#326: Financial Freedom for Lawyers: Strategies and Mindset with Niraj Chhabra

Financial Freedom for Lawyers: Strategies and Mindset with Niraj Chhabra

Dina Cataldo (00:00):

Mindset is essential to better every area of our lives. But we also need to be aware of strategy. And if you want to increase your net worth, keep listening.

Dina Cataldo (01:14):

I am so happy to get to bring today's guest on for you. I'm definitely gonna go back and re-listen to this episode because there was just so much information that I want to apply to my life and my business, and I think you will too. A couple months ago, I came across Nira Shara's profile on LinkedIn, and we had a couple conversations, which is something I love about LinkedIn. And it's the ability to connect with really cool people and do it in a way that feels good, like not in kind of a weird, awkward way.

Dina Cataldo (01:48):

I think some people try to like sell you things in the, in the dms sometimes, and that can make us feel like if we reach out to somebody that somehow somebody else is gonna perceive that as being sales salesy. But in this case, I connected with him and he reached out to me and it was very natural and I really appreciated that. So if you are not on LinkedIn or if you very seldom go on LinkedIn, I highly recommend it. Recommend that you use it as a fabulous resource that it is, which is to use it to meet people. Anyway, as we talked, it was clear that he really had a passion to help specifically female lawyers and to, to help them manage their money wisely. And you're gonna find out why as we go on with the interview. Now, men, you are gonna get a ton of value out of this conversation.

Dina Cataldo (02:38):

And even if you're not a lawyer and you're listening to this, which I know you are listening 'cause I get these beautiful reviews from you on Apple Podcasts. So thank you. You definitely will not be left out here because what he shares on this episode is applicable to everyone. I wanna give you a taste of the topics that we cover in this episode. We cover the difference between upper middle class mentality and wealth mentality, the two biggest drivers of your long-term financial success, unique problems that law firm owners face when it comes to finances, what to do when you're afraid to look at your budget and recommendations for your very first steps to begin thinking about your finances. If you're just getting started, that sounds pretty darn amazing. Right? Before we jump in, I want to invite you to my masterclass because just like mindset and strategy applies to money, it also applies to our time.

Dina Cataldo (03:38):

So the masterclass is the Busy Lawyer's toolbox, calm, overwhelm, and become a high performer in your law practice. And if you're listening to this episode in real time, register for it right now. Go to dina cataldo.com/august masterclass. That's dina cataldo.com/august masterclass. It's happening on August 16th, it's a Friday, and we are gonna be talking about all things mindset. And there really is a toolbox that lawyers have access to. And I have divided this toolbox into pillars. I have four pillars that I'm gonna share with you that really help lawyers calm, overwhelm, manage their mind, and begin to become high performers, not just high achievers, but high performers in your law practice. And there is a difference because if you're a high achiever, you are constantly taking action, doing things that maybe aren't quite as important as they really, as you really doing the things that are gonna move the needle.

Dina Cataldo (04:47):

A high performer remains calm under pressure, remains calm, able to problem solve, communicate clearly and begins to design a practice and a life by their design, not by the designs of those around them, like clients or opposing counsel or even their boss. So I want to encourage you to sign up for this masterclass. Go to dina cataldo.com/august masterclass. Alright, let's dive into the interview. Thank you so much for being here, Naraj. I'm really excited for this conversation because I know so many of the lawyers listening like to, well, maybe they don't like to think about money, but they do want more money, and they do want to feel very secure in their futures. And when we started talking, we really started talking about what you do and how you help lawyers, specifically women lawyers, figure out their finances and begin thinking about their future. So could you please share a little bit about yourself and how you got into caring about this population of women specifically who are maybe struggling to get their finances in order or want to secure their future, but they're, they're kind of lost right now, or they're a little overwhelmed.

Niraj Chhabra (06:21):

Sure. And first, Dina, thank you very much for having me and allowing me to speak to your audience. I I hope that they get value out of our conversation today. My name is Niraj Chopra. I am a financial advisor with Sidebar Advisors. We are a financial planning practice that specializes in working with lawyers, as the name implies. I've been in the industry for about 19 years at this point about 15 of which was spent servicing attorneys primarily. The way I got into it was back in college, I had an interest in investments, you know something I would read up on, on my own. I remember picking up a book called Investments for Dummies and things of that nature that when those series were popular. But growing up, you know, I had a mother who was very, very much your immigrant mother.

Niraj Chhabra (07:08):

She came here with very little in her pocket, busted her hump, working double shifts as a nurse to be able to provide both my brother and myself, you know, the education that we, we ended up having. And neither of us graduated with a single penny of student loan debt upon graduation. You know, we were she, she offered to buy us both cars. She paid off a mortgage down in 15 years, and this is what interest rates were in the double digits. So, incredible work ethic. That all being said, it was during the dotcom era and everybody was making money at that point, but my mom didn't really have that background, that education on how investments work or anything like that. So that, I think that's kind of what sparked my curiosity, just knowing that her life could have been easier. She didn't have to work as hard had she had these tools available to her.

