Learning how to manage money in your real estate business is a necessity — even though few courses are offered.
Luckily, there are several free, innovative apps and tools to help you out.
Making money in every commission-based business (including real estate) is unpredictable. Unlike salary-based employment, you will not receive regular paychecks or have automatic tax-withholding or social security deductions. You are self-employed like an independent contractor. Managing your money carefully will enhance your business success.
The following money management tips will help you cope with the uncertainty of earned commissions.
- Begin with a debt-reduction plan. Slash your debts to zero (or as close to zero as you can get). An overload of stress can cause you to make costly mistakes.
- When you’re just starting out, you need to create a safety shield. Plan to pay for your first six months’ expenses with no paychecks. Tap into your savings to pay for marketing expenses like creating a business website and blog, and advertising. Don’t forget to include car expenses, as you’ll be doing a lot of traveling to show properties, attend meetings, etc.
- Reserve funds. Put aside money to pay for unexpected business expenses so you won’t have to borrow funds or max out your credit cards, resulting in higher interest rates.
- Apply for a business line of credit. Small businesses need a line of credit in case of emergencies.
- Expect to spend up to 10% for marketing. Don’t depend on what your real estate broker offers for company promotions. Remember the old saying: “You must spend money in order to make money.” But, you don’t need to overspend.
- Save money by being creative. Purchase unlimited calling and data plans for your smartphone. This will save you money over time. If you need to purchase a car, buy one painted tan, white, or silver, which require less washing to look presentable. Select the highest deductibles for your car insurance. Purchase wrinkle-free business clothing to reduce cleaning & pressing expenses.
- Look for discounts. If you’re a Realtor®, join the REALTOR Benefits® Program, which provides discounts for all NAR members, including apps and tools for sales and marketing, car rentals and purchases, car and personal insurance, credit cards, and other important business products.
- Tracking your expenses. Keep detailed records on all business expenditures for tax deduction purposes. It also helps you to know where your money is spent every month. You might be surprised on how much you spend on gas and coffee.
- Buy long-lasting products. Buying the cheapest clothes, car, furniture, and tech tools — which are likely to break down — will cost you more money in the end. Spend a little more on sturdy, long-lasting products that will save you money over time.
- Use every free thing your broker provides. Take advantage of your real estate broker’s free website and blog, free signs, free advertising, and free marketing products. Some companies also offer dental and medical plans and other benefits.
Free Money Management Apps
Here are some free money management tools and apps that work for real estate agents:
- Expensify is a free app to track business travel time and mileage. Expensify creates expense reports and records receipts. Both business and personal credit cards, along with bank accounts, are included to track daily spending. Their mobile app works on Android, Blackberry, iOS, and Windows platforms. It has a SmartScan for taking screenshots of receipts, allowing you to export or import them to other devices. Receipts from different devices and programs can be quickly consolidated. Dropbox, Evernote, and your email inbox are supported by Expensify. You can also create charts and graphs to help analyze your expenses and financial status.
- Mvelopes is a free real estate agent app to monitor finances so you can make smart financial decisions. You can link credit cards, bank accounts, and PayPal. It also provides an overview of your spending habits.
- Mint is another free app to help you manage your earnings, budget, spending, and investments into one place so you can see the entire financial picture. Mint works on your mobile devices and computer. Your expenditures can be calculated in different categories to better see your spending patterns. It even sends you alerts like when you are over-spending. New integrations are constantly being updated with your financial data, including loans and bank accounts.
- LearnVest is recommended by PC Magazine as one of their “Best Mobile Finance Apps of 2017.” It’s free, but only available from the iTunes Store for iOS devices (iPhone and iPad). It allows you to set your financial goals and track your budget.
- BillGuard protects your credit and debit cards from inaccurate, unwanted, and fraudulent charges. It’s a free service where you can register your credit cards, debit cards, and banking information. BillGuard scans those accounts for billing errors, hidden fees, fraud, and scams. Questionable transactions are flagged and emailed to you as they arise. Examples include double charging for the same item or recurring fees that should not be charged. Their spending analytics breaks down your spending into categories and lets you see where you may be overextending yourself. It helps you to stay within your budget. It’s compatible with Apple and Android devices.
Summing up the money management tips
How to manage money in your real estate business to save money requires discipline and organization. Being self-employed offers many benefits, but always be aware of your financial situation. Create a monthly budget. Take advantage of discounts available from NAR (if you are a member) and your real estate company.
Use the free apps and tools listed here to organize and carefully manage your business expenses so you know your financial status at all times. Keeping records of all your business expenses helps with tax deductions and can help you stay afloat when you’re waiting on big commissions to roll in.
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