By Joel Chouinard, CHFC®
January 29, 2026
If you work in Big Law and you hit your hours last year, you probably received a significant year-end bonus. First of all, congratulations. Having seen my wife work for years as an M&A attorney, I know the incredible dedication and hard work it takes to make that happen.
Now comes the big question: what should you do with all of this money? Do you put it all on a hot stock and hope it goes to the moon? Do you dump the entire amount into your student loans? Should you buy that $15,000 designer handbag you've been eyeing because, hey, you deserve it, right?
The answer, as with most things in finance, is that it depends on your specific situation. But to give you a framework, here’s how I would personally approach a $100,000 Big Law bonus to build a stronger financial foundation.
1. Pay Off High-Interest Debt
The very first thing I would do is eliminate any high-interest debt. This typically means credit cards and personal loans. It might not seem like the most exciting use of a bonus, but from a purely mathematical standpoint, it’s one of the smartest moves you can make.
A rolling credit card balance of $30,000 with a 27% interest rate can cost you nearly $700 per month in interest payments alone. That's money that vanishes without reducing your principal balance.
Is it better to pay off credit card debt or invest?
Some people might argue that it's better to invest the money instead of paying off debt. In certain cases, they might have a point, but not when it comes to high-interest debt like credit cards.
Let's look at the opportunity cost. Imagine you have that same $30,000 in credit card debt. You could either pay it off or invest it. If you invest that $30,000 and earn an average 8% return, you might make around $200 per month. Meanwhile, the credit card debt is costing you $700 per month in interest. That's a $500 net loss every single month.
Plus, an 8% investment return is never guaranteed. Markets fluctuate, and you also have to account for fees and taxes, which might reduce your net return to 7% or even lower. Paying off a 27% interest debt, however, is a guaranteed 27% return on your money.
Personal loans, while not usually as high-interest as credit cards, often carry rates well over 10%. The same logic applies: paying off a 10%+ guaranteed debt is often a better financial decision than chasing uncertain market returns.
2. Bulk Up Your Emergency Fund
Do you remember the stealth layoffs that hit the legal industry during the spring of 2020? In April of that year alone, the industry lost 64,000 jobs. While most of those affected eventually found new positions, it could have taken months to secure the right fit. During that entire time, they had no income.
This is why the second thing I’d do with a bonus is ensure my emergency fund is fully stocked. An emergency fund is your financial buffer against unexpected job loss, medical issues, or other major life events.
How much should you have saved in your emergency fund?
The most common question I get is how much to keep in an emergency fund. A good rule of thumb is to have 3 to 6 months' worth of essential living expenses saved. This includes costs like your mortgage or rent, utilities, car payments, and groceries—not your "living your best life" travel budget.
For example, if your essential monthly expenses are $15,000, you would want between $45,000 and $90,000 set aside. The best way to determine your exact number is to use a budgeting tool like Monarch Money or YNAB to track your spending.
The right amount also depends on your personal situation.
- A single associate with more flexibility might be comfortable with 3 months of expenses.
- An attorney who is married with young children might feel more secure with 5 or 6 months saved.
Lastly, the best place to keep this money is in a high-yield savings account. It will remain easily accessible while still earning a competitive interest rate—often around 3-4% in the current environment.
3. Fund Your Backdoor Roth IRA
Imagine it's the year 2055. You’ve been diligently contributing to a Roth IRA for the past 30 years. Assuming an 8% average annual return and a 2% yearly increase in contribution limits, your account could be worth over $1.1 million. The best part? Only about $300,000 of that is your own contributions.
Over $800,000 is pure, tax-free growth.
That’s why the third thing I’d do with a bonus is fund my Roth IRA for the year.
As a Big Law attorney, your income is likely too high to contribute to a Roth IRA directly. In 2026, the income limit for single filers is a modified adjusted gross income (MAGI) of $168,000, and for married couples, it's $252,000. With starting salaries at $225,000, most associates are phased out.
This is where the Backdoor Roth IRA comes in. It’s a completely legal strategy that involves making a non-deductible contribution to a Traditional IRA and then immediately converting it to a Roth IRA.