Niraj Chhabra (07:57):

All she really knew were CDs because that's what she grew up with. Mm-Hmm. <Affirmative>. So I ended up joining this club called the Financial Management Club on campus, which wasn't as cool as you would think, but it gave me the education and background that I needed to ultimately end up where I am today. It led to a career so fast forward, you know, a couple years. And I ended up becoming a financial advisor. Somebody reached out to me and said, listen, you're bringing on speakers to come talk to the student body about different financial planning topics. Why not make this a career? And that's ultimately how I ended up doing financial planning.

Dina Cataldo (08:30):

I love it. And, and basically <laugh>, like when you were talking about that, like, it's not as cool as it sounds, <laugh> because my brain would never even have thought to go there. And, and just to give you a little bit of my background, and I think a lot of the lawyers that I talk to have similar backgrounds because we have this incredible work ethic that we learned many times from our family. Either we're a first generation attorney, not all of my, my listeners, but a a lot of the lawyers I talk to first generation right? They maybe have immigrant parents. My dad was a third generation Italian immigrant. Not, he wasn't an immigrant, but he was a third generation American. And so he was very proud of his roots. And so he very much came from that background of working really hard too. And he worked and struggled to the bone he dropped outta high school in the 10th grade, but he was like the hardest worker you ever saw. But he did not save very much money. Like he had very little money when he passed on. And my mom and my dad, they had very different spending patterns. Right? And so they had a difficult time. He was

Niraj Chhabra (09:44):

The saver.

Dina Cataldo (09:45):

Yeah. No, no, no, no. My dad was a spender. My Right, right. My mom, she grew up in a household where they went through the depression and they were savers. They were so frugal they would save like Christmas paper, right? I was told stories or they, they would save Christmas paper and reuse it every year. And my dad actually told my mom, no, you can't do that anymore. Right? Like, they, so they had very different ways of spending money. And it got to the point, and I think we're gonna talk more about this today, about communication between couples around money. It got to the point where my mom started just saving money and not telling my dad because she was so, I think, frustrated with the fact that he would just spend every penny that would come in. So I think we're gonna have some good conversations here today.

Dina Cataldo (10:34):

Absolutely. And I think that the people listening, they're gonna get a good flavor for what you're all about and what they can do to begin balancing themselves out. One of the things you said about overworking with your mom, like she just worked harder than she needed to. I also think people listening to can relate. Can, can you share with me some of the problems you see coming up specifically with women? Like, I know the men are gonna be getting something from this too, but from the women's side of thing, what are some of the problems you see coming up most often where you, you need to step in and help them?

Niraj Chhabra (11:19):

Sure. So very high level, you know, financial planning in theory should be gender neutral. It shouldn't matter if you're a man or a woman. It should be numbers or numbers. Tax laws or tax laws, you know, you save, you spend, et cetera. It should be pretty simple. Unfortunately, it's not, you know, there's a lot of disparities between men and women. It starts off with salary. You know, women are still unfortunately earning about 80 cents on the dollar compared to men. It's better in the legal industry because of all these initiatives such as, you know, women's initiatives at law firms. There's pay transparency and things of that nature. But that's really applicable at the big, big law firms. You know, when you work your way down, it's still very much an a wage disparity. So that's the first thing. Women typically are earning less, but women are also wearing more hats compared to men. You know, how many of your audience members are the primary breadwinner in their household, but still packing their kids' lunches every morning?

Dina Cataldo (12:11):

Oh yeah, for sure.

Niraj Chhabra (12:13):

You know, and there's nothing wrong with packing those lunches, but it does go to show that there's different expectations, unfortunately, that still exist. So women are responsible for taking care of their kids. Oh, by the way, 75% of caregivers in this country are women. So not only are they responsible for taking care of their children, their careers, but they're also responsible when mom and dad get frail to step up and take care of them. Especially as attorneys. There's that expectation. Well, Dina makes a lot of money. She's an attorney. She could afford to take care of mom, she could afford to pay for that nursing home. So there's that double ex double entendre with them. Other things that people don't necessarily think about. Number one is that women live longer. And while that's a good thing, it means a longer retirement, which means we need more money, not less, you know?

Niraj Chhabra (13:00):

Yeah. It also means that there's gonna be higher medical expenses that we need to think about longer, you know higher medical expenses, high, higher, long-term care expenses. So think about your baby blooming generation. You know, let's use your parents as an example. Statistically speaking, you know, it was not uncommon for husbands to have been older than their wives. Mm-Hmm. <affirmative>. Okay. By several years, maybe even a decade. You couple that with the fact that women live about five to seven years longer than men. What happens? Husband gets frail, needs care. Life is there to support him. He passes away who's taking care of mom?

Dina Cataldo (13:36):

Mm-Hmm. <affirmative>.

Niraj Chhabra (13:37):

So this does impact women very differently than men. If you look at the stats, two thirds of the people inside of a nursing home are women for that reason. You know, there's nobody really there to take care of them. So there's a lot of these issues that come up that people don't necessarily think about. And it is a gender-based issue.

