BY: Chinelo Audrey Ofoegbunam, Esq, ACIARb(UK), ACArb, AICMC, ACIS.
Introduction
In Nigeria, lawyers are often perceived as wealthy professionals, yet many struggle to build long-term financial security. The reality is that despite impressive legal skills and years of education, many lawyers find themselves caught in a cycle of earning, spending, and waiting for the next client—with little or no accumulated wealth.
This week, we’re dissecting why Nigerian lawyers struggle with wealth creation and, more importantly, how to break free from this cycle. Whether you’re a junior associate, a mid-level lawyer, or running your own firm, these insights will help you transition from just making money to actually building wealth.
1. The Wealth Creation Struggles of Nigerian Lawyers
a. The ‘Feast or Famine’ Income Trap
Most Nigerian lawyers, especially those in private practice, experience irregular cash flow:
1. Some months bring in high-paying clients, while others are financially dry.
2. Legal fees are often delayed due to lengthy court cases.
3. Retainership agreements are hard to secure consistently.
Solution:
1. Structure your earnings with a mix of retainer clients, consultation fees, and passive income to stabilize your cash flow.
2. Have at least six months’ worth of expenses saved to cushion income fluctuations.
b. Overworking Without Wealth Growth
Many lawyers work long hours and handle multiple cases but fail to translate their efforts into real financial growth.
1. Earning more doesn’t always mean growing wealth if spending keeps increasing.
2. Lack of investment planning leads to money sitting idle in bank accounts instead of growing.
Solution:
1. Allocate a portion of every fee earned to income-generating assets (real estate, stocks, or business investments).
2. Use the 50-30-20 rule:
1. 50% for necessities,
2. 30% for personal enjoyment,
3. 20% for investments and savings.
c. Lack of Financial Education
Legal education focuses on the law, but financial education is rarely taught. Many lawyers:
1. Don’t understand investment options beyond fixed deposits.
2. Avoid financial planning due to fear of making mistakes.
3. Lack knowledge of wealth preservation strategies like estate planning.
Solution:
1. Take courses on personal finance and investment (many are available online for free).
2. Read books like The Richest Man in Babylon and The Psychology of Money.
3. Join investment groups with professionals outside the legal industry.
d. Sole Dependence on Active Income
Most lawyers only earn money when they work, meaning they must always be actively involved to generate income.
1. There is no financial security if work slows down.
2. Lawyers who fall sick or take time off see their income drop immediately.
Solution:
1. Build passive income streams that generate money even when you’re not working:
1. Invest in rental properties.
2. Start a legal blog or YouTube channel that earns ad revenue.
3. Create online legal courses or e-books.
e. Lifestyle Inflation
As lawyers advance in their careers, many increase their spending to match their new earnings:
Moving to expensive apartments.
1. Buying luxury cars on loans.
2. Overspending on networking events, vacations, and gadgets.
3. While enjoying your success is important, lifestyle inflation keeps lawyers trapped in a cycle of earning more but saving nothing.
Solution:
1. Instead of upgrading your lifestyle with every raise, upgrade your investments first.
Delay large purchases until you have passive income to sustain them.
2. How to Break the Cycle and Build Lasting Wealth
Step 1: Create Multiple Streams of Income
1. Don’t rely solely on client retainerships and case fees.
2. Add at least one additional source of income (real estate, side business, or investments).
Step 2: Automate Savings and Investments
1. Set up an automatic deduction that transfers a portion of your income into an investment account every month.
2. Use platforms like PiggyVest, Cowrywise, or Risevest to automate wealth building.
Step 3: Learn to Make Money Work for You
1. Instead of keeping large sums idle, invest in assets that generate returns.
2. Consider stocks, mutual funds, government bonds, and real estate.
Step 4: Plan for Retirement Early
1. Don’t assume you will practice law forever.
2. Start retirement savings and pension contributions early.
Step 5: Protect Your Wealth
1. Get health insurance and life insurance to avoid financial emergencies.
2. Create an estate plan to protect your assets for future generations.
3. The Lawyer’s 90-Day Wealth Challenge
Want to take action? Try this 90-day wealth-building challenge:
Month 1:
1. Open a dedicated investment account and start saving a fixed percentage of your income.
2. Cut out two unnecessary expenses from your lifestyle.
Month 2:
1. Learn about one investment type (e.g., real estate, stocks, or bonds) and invest a small amount.
2. Start a side income project that doesn’t take too much time.
Month 3:
1. Set up an automated investment plan for long-term growth.
2. Join a professional financial group for accountability.
By the end of this challenge, you will have taken concrete steps toward financial independence!
Conclusion
Nigerian lawyers are highly skilled professionals, yet many fail to achieve financial stability because they spend more time making money than making wealth grow. By breaking free from the earn-spend cycle and adopting smart wealth-building habits, you can create a future where money works for you—not the other way around.
What financial habit will you change today?
__________CIA___________
Chinelo Audrey Ofoegbunam