It was a PLT placement at the Cancer Council Pro Bono Legal & Financial Service where, working alongside countless Australians experiencing financial distress, Paridhi Jain first saw the real-life impact and importance of financial education - and what could happen in its absence. Insights spoke to Paridhi, the founder of SkilledSmart, about how she moved from the law to financial education, the specific challenges lawyers face when it comes to managing their wealth, and how they can be overcome.
You learn how to earn, but not what to do with money
Paridhi’s PLT placement saw her talking to people about their finances every day.
“The double-whammy of cancer is that it can be pretty expensive, so it can throw a lot of people into financial distress,” explained Paridhi. “It was a pretty sobering experience. I saw how many people struggle to understand their finances, the importance of having a strong financial foundation...and the potentially devastating consequences of not having one.”
As her career progressed and she began to learn more about managing her own money, she realised this issue wasn’t just confined to cancer patients and their families.
“I realised that most people, across all ages and professions, don’t understand their finances, have never been taught how to manage them, and don’t know who to turn to for help,” Paridhi observed.
“As a society, we put a huge emphasis on teaching people how to get a job to earn money. But we don’t teach what to DO with the money they earn. That seemed kind of crazy to me. After all, money is something we need and use every single day until the day we die.”
Creating highly actionable, practical financial plans
Lawyers, like many professionals, make their living as experts in their chosen field. However, this can render them uniquely resistant to financial education, a sensitive topic at the best of times.
“It’s your job to be the authority, to know things, which can make it hard to admit when you don’t know everything,” explained Paridhi. “There’s often a sense of, ‘shouldn’t I know this by now?’ Or ‘does everyone else already know this? I don’t want to look silly by admitting I don’t know what I’m doing.’”
“Having done a law degree myself, I know how much personal finance is taught at law school: none. As a result, finance is a topic that often isn’t really front of mind for many lawyers. Their main focus is their career. And there’s this assumption a lot of people have that financial success comes from earning more money. So it can be easy to fall into the trap of constantly chasing a bigger income…”
In addition, lawyers are trained to be risk-averse; it is, in fact, what often makes a good lawyer.
“Being risk-averse is part of the job - looking for what could go wrong,” said Paridhi. “You’re trained to look for the error, for what’s ‘missing’. It’s great as a lawyer, but not so great when it comes to investing and building wealth. It can make lawyers more conservative and risk-averse than perhaps what they really need to be when it comes to financial decisions. In the long term, that can be a costly mistake.”
Her online financial education program, Mastering Money, has proven popular with lawyers.
“They really enjoy it,” said Paridhi. “It’s something that’s been developed off the back of a tonne of research and countless hours spent working alongside financial professionals. The goal was to create something highly actionable and practical, that would help people understand what steps they needed to take to manage their finances and build a strong foundation.”
Mastering the difference between money and wealth
Lawyers, like many white-collar professionals with the potential to earn high incomes, often find themselves trapped in the chase - pursuing higher and higher salaries.
“There’s a difference between money and wealth,” explained Paridhi. “There are plenty of high-income earners who live paycheque to paycheque. It’s not about how much you earn. It’s about what you do with what you earn. How much are you saving and investing? You don’t retire off the income from your job. You retire off your investments.”
That’s why she encourages all lawyers to focus on learning how to invest.
“I know this is scary for a lot of people. There are a lot of horror stories out there, a lot of jargon, so it can seem really complicated. But you don’t need to be good at maths, or have a finance background. Anyone can learn to invest. It’s simpler than it looks once you understand the basics.”
“You also don’t have to take on huge risks,”said Paridhi. “Investing can seem a lot more risky than it actually is from the outside when you have no idea what you’re doing, much like driving a car without any training would be pretty scary. For most people, the real risk is that they’re not investing at all, which means there’s a risk they won’t have sufficient wealth to retire comfortably.”
Demystifying investment is central to Paridhi’s work, which is about financial education - not advice.
“It’s about empowering people,”” said Paridhi. “I think a lot of people who end up in law school are impact-driven at heart. There’s a desire to make a difference in the world, and that was definitely true for me. So to this day, the thing I love the most is seeing the real-life impact our program has for students.”
“Hearing stories of how much our students lives’ have changed through transforming their financial life is by far the best part of my job. It's not just the monetary gain. Yes, our students save and invest a lot of money and grow their wealth, which is amazing. Money is connected to almost everything in your life, so there is an inevitable flow-on effect. There have been students who saw their marriage improve, thanks to reduced financial conflicts, or became more confident at work, or even lost weight because when they started budgeting and meal-planning, their diet improved! It’s incredible.”
“Learning how to effectively invest your earnings is one of the best things you can do for your financial future. In fact, your financial future kind of depends on it.”