Dina Cataldo (13:54):

Yeah. And, and everything you're saying, I think so many of us hear it often enough that it becomes background noise, and we don't put it front and center and put our financial life front and center in part because another thing that I see is that women aren't really taught to think about money. They're not really taught to think, oh, I want to make X amount of dollars, and here are the reasons why I want to make X amount of dollars. And here's how I lay out a plan to make that money long term. So many of us, and I think men also fall into this too to a certain extent is, well, I'm just gonna work really hard, right? 'cause Lawyers, we're making good money. Most of us, you know, we're, we're getting six figures, multiple six figures, you know, and it comes in. But then when we get that money coming in, our expenditures go up, we decide we're going to buy that new car, we're gonna buy that new fancy house, we're gonna do all of these things with the expectation that the money will always be the same. That the money will always be coming in and

Niraj Chhabra (15:02):

Always be growing.

Dina Cataldo (15:03):

It'll always be growing. Right? And it is in part because our society tells us these are the features of success. You work hard, you make lots of money, you spend lots of money, you have things to show for it and things, specifically material things. And I think that, you know, the literature I read, it makes so much sense to me. And please tell me what you think about this, is that many middle class, upper middle class earners think in this generalized manner, but people who are really making money are thinking about how the money that comes in can make them more money in the long term. So I'm curious what your position is on that.

Niraj Chhabra (15:45):

Oh, you brought up a lot of excellent points. The first one that I wanted to point out is what, what you're describing is keeping up with the Joneses. You know, and that's very, very common in the legal community. You know, you're working with people, like you said, that earn high six figures, seven figures, even, you know, and there is a lot of competition. There are, you know, these expectations that you have to drive a certain car, you have to vacation in a certain spot, you have to send your kids to a certain school, et cetera. Here's the issue. What ends, what we end up seeing is that where do people save their money? They save first place is gonna be their 401k, because that's what you're trained to do. But keep in mind that there's a limit on how much you could put into your 401k.

Niraj Chhabra (16:22):

Whether you make a hundred thousand or a million dollars a year, the limits are the same. Okay? Once you're done with your 401k, where do you put your money? If you don't have time to address these things, you're putting it in the bank account and you're not necessarily giving it time to, to do the research and really grow the portfolio the way you probably should. The biggest culprit that I think I see with regards to attorneys that spend more than they should is their salary goes up, their spending goes up, but their savings stays stagnant. And the reason we see that is because think about what most people do. They get their paycheck, they direct deposited into their checking account, and they have a fixed dollar amount that goes into their savings. Next year they got a raise, so their income went up, the amount that went into their checking account went up. Naturally, when you see a higher balance in your checking account, you spend more. But what stayed exactly the same, the amount that you were putting aside in the savings account, Mm-Hmm. <Affirmative>. So, fast forward five years, you've had five years of pay increases, but your salary did not move. I mean, your savings did not move. Mm-Hmm. <affirmative>. So I think that's the big problem, making sure that your savings is increasing proportionally to your sal salary each and every year.

Dina Cataldo (17:29):

Mm-Hmm. <affirmative>. And one of the things that I've also seen come up is this security thing. So I work with lawyers who tend to overwork. They have high anxiety, they're overwhelmed. And you brought up a good point there is if you're overwhelmed, your finances are the last thing on your mind. They, they keep getting pushed to the back. Right. And that, that is part of the problem, is not really focusing on, okay, this is important and I am, my future is important, so I need to put attention there. That's one thing. But the other thing that I'm noticing is that when people feel overwhelmed and they're telling themselves they don't have enough time, that often goes hand in hand with money and how they think about money. And so I'll see lawyers come to me and say, you know, the only way I could possibly feel safe and calm is if I have 100, $200,000 in a savings account. Not even invested anywhere, just in a savings account. Like, I could only feel safe if I had that much money in a, in a savings account. But that's, is, is an incredible amount of money to have not doing anything. And I, and I would, I wanna ask you to speak to those people who feel like they need to have lots and lots and lots of money in a savings account versus some other vehicle. And also what you would recommend is just like a, a standard rule of thumb in terms of saving.

Niraj Chhabra (19:00):

Sure. No good points. The first is the amount of money, you know, one or $200,000 in cash might be a lot of money for certain people, but it might be a small amount of money for others in regards to savings. So typically we wanna see three to six months worth of expenses set aside in cash. And, you know, when I ask my clients to go through their household expenses, if I were just ask you, you're probably gonna give me your mortgage payment, how much you spend on groceries, your phone bill, electricity, et cetera, you're probably not thinking about how much you spend annually on vacations. You're probably not thinking about Broadway shows or anniversary gifts to your spouses or graduation gifts, or anything along those lines that literally add up to tens of thousands of dollars throughout the course of the year. Hmm. So, naturally, if those are off the table, your budget is going to fail.

Niraj Chhabra (19:44):

Okay. So we wanna take all of this into account, not because we're trying to tell you to spend where to spend or cut back on your expenses, but just to be realistic as far as what you need in a savings account. So if your expenses work out to $20,000 a month, and we wanna keep six months worth of expenses, keeping $120,000 in cash might be the right amount. You know, just very back of the envelope math. Mm-Hmm. <affirmative> above and beyond that, yes, it requires some, a leap of faith. You need to be able to educate yourself and, you know, research how investments work. So we were talking earlier about, you know, finances and how they aren't the same between men and women. When I first started in the industry, we were trained, and there was a lot of research done by my prior firm on the differences in investment styles between men and women.

