A real estate agent is a unique profession. Unlike many other careers, agents are employed by the best boss: themselves!

Working as an independent contractor can generate unique cash flow patterns (or sometimes, lack thereof). This situation can create distinct financial challenges, especially for those starting their business.

Money management always requires discipline and is especially important for Realtors. Here are the top three ways you, as an agent, can prepare financially and limit your money madness:

Have a Safety Cushion

Because closing checks are never guaranteed or predictable, saving for business doldrums is essential. It’s general financial understanding to save for three to six months of expenses in the event of a business emergency, but the standards are different when you’re working for yourself. Ensure your safety net by doubling it--saving for 6-12 months of expenses. This way, when seasonal, market or personal changes arise, you are set (and way less stressed) to endure the changing tide.

Budget for the Month and the Year

Saving is important! Without a crystal ball, no one can predict what successes or challenges their business will face. In order to truly become a real estate (and money) master, there’s no better place to start than a budget. Creating the perfect budget will not happen by clicking your heels together. Start by understanding your monthly expenses. How much do you spend on living expenses? What about your car? How about coffee or eating out? Understanding where your money now goes will help you make wise choices in creating a budget. Do you really need $150 worth of caramel macchiatos each month? Create a budget that you can follow no matter how much or how little success you’re having. Continue to tweak your plan until you find a financial space that allows you to live comfortably all year long, despite market highs and lows.

Take Advantage & Invest in Yourself

You gotta spend money to make money, right? Sometimes. Agents almost always spend their hard earned cash on marketing and lead generation. Before you overspend, start by knowing the resources you already have available. What marketing tools does your brokerage offer you? What CRM (customer relationship management) software does your brokerage use? Does your brokerage create any marketing content for you? Are you using those tools to maximum capacity? If not, start! Take advantage of the provided (and usually free) tools to increase your business. Once you’ve seen your productivity grow, then you can invest in extra growth tools. But, do some research before you hand over your card! Don’t fall into gimmick marketing services, like investing in print campaigns or buying services to increase your social media audience where you cannot track the return. When it is finally time to invest in your business, don’t forget to add that expense back into your monthly budget!

Money management can be intimidating, but the most important step is starting. It isn’t always fun or easy, but disciplined budgeting can help any real estate agent stay anchored in the changing tides of business.

Tired of feeling like just a number? Every Village Realtor is a partner in our shared mission to build a better real estate experience.

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