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Successful lawyers take years of hard work, focus, passion, and determination. And, the hefty paycheck you may be dreaming of only arrives after the substantial experience.
But, other than representing clients, analyzing legal problems, interpreting laws, and fighting cases, you have another side to your life. A side away from the courtroom noise, where you have your family, friends, and happiness. A side that you can only realize upon achieving financial stability and freedom from debt.
However, for lawyers just starting their career, achieving that side can take a long time, as long as five to ten years. In some cases, maybe even more.
But, there’s a hack – an alternative dispute resolution, if you will – to a better financial future. And that alternative is passive income.
In this article, I will present a list of passive income streams for lawyers and all the related information to help you understand why you must seize the side hustle opportunities.
How Much Does a Lawyer Earn as Per Experience in their Field of Law?
The following data represents an average salary projection across the legal profession –
- Less than 1 Year: $72,171
- 1 – 2 years: $83,373
- 3 – 5 years: $119,000
- 6 – 9 years: $103,218
- More than ten years: $119,327
Note: Corporate lawyers typically earn a much 40-percent higher rate than the above. By contrast, public prosecutors earn around 18 percent less than the above.
Why Should a Lawyer Have Passive Income?
Given the data, you can see that it takes years to build a substantial career where you can take home a hefty paycheck – enough to meet all your financial goals.
If you have a looming debt over your head, achieving your financial goal with a single stream of income can take even more time, as you lose a significant chunk of money to your debt every month.
I have a fellow lawyer who went through the same dilemma for years until he started legal content writing. The additional income he generated allowed him to work with a debt consolidation company and pay off his multiple credit card obligations in six months. After paying his dues, he invested the additional income in setting up more passive streams, increasing his monthly cash flow significantly.
So, if you’re starting your career as a lawyer, leveraging one or more passive income vehicles is a sound financial decision. By setting up passive income avenues, you can gain additional cash flow and achieve financial freedom faster.
3 Types of Passive Income for Lawyers
There are three main types of passive income, and the first two are essential for almost all working professionals, including lawyers.
Passive Income for Your Loved Ones
Chances are you have people depending on your income. But what happens when your single source of active income takes a hit? Or what if you die? Who will provide for them after you?
Hence, you must have alternative sources of income in place for your loved ones. And ensure you leave instructions for your loved ones so they can access the money and know what to do with it.
Term life insurance is a good income replacement option for your family after death.
WHAT IS THE AVERAGE LIFE EXPECTANCY FOR A LAWYER?
The mean age at which attorneys may die is 63.7 years, according to a study.
Passive Income for Retirement
Whatever “retirement” means to you, you must have a strategy that generates enough passive monthly earnings to cover your living costs. Plan accordingly because more passive income in retirement is preferable to less.
For most people, retirement income can come from pensions, government safety nets, and retirement savings (like a 401k, IRA, and Social Security).
WHAT IS THE AVERAGE RETIREMENT AGE FOR A LAWYER?
The retirement age for lawyers varies from 65 – 75 years old (70 years old is a common choice).
Passive Income for an Abundant Lifestyle
Providing for your family and taking care of your retirement is the goal that many would like to achieve. But another goal always stays at the back of everyone’s mind – MONEY in ABUNDANCE. And passive income can help you get there.
You can create or acquire many passive income streams to achieve the goal of abundance. Choose something you find appealing, then put forth the utmost effort to make it a reality.
WHAT IS THE MINIMUM INCOME TO SURVIVE IN THE USA?
At the time I wrote this article, the median necessary living wage across the entire US was $67,690. Some states have slightly lower median amounts, while others have much higher.
How Can a Lawyer Make Passive Income?
A lawyer can make passive income in various ways, just like anyone else, including life insurance and retirement savings. Both are very simple to start with.
However, to make the goal of an abundant lifestyle a reality, which is probably why you are reading this article, it will take a little more thought, preparation, and work.
Although most people, including lawyers, have an abundant lifestyle as their ultimate goal, you should consider the first two forms of passive income before implementing any abundant lifestyle strategies.
Get Term Life Insurance
Term life insurance is the most straightforward way to generate passive income for your loved ones. These life insurance plans are, without a doubt, the most affordable.
If you want to buy life insurance, avoid salespeople who will undoubtedly try to pressure you into their complicated plans with the assurance that you will “build up cash savings within your life insurance plan.”
What they need to tell you about these plans encouraging cash savings is that when you pass away, they keep your cash savings and only give you the insurance policy’s face value.
Using an insurance broker to shop around among life insurance companies to find the best plan for you is the simplest way to get started with term life insurance. This process is straightforward, thanks to reliable online resources like PolicyGenius.
