Money is one of the most important resources a real estate agent can have. Having great real estate budgeting habits will help you save up when times get tough. This might sound obvious, but some agents blow through their savings with negligent spending habits.
When they do, they have to adopt another form of income or give up on the real estate agent lifestyle for good.
Real estate budgeting habits will keep you from ruining your career with a few purchases. With the right kind of budget for real estate, an agent can turn their entire business around. Adopting the right habits starts with creating a foolproof real estate budget.
The best way to start your budget is to plan month-by-month.
Plan a Monthly Budget For Real Estate
Planning a monthly budget gives you a clear idea of where you are allocating your money. Using an excel budget template or another form of tracking is a beneficial tool in visualizing your expenditures.
While creating a monthly budget, you should have a clear goal of how much money you are willing to spend. The best way to determine the amount of money you’re willing to spend each month is by listing the accrued monthly costs.
List Your Costs
To list your costs, you will have to track where you spend your money month-to-month. Keeping receipts, transaction documents, payment records, and any other receipt form are integral to any money management plan.
When you have the appropriate documentation, make a list of your monthly expenditures. This should include every product or service that you spend money on.
Plan on being honest with yourself about your spending habits. Remember, it’s always best to err on the side of caution when listing your costs. You should also plan on listing the money you will be putting away in investments, retirement funds, and your emergency fund.
Investments and Retirement Funds
Investments and retirement funds should be included in your listing costs. This is because you are completely responsible for your own investment and retirement. You don’t have the security of a company to help you reserve funds for the days you will no longer be working.
The real estate agent's salary is entirely dependent on a commission-based income. Therefore, planning for the future is a vital part of saving money. If you don’t put away funds into investments or a retirement plan, you won’t have any money to fall back on when (or if) you decide to retire.
Save for an Emergency
Making an emergency fund is an excellent safety net for rainy day situations. When a drastic, unexpected event occurs that siphons your money, you’ll want to have the security of an emergency fund to help finance your living conditions.
Reserving some of your money for a bad scenario is standard practice for real estate professionals. Your salary is unpredictable and inconsistent. Having as many safety nets in place to catch you when you fall will make or break your career.
Cash and Cards: Learn to Use Both
Paying with cash is an old, traditional trick. When you strictly use cash for the payments of goods and services, you will spend less overall. The reason being, paying with cash is harder than paying with a debit or credit card. Transparent money transactions (such as paying with a credit card) cause you to be less averse to payments.
Therefore, when you pay with cash, you’re less likely to overspend. This will help you stay within your real estate budgeting limits - especially if you run out of cash in your wallet.
When you’re paying with credit cards, you’re more likely to spend more money. However, there’s plenty of benefits to making payments using a credit card. One of the major benefits is accruing points over time. This will make you eligible for special perks and rewards with your bank provider.
Another benefit of using a credit card is accumulating good credit for making payments on time. This will help you on down the line by building an excellent credit score.
Keep the Receipts (for taxes too)
Finally, you should always keep the receipts of payments, money transactions, or over-the-counter deals. This is an old-school habit that helps you collect a history of your payments. Doing so serves well when calculating your monthly expenditures and gauging how much over (or under) you are with your spending.
Keeping a record of your transactions will greatly benefit you when doing taxes too. Tax season is a headache - especially for real estate agents. You can make the process simpler by keeping your receipts organized.
In Conclusion
Being conscientious about your real estate budgeting habits will help you survive as a real estate agent. This is especially true for your first year. Adopt these healthy habits now, so you growing your business is easier in the long run.
If we created a downloadable real estate budget template, would you find it useful?
