Working as a real estate agent is much different than working in many other types of jobs. You are not guaranteed any kind of paycheck, and your income and cash flow can be very unstable. Consider the fact that you are working on commission, the amount that you earn is entirely dependent on the number of properties you sell in a given period. Unfortunately, some of this is outside of your control, and you might find that the amount that you earn is highly variable based on factors that are outside of your control. As such, you need to prepare your finances to handle the ups and downs of the industry.
Maintain a Separate Bank Account
It takes a little extra work, but you should maintain an independent bank account that you only use for your real estate business. If you don’t separate your real estate accounts from your personal accounts, it is challenging to determine just how well your business is operating. You don’t want to co-mingle funds because it can be challenging to determine which expenses are business expenses and which are personal expenses.
Simply go to your local bank and ask to open a business account for your real estate transactions. They should be able to help you set up the account that you require and issue you a card linked to that account.
Track Your Expenses
There are numerous benefits to tracking your expenses within your real estate career. Realestateonlinelearning.com explains that you should consider tracking your expenses for the following reasons:
- Track Your Goals – You can track your progress on the goals you have set for yourself. See how your figures are coming in compared to the goals that you have set for yourself. Are you doing better or worse than you had expected? Once you know these facts, you can adjust your strategy as necessary to reach your targets.
- Create Financial Statements – You can track your financial statements when you track all of your expenses related to your real estate business. It can be helpful for you to create the financial statements that you need to have handy so that you can determine what kind of adjustments you might need to make to your strategy moving forward.
- Will Help During Tax Season – When the time comes to file your taxes, you will want to have all of the financial records that you need to make this process as simple as possible for yourself. Therefore, knowing where your expenses stand at any given time is the best way to understand what you owe on your taxes.
These are all valid reasons to consider keeping track of your expenses. There are truly no drawbacks, and you should be doing everything to power your business forward that you possibly can.
Set Aside Money in Savings
Exciting though it might be to have a great month in real estate, you need to consider your savings. You don’t want to run out and start spending extra money just because you earned it this month. The reality is that you should set aside some of that extra money to handle the tax implications related to your earnings. Besides that, you need to ensure that you have extra savings for when things might turn around in the market. If you have a bit of a cushion, you can get through the tough times in the real estate market more easily than you otherwise would have.
Think carefully about everything you need to do to create a safety net for yourself in your finances. You will never regret having set forth a plan ahead of time.