Invest in Retirement Savings
Investing in retirement savings accounts is the most prudent way to generate passive income in retirement. It’s best to start as soon as possible and invest more of your income until it becomes uncomfortable (10% is the absolute minimum, Rapplean told Forbes). Investing more will position you to retire sooner and with the most considerable retirement savings possible.
You can start your retirement savings with 401(k). Law firms usually contribute more to employee 401(k) plans than nearly any other industry. Therefore, if your company offers a match, that is free money you want to take advantage of.
You can begin contributing to a traditional or Roth IRA if your 401(k) contribution is at its maximum.
One of the good things about IRAs is that you can use almost any Robo-advisor to open one. Robo-advisors can help you save for your future retirement income by handling the labor-intensive aspects of your investment options.
You can also start investing in stocks if you have additional funds and have exhausted both options.
Choose a Passive Income Strategy for Your Abundant Lifestyle!
It’s time to get into the fun stuff now that we’ve covered the necessary and fundamental forms of passive income (retirement savings and life insurance).
The passive income options are countless. Some strategies require a one-time financial investment, while others demand a significant time commitment. So, consider how much money you can invest and how much time you can spare, and then make a choice.
Dumb Passive Income has compiled the most thorough list of the top 27 passive income ideas. You should look through that list and see which approach is just for you.
Here are a few suggestions for passive income that I believe would work best for attorneys:
Dividend Stock Investing
The stock market is one of the most lucrative passive income avenues into which you can invest your money and time. You can invest a tiny sum of money in shares of a company that pays high dividends, then sit back and watch the money flow in.
To ensure that your investment has a greater chance of making money, you’ll need to research the companies before investing.
Remember that there’s no guarantee and that stock market investing always carries some risk.
Income Fund Investments
Income Funds are a good option if you want to earn passive income while minimizing risk. With this investment option, you can generally get a return once a month. (Although it’s worth pointing out that there’s always risk involved and investments can and do increase and decrease in value).
REITs, or Real Estate Investment Trusts, are businesses that own and manage real estate on behalf of investors like you and me. Thus, REITs are similar to mutual funds. You can receive dividends from REIT investments without actively managing or financing any real estate property.
Additional Legal Work
Your training, expertise, and experience as a lawyer make up your most glaring and lucrative side hustle advantages. So, consider finding ways to take on more legal work in your area of expertise.
However, ensure no conflicts with your current job before taking on additional legal work as a side gig.There are many reputable online platforms like UpWork and UpCounsel that you can use to find more legal work quickly.
Legal Writing and Research
You can turn that into additional income if you have an aptitude for and interest in legal research and writing.
You can write legal articles for legal journals, governmental organizations, or businesses looking for legal content writers.
You can also start your legal blog by advising on current legal issues. If you manage to garner a substantial audience, you take part in legal affiliate programs and earn money on sales commissions.
Passive Income Starts with Your Money Mindset
You can achieve passive income following certain plans and specific strategies. However, even the best ideas for passive income can only be rendered useless if you harbor the right attitude toward money.
One of the best ways to change your mind on money is to educate yourself by reading books (or listening to Audiobooks).
Some most favorite books of all time are included in this list of money mindset books for passive income, like Robert Kiyosaki’s Rich Dad Poor Dad. If you haven’t already, start your journey with this book.
Here are two of the most popular money mindset books of all time!
Frequently Asked Questions
You have questions, and we have answers. Here are some common questions about ‘passive income for lawyers’…
Can a lawyer earn passive income on the side?
If a lawyer can establish multiple passive income streams, investing the required attention into each, they can earn $1000 + monthly.
How can a lawyer get started with passive income?
The first step is determining your skill level and how much time you can spare from active work. Then, go through the list of passive income opportunities and choose the one that suits your situation. Do all the necessary research to do the job successfully.
Is owning your legal firm considered passive income?
No, owning a legal firm requires active engagement. Hence, it cannot be considered a passive income.
Get Started with Passive Income Today!
Passive income can help you win your case against financial stress. But it’s a hustle that demands a lot of your time and attention (if you want to do it successfully).
Thanks to your years of education, you already have the minimum required assets, skills, or talents. Now all you need is the will to get going.
The upfront workload can be hefty, involving research, setting up, managing and learning. But, the resulting growth can bear fruit for years on end.
When you’re done reading this blog post, don’t hesitate. Stop your procrastination, start your research, choose one of the best passive income ideas that work for you, and get going.
You could even try more than one way to make money without much work. After all, the goal is to have multiple streams of income coming into your bank accounts every month.
If you like your job as a lawyer, it’s acceptable to trade time for money. You can get so far by trading your valuable time for a regular paycheck. Start earning passive income right away! You won’t be sorry because passive income is the key to financial freedom and success.