other hand, you will need a wholesale change in what you do minute-by-minute, day-by-day. You will have to change your habits, and this will take willpower. Suppose your salary is $150,000 a year, or about $100,000 after tax. You have enjoyed the benefits your salary confers. Your current expenses are based on living downtown, going out with your friends for dinner a couple times a week, traveling to Mexico and Europe twice a year, shopping Patagonia and Guess online, and funding your Peloton addiction. Your annual savings in this lifestyle: $1,000. To reduce your expenses, then, you will have to live uptown, go out with your friends for coffee a couple times a week, travel once a year, shop Amazon, and go bike outside. Your annual savings in this frugal lifestyle: $30,000. Such a change will not be easy, for it will initially be abnormal, but repeating the abnormal normalizes it. We better adapt to the circumstances we choose.
Increasing income can significantly speed up your net worth. You can dedicate yourself to becoming a better lawyer, getting better clients and files, and getting promoted. The challenge here, however, is double. Not only must you improve your career, but at the same time keep your expenses flat. You will likely have to spend more time dedicated to improving your income and you will want to reward yourself with a Porsche, a Gucci bag, and a penthouse apartment. You deserve it, you say. But the truth is every reward you pay for adds another week, another month, another year you must work before you can retire. Meanwhile, as your income increases, so will the income of those in your circle of people. You will go from knowing nobody with a cottage to everybody with a cottage. Nobody with a Tesla to everybody with a Tesla. Nobody with reservations to Alo, everybody with reservations to Alo. And you will want to join them in acquiring such goods. This temptation, should you succumb to it, will achieve only one thing from a financial point of view: increase the number of days you will have to work before you retire.
If you don’t grow your savings, then your net worth is decreasing every day. This is because of inflation. In typical environments, let alone today’s high inflation environment, a dollar today is worth less by the end of the year. And less the year after that. And so on. Just to keep up with inflation, you will have to grow your savings. You can grow your savings in myriad ways. You can invest in less risky GICs and government bonds. You can take on more risk and invest in index-based ETFs (google Canadian Couch Potato), or buy individual stocks, crypto, or real estate. If you have no knowledge of any of these, then remember: if you are not growing your savings, then you are losing savings every day. You can also invest in your law firm, should you become a partner. Whichever way you go, it literally pays to get educated about investing.