The subject of money is a big one. Its probably one of the reasons you got into real estate in the first place, right? The unlimited earning potential! For many agents, that can translate into too much spending and little saving, which can hurt you both in the immediate and the long-term future.
Let’s focus today on saving money…the “how much and when” aspects of saving money. We’ll get to the other aspects of talking about it, spending it and giving it away another time.
Saving money is vital to building long term wealth and security for your future. Even if you think you don’t have or earn or get enough money yet to save some of it, you do. Consider some of these ideas to help you save some of the money you have right now:
- Consider saving a specific percentage of the money you do earn, every week or every month. Think specific percentage, not a specific amount.
- Start with 10% of every commission check and work your way up from there.
- Match your saving percentage with you income, not your spending.
- And always stay on top of your debts so your credit score is good and always make sure you have a separate emergency fund for those just in case scenarios.
When you’re just starting out, in your 20’s or even before, experts suggest that you shoot for a savings percentage of 25%, though we say that 10% is more realistic of a starting place for most people. Even though you have lots of expenses in your 20″s such as paying rent on your “own” place, food, car/Uber/Lyft/public transportation, clothing, entertainment, debt repayment for college, etc., you are usually the only person you have to support, unless there are family obligations, and 75% of what you have, earn, get every month ought to be able to cover your expenses.
Going into “real” adulthood and family life in your 30’s, 40’s, 50’s, you will likely have many more financial responsibilities than you had during your 20’s…children perhaps, parents perhaps, home ownership expenses, health care, emergencies, college and/or training/retraining expenses for yourself and your family members, etc. Experts advise that you shoot for having two times the equivalent of your annual income saved up every five years. If your annual income is $40,000., experts say to shoot for saving $80,000. in five years. An easy way to make saving your specific percentage every month is to link you savings and checking accounts so that transferring money into your savings account is seamless.
Saving for retirement is considered the “long game of saving money.” Experts go back to the 10% plan at this stage in life…10% of every check, every profit, every amount earned, given, available to you in your various savings, pensions, IRA, investment plans.