Agent Academy: Why Some Agents Sell Houses But Stay Poor
Today, I want to talk about something that we as agents consistently fail to discuss, which is how we treat the money we earn.
Constantly we are more concerned with how do we generate leads? How do we generate commissions? With very little education, very little focus on what we do now with that money we did earn! And not end up in tax problems or living commission to commission.
We need to take that hard earned money and move it into a strategy that will build assets for us over the course of time so that eventually you can put yourself in a position where you have passive income coming in through investments.
I’m going to take you through four accounts that we at the Beer Home Team use.
If you want to have a better handle on your money I recommend you set up the same accounts, this will give you financial security for the future.
“I’m not a financial advisor. I’m not a financial planner, I’m not certified in any of it. And I don’t pretend to be. Take these concepts to your professionals and put together your strategy.”
When money comes in, there’s an account that you should have, for us, it’s our business account. The business account, this is where all of my commissions come in.
We also call it our revenue account and we pay expenses out of this account.
Additionally, every month, I have an automatic transfer go into a tax account.
With my CPA I think through where I believe my income will be at the end of the year, what will the tax liability be, and then I take that number divided by 12. And I move that into a tax account, on a monthly basis.
Furthermore, and maybe most importantly, you need what I’m going to call an investment/asset account.
At the end of the month, money left over in the business account I have an automatic transfer to the investment account. I transfer money into that account every single month, and I cannot do anything with that money unless it’s going to go toward purchasing an asset such as real estate.
Now we have a dedicated place for wealth building.
I’m going to recommend a book to you read The Richest Man in Babylon, because these concepts come straight out of there.
I know that a lot of us think I just barely make it out of the month, how am I going to squeeze a little bit off for that account.
The truth, if we really take an audit and look at how much money’s leaking out, $3 here $4 there and $5 there, whether it’s at Starbucks or your pack of cigarettes, or whatever you’re doing.
Put a minimum of 10% into the investment account still. Because there is an interesting law of money, where you’ll still just make it out of the month even after you take out that 10%.
Furthermore, I am an employee of this company. And I pay myself a salary, this is my personal account. My wife and I, we live out of here. We decide how much money do we need or want over the course of the month that we’re willing to spend and only use this account for them.
Our business retains earnings in the business account in order to reinvest into the business to improve. This pays for employees, office supplies and other expenses.
These are the four accounts that you need for your Real Estate Business
- Business Account
- Tax Account
- Investment/Asset account
- Personal Account
To recap; you need an automatic transfer into your tax account. You cannot avoid this one if you are making money. You can pretend like taxes are not happening. And then you can get a nasty surprise and go into back taxes and pay penalties or you can simply transfer automatically here every month.
Then put 10% aside to start investing. And you cannot touch this account unless you are putting it towards an investment.
Your personal account and only your personal account is what you live off of. Pay yourself a salary that fits your personal expenses.