Advice to law students on the benefits of budget

<<Lakkides quickly adds that there's more to saving than students may think.

"I think the mistake a lot of people can make is looking too far ahead," Lakkides explains. "Students in general are willing to accept debt. They find themselves in credit card and student loan debt."


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Students do have a considerably high debt threshold, and this has a lot to do with the accessibility of credit cards. This is not beneficial since the average adult has only around $8,000 in debt, according to Lakkides.

"The temptation to use a credit card is...pretty high," he says. Students "can talk themselves into running up credit card debt — 'I deserve it, I need it.' Emotionally that's acceptable, but financially that's digging the hole deeper."

Lakkides says that kind of thinking is what gets people in trouble. At the end of the day, students don't know what kinds of jobs they are really going to get.

"Law students by definition are good at advocating an issue. As good as that is in front of a judge, advocating [their] clients' point...it's used to delude themselves when it comes to the real financial issues they are dealing with," he says. "They can say they are going to make $150,000 when they graduate, then great, but there's no guarantee. There are so many steps in between. One cannot get too optimistic...at the end of the day, you don't know what kind of job you will get."

Having worked in the financial industry for about 26 years, Lakkides has had his fair share of experience with people in financial trouble. He warns law students about the financial problems they could be setting themselves up for in the future.

"There are so many things in life that aren't for sure. Things may not work exactly as planned," he says. "It's a risk they are willing to accept, but it should be avoided at all costs. If they do not land the high-paying job with the law firm, then what do [they] do now?"

So if you've already started charging up credit cards, you can prepare to be in debt forever, right? Not necessarily — it's not too late to change your spending habits now.

Below are a few tips from Lakkides to follow in an attempt to control your spending habits as a struggling student:

1. Pull out a piece of paper and account for all of your spending.

Lakkides says that it shouldn't be anything "exotic — just a simple spreadsheet." Go down 20 to 30 lines and write how much income you used up last year.

"Where does the money go? That's a tough task for people; they confront realities most of us won't want to look at," he explains. "Look at where that $30,000 goes. The pain of having to juggle [credit card bills] almost spoils the success...it [becomes] a ball and chain of debt."

You can have $20,000 in credit card debt, and if the interest is high, then it's a cascading effect, and that's corrosive, Lakkides says.

Fill in the spreadsheet by hand to really take it all in. Do this for a month. Then look at where your money has been spent and see what you can give up.

2. Break down where you are spending the money at.

Make conscious decisions about spending. Carry a Ziploc sandwich bag (or a similar practical container) to hold all your receipts. Then at home, on a weekly basis, write down what you spend money on.

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"By keeping track or a handle on the $5 here and the $2 there, that's what adds up. That's the flaw in most people's thinking; it's the details that are what matters," says Lakkides. "Keep track of the details. Law students should apply the detailed thinking that they do to their legal documents to their pocketbooks."

3. Don't rely on credit cards unless absolutely necessary.

"Credit cards should be used on an emergency [basis]...avoid picking up debt during school as much as you can. Paying interest is extremely wasteful," Lakkides says. "You've got to be disciplined and not let people through advertising [fool you]."

Lakkides also says that aiming for the bar and that big law firm job can be putting one's eggs in one basket.

"What if they get sick and they can't pass the bar, and then they are carrying the debt for another six months?" he asks.

Lakkides says that students should care for their finances while in school.

"Spending habits are things anyone can change. It's all about control," he says.

He emphasizes that people can learn at a young age but warns about advertisements. Credit card commercials, he says, "are making it socially unacceptable to spend cash. Peer pressure is hard to resist...[it] lures people to make it easier for them to make bad financial decisions."

When it comes to wisely managing credit card debt, the answer is simple: pay it off every month, says Lakkides.

"Shop, get a good price, but pay it off. Look at the fine print of the agreement that comes with a credit card...[you] would be amazed at how many land mines they have in there for the average consumer," he adds.

Lakkides advises everyone to read all the fine print. It can be time consuming, but even reading it once will show you the catches in credit card companies' terms, even the ones claiming to give you 0% interest.

Although it probably doesn't sound like the most fun, going to your grandparents and parents and asking for financial advice is your best bet. A third party can give you a clear point of view. They have experience and can provide valuable information on how to budget your finances.

Lakkides advises students to make a projection of their income. They need to see where they need to be five years after graduation and how much they plan on spending.

"It would be almost like running a business — $60,000 the first year, then jump to whatever," he advises. "[Make an] income statement and a spending analysis...they can pretty much get an idea of how much apartments are, car costs. [It should be a] simplistic business plan...it ought to carry realistic numbers."

Ultimately, financial saving is in your hands, but the earlier you get a head start on it, the better off you are for your future. Let's face it: whether you want to work at a large law firm or at a small one, nobody is happy with any debt.

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"The key word is 'discipline.' Enjoy the quality of life," Lakkides says. "Budgeting is the heart of it all — no other way to do it."