Transitioning out of law: Learn to budget

Over the past year and a half I've had lots of conversations with early career lawyers, investment bankers and consultants who are doing well professionally but still want to move out of their corporate gigs and into something . . . else. I'm always flattered to be asked and, truth be told, proud of me and Emma for having come so far in the past few years so I always say yes and share what I've learned. At this point I've had the conversation enough times that it makes sense to start writing it down. It's not gospel, but it is my lived truth.

You will earn less cash and you better get used to it

The first thing that lawyers and others who are making very comfortable livings but want to shift careers need to do is get a good handle on their finances and prepare themselves and their families to live on significantly less. I know from fortunate first-hand experience that making a good salary at a young age and with few fixed expenses can lead to complacency about money. Most people can lead very comfortable lives in New York on a big lawyer's salary without counting pennies.

Business roles at technology companies, in contrast, do not come with the same cash compensation. (I am talking here about the types of roles you can expect at the beginning of your new career as a tech company business person) Equity could eventually make your work lucrative but that is so speculative and far off that it only makes sense to think of it as a "bonus" and not something to be counted on.

You need to budget for your transition

The solution to the problem of limited cash is to set weekly or monthly budgets and track your expenses closely. This is elementary but I'm surprised by how often the suggestion surprises.

Before I got hugely into personal budgets I thought that tracking expenses would cause money and money-issues to take an outsize role in my day. The reality has been exactly the opposite: Budgeting and sticking to it has reduced my day-to-day money worries. As I see it, when you've got a budget everything you can think of everything in life as being pre-paid and never have that terrible I-shouldn't-have-done-that feeling in the pit of your stomach after an expensive meal or a shopping splurge. Good meal or bad, the money was already gone.

There are tons of budgeting techniques and tools - we started with spreadsheets and these days use Mint - and I don't have a view on which one is best. As with CRMs for notetaking, the point is that you must pick a technique or tool and be diligent.