Roth IRA vs. Taxable Brokerage Account: Which is Best?
To understand the power of a Roth IRA, let's compare it to a standard taxable brokerage account.
- Taxes on Growth: In a brokerage account, any income generated from interest or dividends is taxed each year. This "tax drag" can reduce your long-term returns. When you sell investments for a profit, you also owe capital gains taxes.
- Tax-Free Withdrawals: In a Roth IRA, all of your growth is tax-free. When you withdraw the money in retirement, you owe nothing (assuming you meet the qualified distributions requirements).
If you had that same $1.1 million balance after 30 years, a brokerage account might only leave you with $935,000 after capital gains taxes. That’s a $165,000 difference. A Roth IRA allows your money to grow and be rebalanced without creating a tax bill along the way.
For a complete guide on how to execute the Backdoor Roth IRA, check out this post.
4. Pay Down a Chunk of Student Loans
If you're a Big Law attorney, there's a good chance you graduated with a significant amount of student loan debt—sometimes over $200,000. While your income can support the payments, the psychological weight of that debt can be heavy.
Some financial experts advise against aggressively paying down low-interest student loans, suggesting you invest the extra money instead. While often mathematically sound, this advice ignores the emotional burden of debt. That’s why the fourth thing I’d do with a bonus is apply a portion of it to my student loans.
How much extra money should I apply toward my student loans?
Before you answer this question, the first thing you should ask yourself is, "How do you feel about your student loans?"
- Some are indifferent and see it as a simple math problem.
- Others feel a great deal of anxiety and want the debt gone as soon as possible.
Your answer to that question should drive your repayment strategy. If your goal is to be debt-free in five years instead of the standard ten (or more if you’re on an income-driven repayment plan), you'll need to make additional principal payments. A large bonus provides a perfect opportunity to make a significant dent and accelerate your timeline.
5. Save in a Brokerage Account
Working in Big Law is a demanding career. Even if you plan to make partner, life can change. You might decide you want a lower-key in-house role, or you might feel a pull to work in the non-profit or government sector. Either way, these paths often come with a substantial pay cut.
Having financial flexibility is the key to making those transitions possible. This is where a plain-old brokerage account comes in, and it's the fifth and final thing I'd do with a $100K bonus.
A brokerage account is essentially a savings or checking account where you can invest your money for growth. Unlike retirement accounts like a 401(k) or IRA, there are no penalties for withdrawing your money before a certain age. This makes it an ideal vehicle for medium-term goals, like:
- A down payment on an investment property or vacation home.
- Funding a major home renovation.
- Building a "transition fund" to provide a cushion while switching careers.
You can invest in anything from individual stocks and bonds to mutual funds and ETFs. I personally favor low-cost index ETFs because they are tax-efficient and allow you to build a globally diversified portfolio with just a few funds. Remember, brokerage accounts are taxable, so any income or capital gains will be taxed in the year they are realized.
Your Bonus, Your Future
Using your bonus to pay down debt, build savings, and invest for the future isn't about chasing hype. It's about using that money strategically to reduce stress, create flexibility, and put yourself in a stronger financial position.
You can spend countless hours navigating Reddit forums and YouTube videos to piece together a plan. But if you’d rather outsource the research and analysis to a professional, that's what I'm here for. I help attorneys make smart financial decisions every day. If you're ready for a clear, actionable plan for your money, schedule a free introduction call today.
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SharpEdge Financial LLC is a registered investment adviser registered with the State of Texas. Registration does not imply a certain level of skill or training. The views and opinions expressed are as of the date of publication and are subject to change. The content of this publication is for informational or educational purposes only. This content is not intended as individualized investment advice, or as tax, accounting, or legal advice. Although we gather information from sources that we deem to be reliable, we cannot guarantee the accuracy, timeliness, or completeness of any information prepared by any unaffiliated third-party. When specific investments or types of investments are mentioned, such mention is not intended to be a recommendation or endorsement to buy or sell the specific investment. The author of this publication may hold positions in investments or types of investments mentioned. This information should not be relied upon as the sole factor in an investment-making decision. Readers are encouraged to consult with professional financial, accounting, tax, or legal advisers to address their specific needs and circumstances.