Niraj Chhabra (20:28):

And we were trained to think that women were actually more conservative investors than men. And we found out that this was true, but it wasn't the whole story. As they continued to do more research over time, what they found is women are comfortable doing the, taking on the same exact level of risk as men. Once they had the time to educate themselves and feel comfortable with what they were doing. Here's the problem. We talked about the fact that women wear multiple hats at, you know, at this point. So when do they have the time to research all this stuff to take on that additional risk? So what ends up happening, you have a male and a female both working for the same company, one's being a little bit riskier, what ends up happening at retirement, one ends up with more money potentially in their portfolio than the other person, even though the women are probably gonna live longer and need more money.

Niraj Chhabra (21:15):

You know? So it does have a compounding effect, and education is going to be the first step. And yes, attorneys are busy, it's a very demanding career, but if you can't do it yourself, that's why you hire a professional, just like you would for anything else. You know, with your childcare, you hire a nanny. If you can't get to mowing your lawn, you hire a landscaper. And that's really where, you know, hiring a financial planner to do these things for you. So you don't have seven figures in the bank account and the bank account sitting there earning nothing. You know, at least you're getting your money to work for you and potentially taking some pressure off of yourself where you don't have to work as much in the later years because of that compounding interest that you've accumulated.

Dina Cataldo (21:51):

Yeah. And that's so interesting. That brings up a topic that comes up in my conversations with lawyers, which is they're working so hard because of their families and how they wanna provide for their families, and they wanna go on trips and they wanna do all these fun things, but they're working themselves to the bone. So if they were able to really understand the vehicles available to them, the the numbers, like the actual numbers that they're looking at and working with every month, and putting money in vehicles that potentially have that opportunity for growth, it, it would one, like you said, take some of that pressure off of working so hard. Right. And, you know, maybe live under your means, right? Like live below your means, right. For a while so that you can have those opportunities for your family. But also, I, I talk to lawyers who want to have that passive income. They wanna have that, you know, and they think, okay, I need to work harder to create that passive income. Like, I need to start another business. I need to do this other thing in order to create that passive income when really there's so many vehicles out there for money that you can essentially, that could be your passive income. And so it's interesting that you say that because they might be so focused on working harder to make that money, there's actually easier, easier ways to use the money already coming in to make more money.

Niraj Chhabra (23:23):

Absolutely. And you know, you know, attorneys are at a slight disadvantage in certain cases. You know, everybody thinks that okay, they make more money. So it's boo-hoo when they complain about the fact that their kids don't qualify for financial aid. But the reality is, it's a very big ticket item. It's several hundreds of thousands of dollars to pay for. You know, especially if you have multiple children that can potentially set you back. So I think the big decision that people need to make, not just attorneys, is do you want stuff or do you want experiences for your family? You know, do you want to take them on vacations or do you want to drive a fancy car? Sometimes it is in either or situation, you know, and the difference could be put away, you know, just back of the envelope. If you have a million bucks at retirement, if you're earning 5% and you're living off of the income that you're generating, that's $50,000 of supplemental income. But you have to get there, you have to put that money aside so it compounds over the next 30, 40 years. So you don't have to stress about it. That is your passive income. That's exactly what it was designed to do. But you gotta put it away, put put it away, and put it away early.

Dina Cataldo (24:24):

Yeah. One of the problems I see, and I'm curious, you know, what your conversation with people is around this, is a lot of people don't even wanna look at their numbers. They don't wanna look at the budget. Even when they make time on their calendar to do it, they avoid it. They procrastinate on it. They tell themselves they can do it later. Oh, it's not that important. They'll put things off around money. I had one client who says she checks her mail like once a month, but she actually gets some checks in the mail. And so she doesn't do anything with them for that month because she's not checking the mail, in part because she feels so overwhelmed that her brain's telling her she doesn't have time. But of course, her brain has plenty of time to, you know, watch TV and do all the things that aren't necessary.

Dina Cataldo (25:10):

Right. Because it is just this feeling of fear that when you look at the numbers, when you, when you put yourself in front of the, the computer and you start tallying everything up, that you are gonna beat yourself up. You're gonna tell yourself, you're, you're doing things wrong. I should have been saving more all along. I am, you know, a hor I'm horrible with money. That's a story that so many of us, especially women believe is true when there's a lot of evidence that they're not horrible with money, it's just they're not taking the time to look at them. So how would you speak to somebody who maybe wants help, but is afraid to look at the numbers?

Niraj Chhabra (25:54):

Sure. I'll answer your second question first. You know, sometimes it's not as bad as you think. You know, we build these scenarios up in our mind like, oh, I'm sp I'm such a bad spender. I spent so much money on this or that. But what if it's summertime? You know, of course you're gonna spend more in the summertime with activities and your vacations and things of that nature. What if it's, you're opening up your credit card statement on January and in January and it's all the holiday spending that you did. Of course it's gonna be a higher bill. So if you are using that as the proxy to gauge your success in savings, it's not gonna be fair to yourself. So that's the first thing. You know, sometimes it's just not as bad as you think, and even if it is bearing your head in the sand isn't gonna help it.

