Realtors: Change the Way You Think About Money
WASHINGTON – Thinking about money – let alone talking about it – is uncomfortable most of the time – but during an unstable economy, it’s downright painful, said Leigh Brown, ABR, CRS, author and speaker. But money doesn’t have to be scary when you make a habit of saving it, Brown said during her session, “Getting Your Financial House in Order: Evaluating Your Finances in a Crisis,” at the virtual 2020 Realtor® Legislative Meetings.
Because Realtors tend to have a highly optimistic nature, Brown said, it makes sense that only 52% actively save for retirement, according to NAR research.
“You say, ‘I got this deal coming through next week, and I’ll be getting $5,000,’ Brown said. “But then you get [interested in] a CRM that’s $6,000, and you say, ‘Well, I just need one more sale to make that up.’” And the cycle continues, and we never save.
Now we’re in a downturn, and that hamstrings our confidence, Brown said. “If you’re feeling fear, I’ve had that, too. During the Great Recession, when the phone stopped ringing like a spigot turned off.” Brown said she learned to play the organ during that downtime so she could audition for church jobs as a side gig to support her children, who were then toddlers.
The first step to move from fear to action during the pandemic is to reach out to your peers who were around during that last disruption, Brown said. “We’re a profession of abundance in terms of energy, calmness and information. This is the crowd who will support you.”
Your next step, she recommended, is to take advantage of NAR’s Center for Realtor Financial Wellness, a free member benefit, where you can take a confidential financial assessment to get on the right path. You can access spreadsheets and calculators, and sign up for monthly financial webinars. Past webinars, such as “Financial Tips During Challenging Times: A Business Survival Guide,” are available in the archive.
Then institute what she called a “40-30-20-10” spending plan: 40% of your commission check goes into a business account (to pay for things like CRMs, sponsorships, signs, and professional certifications), 30% goes into a personal account (mortgage, food, car payments), 20% goes to taxes and 10% is used for giving.
But the order in which you deposit the money, she recommends, is giving, taxes, personal and then business. “When I make it a discipline to give, it comes back big time,” she said.
She also recommends that Realtors invest in real estate, which not many agents do, even though they know everything about their market.
Landlord horror stories, like the nightmare tenant depicted in the 1990 movie “Pacific Heights,” keep us from investing, she said. Don’t let it. Get a property manager friend. “Surround yourself with smart people in this oddball market,” she said. “Is it someone you can partner with? Build collegial relationships that will help you in the future.”
Brown says that 85% of millennials also believe real estate is a good investment, according to NAR research. Even if they’re not ready to buy a primary residence, they may be interested in investing, she noted.
Brown’s other money tips
- Consider opening accounts at a local bank or credit union, which are traditionally more relationship-based than a big bank. Not only will it help to have a personal banker when you need to get in the fast lane for things like an SBA loan, but you can also add to your sphere by building on those relationships. “Not everything has to be by app,” Brown said.
- If you’ve memorized your credit card number, expiration date and security code, tell your bank you lost your card so you can get a new one. Don’t memorize the new number and keep the card where you have to walk to get it. That gives you time to think twice before you buy.
- You don’t need a fancy car. “I got frugal after the Great Recession,” Brown said.
- Get a certified accountant to help you structure your business so you pay the least amount in taxes. Take advantage of the 20% deduction NAR scored for independent contractors and pass-through businesses during the federal tax bill negotiations in 2017.
- Finally, how you position yourself in this market is key. “You’re a professional problem solver,” Brown said. You’re successful “not because you have open houses. It’s because you’re there to professionally solve clients’ problems.”
And today, expertise is everything.
Source: National Association of Realtors® (NAR)
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