Niraj Chhabra (26:34):

You know? So you really do need to address it. It really does boil down to time. Attorneys, like I said, are busy people I know personally, I don't have time or the desire to do this for our own personal fi our my own family. When I get home, I'm doing this for, you know, everybody else all day long. We hired a financial advisor When I got married. My wife thought I was crazy when I brought it up. But the reality is I just don't wanna do it when I get home. Mm-Hmm. <Affirmative>. That's number one. Number two, a benefit that I did not expect is that we have an objective third party. It's very hard to be rational with your own money. You know, including for myself who does this for a living, I could give one piece of advice to a client, but when I have to do it myself, it's my money.

Niraj Chhabra (27:14):

It's different, you know? Mm-Hmm. <Affirmative>. So having an objective third party helped us kind of neutralize the situation. The second thing is that, you know, you brought up the disparity between the way your mom and your dad spent money. That's not at all uncommon. I don't know if it's still true. I remember reading a stat at one point that the, the biggest, you know reason people get divorced is either infidelity was number one and finances when was number two, or flip flops, something along those lines. But people fight about money because think about it. You are typically attracted to somebody who's opposite of you. So one person spends, one person saves and you balance each other out. But you need to have the healthy discussion. You know hypothetically, you both met at law school and one person had mom and dad pay for their education.

Niraj Chhabra (27:57):

The other one, you know, bus tables at night and, you know, made sure that they had to hustle to pay for their education. And now it's time to pay for your kids' education. One person says, no, we're responsible for paying for our entire kids' education the way that my mom and dad paid for mine. The other spouse says, no, I appreciate my education because of how hard I had to hustle. They could do the same thing. I wanna retire early. Is either partner wrong? Absolutely not. But if they're not gonna get on the same page, there's going to be some discrepancy. There's going to be some arguments. And that is the other benefit I just did not expect to have. Or that's, excuse me, that's the main benefit I expected to have by hiring a financial advisor. At the end of the day, I know what I'm doing. But if I'm trying to explain to my wife that this is the reason we're making that decision, the advice isn't coming from a financial advisor, it's coming from a husband, which is a different dynamic.

Dina Cataldo (28:46):

Yeah. You know, that's so interesting. Yeah. 'cause when you share it like that, it's almost like you have this intermediary slash counselor that can help you both speak the same language and understand each other. I think that so often when one person kind of digs their heels in and says, no, this is the way, then the other person automatically wants to dig their heels in and say, no, this is the way. And if you are having those conversations with an intermediary, then you're able to better have an open conversation about what are the pros, what are the cons? How can we, you know, maybe compromise on this? What are some things that we can do that might make this easier for the whole family and that we can all agree on? I didn't, yeah, that's a great, great opportunity to have those conversations.

Niraj Chhabra (29:35):

Yeah. And there is a meeting of the middle, you know, so for example, in that scenario, one person wants to retire 10 years years earlier, and the other one wants to fully fund their education. I'm not saying these are the numbers, but they sit down with somebody like myself. And the solution we come up with is, okay, let's not retire 10 years earlier. Let's retire five years earlier. But instead of funding a hundred percent of your kids' education, we fund 50% of their education. You know? And that's a very viable solution for everybody, you know? But the conversations need to be had. Usually these conversations don't take nearly as long as people think. People come to me, they spend maybe two hours collecting some information. I go behind the scenes and do this stuff for them. Then we have our meetings. That's when we have that healthy discussion debate sometimes between spouses on how to reconcile any type of discrepancy in the way each person approaches money. And then you meet periodically having those scheduled meetings. It becomes far less stressful once you have a game plan in place and you feel like each partner is being heard.

Dina Cataldo (30:31):

You know, I, that brings up a topic that I'm curious about. And I think, so this is kind of a mystery for a lot of people, because many of us did not grow up in households that talked about money in the open. Mm-Hmm. <Affirmative>, you know, had maybe the opportunity to have the financial means to hire a financial advisor. I'm really curious if somebody was listening to this and they were thinking like, wow, what he's saying is making sense, but, you know, I don't know that I'm making enough money to hire a financial advisor, or maybe I should be, you know, you know, accumulating more money before I hire somebody. What would your rubric be your suggestion be for somebody who might be listening on what they need to have in the bank to even consider talking to someone like you? And if they did talk to someone like you, then what would be the, the steps that you would walk them through in terms of, okay, what are, what do I even do? What does a financial advisor even do when I walk in the door?

Niraj Chhabra (31:39):

Sure. Good question. A few things. I think that, you know, people feeling like they don't have enough to sit with an advisor is a function of our industry or lead. Doing a j doing a poor job, educating people on what we should do. Historically, people associate financial planners with stockers wealth managers. It's a very common interchangeable term. The reality is that we're doing way more than just managing a portfolio. You know, a lot of it, there's different ways that advisors get compensated. Traditionally, they're getting a percentage of the assets that they manage, and many advisors are going to have a minimum 1, 2, 3, 4 million sometimes, you know, so of course that's gonna come across as intimidating when you feel like, oh, well I can't work with my boss's advisor because I don't meet their minimums. But attorneys have complex situations and they want guidance on way more than just portfolio construction.

Niraj Chhabra (32:30):

You know, they're starting off their careers with way more student loan debt than other professionals. They may not have gotten the training or the, you know, background on how to manage their finances because they just didn't have that upbringing. Now they're jumping into a job where they're making good money, but they're paying a boatload in taxes. They're automatically not qualifying for certain retirement vehicles. They're trying to figure out, should I put the money into my 401k or start to pay down that debt? Everybody's trying to sell them life insurance and disability insurance because they make good money and they're not sure if it's the right thing for them. So attorneys still need advice. Even if they don't have these portfolios, their net worth is negative because of the student loans. So who's gonna help them? Other types of advisors like ourselves will bill on a flat fee basis based on complexity. So that makes it a lot more palatable for people that are looking for this advice. If they want us to manage their portfolio, yes, we'll charge them the same way everybody else charges them. But we're really designed to help these attorneys get guidance as long as they're looking for that guidance. So it doesn't have to be something that they're intimidated by or self-conscious or feel like that they just don't, they're not good enough to meet with an advisor yet.

Dina Cataldo (33:37):

Yeah. And you know, I talked to so many lawyers who are confused about where they should be taking the money. So let's say they get a bonus at the end of the year. Should they be putting that bonus towards their student loans? Should they be putting that bonus towards credit card debt? Should they be putting that bonus aside in the savings account? Like, what should they be doing? And they have these questions and they feel really confused. And sometimes what happens is, is because they're so confused, they're frozen, and then they just react. And then they don't necessarily do what's best for them in the long term and do something with that money that is not going to be reflective of their long-term values. 'cause They've never really had an opportunity to talk about their long-term values.

Niraj Chhabra (34:21):

Yeah. The other problem is that when they are talking about it, who are they talking about it with? You know, they're talking about it with their colleagues, their friends. Oh, what are you doing about your student loans? Well, their situation's completely different than yours. Different tax filing status. Maybe they're single, you're filing a joint return. Their balances are different, their salaries are different, their interest rates are different. Maybe they work for the public sector and they're gonna qualify for forgiveness. And you're not, you know, there's a lot of variables that are in play, and you need an individualized approach, not whatever your neighbor's doing, not whatever your employer's doing. So people will start off their careers and say, okay, well I spoke to my boss and they're putting all their money in the pre-tax 401k, because you're, you're gonna be a lower tax bracket once you retire than you are today.

Niraj Chhabra (35:04):

Okay. You're your, you're a first year associate, third year associate. You're making less money than you probably ever will in your life. Maybe you're in the lowest tax bracket than you ever will be. And maybe we have to divert those dollars somewhere else because of the fact that you're in a lower tax bracket. You also don't know what tax laws are gonna be in the future. Maybe the tax brackets end up going even higher. So it's very personalized and you know, you gotta be careful about, yes, people don't talk enough about it and they bury their head in the sand, but equally dangerous is talking about it, but with the wrong people, or not the wrong people, but people whose situations different than yours.

Dina Cataldo (35:38):

You know what's so fascinating when you said that it, it reminded me when I was, I think it was my first or second year as a lawyer, and it, at that point, what was all the rage were these low interest a PR on houses, but they weren't fixed. They were just like, Mm-Hmm. <Affirmative> balloon of 25%. Yep. Yeah. So everybody in my unit, like, and these were people who were more experienced attorneys. They, they were like several years out, they were supervisors. They were saying, oh, you definitely need to buy a house right now, but APRs are so fantastic. Like, this is the best way to use your money. And I'm thinking, in my mind, you are insane. There is no way I am putting my money into something where I cannot control the a PR. That makes zero sense to me. You are out of your mind. I did not buy a house at that point. A lot of other people did take that advice and we're buying homes. I decided, no, I'm waiting. And then I, when I had the money, then I purchased my home at an insanely low a PR that was fixed. Like, it was just so interesting to hear these people that we were looking up to talk about these, this financial vehicle that to me sounded insane. Like this, it did not make any sense to me, but maybe for their financial position, it did make sense.

Niraj Chhabra (37:00):

Yeah. And not taking anything away from those people, it might exactly what you said, you know, it may have made sense for them, but they're probably in a different financial situation than you and it may not be applicable.

Dina Cataldo (37:11):

Yeah. So let's say somebody is listening to this right now, and they're wondering like, what are the things I should be thinking about right now to get my house in order just as a baseline? Because maybe they've been avoiding looking at the budget, they have been worrying about how much money's coming in and how much money is going out. Maybe they even have some credit card debt and they have student loans. Like where would you point them to just begin somewhere?

Niraj Chhabra (37:40):

So when we're sitting down with a client and starting up a relationship, the first thing that we're gonna have them do is collect everything with a number on it. So we're gonna track their expenses. We have an Excel file that accounts for not just those monthly expenses, but seasonal stuff like Costco membership, you know, haircuts, gifts to families, stuff that doesn't come up every month, but again, adds up to tens of thousands of dollars throughout the year. That's gotta be step number one. You and your spouse need to sit down and go through these expenses outside of the house without kids distracting. You go to a coffee shop and do it just because you have to be honest with yourself. It's not to punish you. It's not to tell you you need to cut back. It's just to get an assessment of where you stand naturally.

Niraj Chhabra (38:18):

When you start putting pens and paper, what happens? You start to be more mindful of it. You pack more lunches, you save more money. It just happens automatically without you even making any effort. That said, that's not the purpose. We need to know what's your lifestyle costing you. If we don't know that number, we have no clue how much you could afford to save for these future goals, such as retirement and investment property, your kids' education, aging parents, long-term care, things of that nature. If we don't know how much we're spending today, it's hard to predict what we're gonna need in the future to maintain that lifestyle. So that's gotta be step number one. We also collect things like your pay stubs, your tax returns, your employer benefits. Sometimes there's nuggets in there that you may not be taking advantage of. I found a client that didn't realize that they had access to two different retirement vehicles and was able to get a match on the second one that they were missing out on.

Niraj Chhabra (39:07):

Other people work at firms and, you know, they offered some sort of deferred compensation program and they're not taking advantage of it. Why? Well, I don't know how it works. Did you know it's gonna save you tens of thousands of dollars in taxes if you took advantage of it? Oh, no, I didn't. So we wanna look through their employer benefits to see if there's any hidden gems that they're missing out on. Take a look at their mortgage statement, take a look at their retirement accounts, and really see how it all blends together. We talked earlier about insurance. What we might find is that, you know, there's certain insurance vehicles that sound really great on paper. Unless you, until you look at it in the context of the bigger picture, then it's not gonna work for you. So you wanna look at, look at your finances holistically, not just in in bits and pieces to really get a good snapshot of where you are and where you should be going going forward.

Dina Cataldo (39:53):

Another question I have for you is specific to law firm owners. So I, I work with a lot of solo practitioners, you know, you know, all the way to, like, they own, they have practices that maybe have 20 employees and, and right now a lot of what we've been talking about can apply to any lawyer, you know, big law and on. But is there any specific advice you would give to someone thinking about finances and they own their own firm? What kinds of things do they need to begin thinking about that might be different from someone in big law, let's say?

Niraj Chhabra (40:26):

Sure. there's a couple things that are unique to being a solo or a business owner as it pertains to the law. So the first one is, earlier we were talking about three to six months worth of expenses set aside in cash. As an emergency fund. If you're a solo, you probably need one to three years worth of expenses Set aside, why such a big discrepancy? Well, when you were working for a firm, you had income coming in, you know, whether that case closed or not, you had some sort of base salary when you're a solo, you know, it could be months or even if you work on as a personal injury lawyer, it could be years before you collect a paycheck. You know? So you need to make sure that you have enough money to keep the lights on in order to continue the practice. You know, what we find is that people will, who don't have an adequate emergency fund, end up taking on cases that they have no business taking on just outta desperation, or they discount their rates and their value as an attorney. Oh,

Dina Cataldo (41:20):

You're speaking my language right now, <laugh>.

Niraj Chhabra (41:22):

Yeah, we see it, but it comes from a point of desperation, you know and I think people see through that and it actually spirals because clients see through that. They take advantage, they try to pay you less in the next time, and then, you know, you're just out of business. So that's gotta be the first thing. Let's assume that you're beyond that and you're actually growing your practice. Another common mistake that we see is that people will oftentimes get fixated on one particular retirement plan. It's usually a set IRA or a simple IRA not realizing that they may be graduating to other vehicles that allow them to defer more of their salary, offer more benefits to their employees as their salaries grow. If you're in personal injury or another types of, of law where you work on contingency, maybe there's something that you could do to defer your compensation, their structured settlements, not just for the clients, but for you as an attorney that could potentially save you thousands of dollars in taxes.

Niraj Chhabra (42:14):

Not even thousands, tens if not hundreds of thousands of dollars depending on, you know, the size of the case. So it's really just understanding that, you know, as a business owner, specifically as a lawyer, you have vehicles that other individuals just may not have access to. But it's also realizing that there are other things that other people have access to that you do not. For example, you work for a big firm, you're probably getting, you know, disability insurance through your job when you're a solo practitioner who's providing you with disability. If you can't go to work, you have to do that yourself. And by the way, that's depend the amount that your coverage you're gonna get is depending on your tax return. You can't just say, I want to collect this much money. No, you have to show them that you, this is what you earn and this is why you're collecting so much or you're applying for so much, you know, so it is unique to you know, solo practitioners do have unique challenges that they need to be aware of.

Dina Cataldo (43:07):

Wow, this is beautiful. I think that there's so much that we've already talked about in terms of what every lawyer needs to be thinking about around their finances. And I'm wondering if is there anything that, well, actually, no, I have this question for you. So what should people be looking for in a financial planner that they can trust that have their very best interests at heart?

Niraj Chhabra (43:36):

I mean, first thing has gotta be fit. You know do you feel like you're comfortable with the person? You're gonna be opening up about some pretty intimate stuff, you know? Sometimes it's stuff you've never, literally never told your partner or anybody else before. So it's personal. You need to make sure that you vibe with the person, you trust the person, and you're gonna get along with that person. 'cause You're gonna be working with them for a long time. You know, and it's not a transactional thing. It's a, it's something that you're gonna have, you know, an ongoing relationship with. So that's the first thing. That's the softer side of selecting a financial advisor. But if you're looking for something more pen and paper, couple things, you wanna make sure that the person's a fiduciary. That's the key word. You know, meaning that they're acting in your best interest, not whatever lines their pockets.

Niraj Chhabra (44:16):

It's not to say that you can't work for a firm that's not a fiduciary and do the right thing for your clients. I was in that position for a very long time, you know, that said, fiduciary has a higher standard and they're, you know, obligated to make sure that they're acting in their client's best interest. The other thing you wanna look for is somebody who's a certified financial planner, CFP. Lots of people are financial advisors and are able to do financial planning. Cfps have a lot more training, and they're able to think more comprehensively and kind of see, okay, well if I do this, that sounds good, but it's actually gonna impact that. And just kind of connecting the dots in a way that not everybody will. Again, there's plenty of great advisors out there that do not have their CFP, but it's just something that you know, kind of helps 'em stand out a little bit. So I would say that those are the three things that you're really gonna wanna look for above, above anything else.

Dina Cataldo (45:06):

Okay. I love that. Is there anything that you think we haven't covered that you wanna make sure that the lawyers listening understand?

Niraj Chhabra (45:18):

I think the last thing I'll leave you with is taxes are the biggest driver of your success. You know, with regards to your, well two things, your savings and your, your taxes, you know, being mindful that your tax situation is going to evolve as your career evolves is extremely critical. You know, everybody focuses on, well, this person got me this rate of return. My portfolio does this, my portfolio does that. Listen, that one or two point differential is, I'm not saying it's not meaningful over the course of 20, 30 years, but if one person keeps 10% more than the other person that's way bigger of it, that's a much bigger impact. So being smart about your taxes, you know, whether it's saving where you save from, where you would draw from, that's huge. You know, maybe you put money into a vehicle for your kids' education that could offer some tax benefits. Maybe it's taking advantage of some of these other vehicles as a solo practitioner that allow you to defer more money for from taxes today. So I'd say that that's probably the biggest thing that attorneys need to be very mindful of, because they're getting slammed with taxes, you know, and while you can't necessarily avoid them, there's things that you could do to time it a little bit better or minimize it to a certain degree.

Dina Cataldo (46:30):

Mm. Thank you. The, thank you. This has been so educational. I wanna go back and I wanna listen to this whole episode again because you've, you've given so much here and I really appreciate it. Where can people find you? And do you, I know that you have a guide that's coming out, a checklist of some sort that's coming out that can really put people on the track to getting to know you, to, you know, maybe booking a call with you if they're, if they're ready. Like, can, can you give us that information?

Niraj Chhabra (46:59):

Sure. You know, we'll, we'll obviously post all the social media stuff, but you know, if you could go to sidebar advisors.com and you could always schedule an appointment that way you could always email me with any type of questions that you have if you're on the website. We have a ton of resources. It's not just, you know links to our website, excuse me. It's not just links to book an appointment. We have videos that we talk about, you know, the difference between a pre-tax and a Roth 401k and things of that nature. So a lot of resources that we have available. Additionally, we have our own podcast where we interview interesting and successful attorneys about their challenges and what they've gone through. So you could always check that out. Along with our upcoming events we're not only an accredited CLE provider where we're able to offer DNI classes and other courses as well, including our flagship course financial empowerment for women in law, but we also try to be a resource to attorneys. We have monthly attorney networking events that we do virtually that allow attorneys to network with other professionals. So there's a ton of stuff out there. So you're gonna wanna check out our website or check us out on social media, even if you're not looking to work with us, it'll be beneficial just to kind of get yourself out there.

Dina Cataldo (48:02):

Absolutely. I love that you're providing so many resources for attorneys and specifically female attorneys, but obviously this covers the guys too, so. Absolutely. Yeah. So I, I really appreciate it and everything's gonna be posted in the show notes so that everybody can take advantage of these resources and really connect with you if they're resonating with this. And, and honestly, I hearing everything that you've had to say, it really puts into perspective where I am, right? And where I want to begin doing the research. I want to begin doing the, you know, the, the sitting down and really thinking about, okay, where is the money going? And not just with a budget, but really thinking about it long-term and thinking about a long-term plan. And I think it's beautiful that you provide this service to allow a space for lawyers and their spouses to begin thinking term about their financial stability. So thank you so much for bringing all of this onto the podcast. I know that people are really gonna appreciate it.

Niraj Chhabra (49:11):

I appreciate the opportunity to come on. So thank you, Dina.

Dina Cataldo (49:13):

I am so happy that I got to bring this episode with Niraj to you because he has a wealth of information, pun not intended, <laugh> to share with all of us. He's been doing this for so long, and he really does his practice with heart. And I just, I really am so pleased with the fact that we had the opportunity to have this conversation and we've been able to establish this relationship. So I'm very happy about that. And if you want to continue not just working on your mindset around wealth, but working on your mindset, around how you manage your practice, how you're billing, how you are able to complete tasks on time without using dread or pressure to try to get you to hit those deadlines without killing yourself, without taking your laptop on vacations on the weekend without ignoring your family, not intentionally, but because you're worried about missing something or that there's an email that you're gonna be missing, I want to invite you to book a strategy session with me.

Dina Cataldo (50:19):

You can go to dina cataldo.com/strategy session. And when I talk to you in these strategy sessions, you're gonna get so much information to help you move the needle in the direction you need it to move, whether you decide you wanna work with me or not. And these strategy sessions are really designed to give you the insight and to give you the clarity that you need. To make a decision moving forward, and that's why I designed them the way that I do. So go ahead, book that strategy session. Go to dina cataldo.com/strategy session. Alright my friend, I hope you have a fabulous rest of your week. I'll talk to you next week.