Agents… Do You Have A Financial Plan?

Wade Webb on September 20, 2023

agents have a financial planMaking money requires having an action plan.

Keeping money requires knowing how to set financial goals.

Let’s be real…

The reason why thousands of real estate agents got into the business was they want to make more money. And that’s why one of the things I am sharing is how to set financial goals. “I want to make more money” is not a goal; it’s a half-assed statement that’s going to keep your intentions vague and your bank account on the line of “safe.”

Do you want “safe” or do you want “comfortable and secure?” The sad fact is that 80% of all people will end up flat-broke when it comes time to retire. That doesn’t have to be you. That’s why in this week’s blog, I’ll show you just a bit of the type of information about how to set financial goals and put practices in place to achieve them. Once you know what you’re aiming for, you’re no longer shooting in the dark. So let’s dive right in and shed some light on your finances.

How to Set Financial Goals, Step 1: Find Your Cost of Living.

This one is very simple, but unfortunately, few real estate agents take the time to do this. All you have to do is add up the total costs of everything it takes to run your life:

Rent/mortgage + utilities

Marketing and business expenses

Car payment

Food and medications

Fun and entertainment

Taxes

Savings

Add up any payments or regular expenses you can think of, then tack on an extra $1,000 because who knows what could happen in life. You could get sick, or your car could break down or you could end up spending a little too much on dinner. This is your Survival Goal. It’s what you need to make consistently every single month just to stay above water. It will not give you a better life and it will not allow you to ever retire.

How to Set Financial Goals, Step 2: Your Good Life + Dream Goals (Phase 1)

Let’s take it up a step. What would it look like if you were closing a few more deals and living a realistically better life? Think about that next-step-up home you want to own. How much does it cost? What about a more desirable car? What would your vacations look like? Get in a relaxed mode and visualize it. Then get on the computer and look up the actual prices. Add them up. Do everything the same as you did with finding your survival goal, then tack on an additional $3,000. This is your Good Life Goal. Now take it even a step further. If everything went perfectly for you in the next 12 months and the money was flowing in, what would your business look like? How much would you be spending on marketing with all your new lead gen sources? Where would you be living? This is your dream life, and once you know how much it costs, you have your Dream Goal.

How to Set Financial Goals, Step 3: Adjust for the Future.

It’d be so nice and easy if we could just stop at step 2 and live in dreamland, wouldn’t it? Unfortunately, that’s how you become a member of the 80% of agents who will be working until they die. What you need to do now is find the REAL numbers it will take to live those life goals now and in the future. Do a 10-year forecast of your life, imagining that at the end of these 10 years, you’re going to step away from your business and just live. Write down all three goals, then multiply each by 12 (to bring them to a yearly amount), then multiply them by 10 (for ten years). Let’s say your Good Life Goal is $125,000 a year. Over 10 years, that means you’ll have made $1,250,000. Now let’s start cutting this down.

35% goes to taxes
25% to running your business
25% to running your home
Leaving 15% that you either saved or invested
Going by this, at the end of 10 years, you can now comfortably live your same lifestyle for a remarkable ONE YEAR and some months! Pretty scary huh? That’s why you need to start thinking about these things now. This step is not over until you find a 10-year number that you’re comfortable with. You either need to start cutting down on some of the expenses or raise the number entirely.

How to Set Financial Goals, Step 4: Choose Your Who and Why.

I’m not perfect; I’m human, just like everyone else. And that means I’ve found that I’m capable of breaking the promises that I make to myself. But what I’ve also noticed is that I NEVER break a promise that I make to others – especially those I care about. Most people won’t tirelessly grind day-in and day-out just for themselves, but they will do it for their spouse, their kids, their parents, or their coach. You need accountability. I need accountability. We all need it. It’s the cornerstone of greatness. Find yours. Don’t skip this step.

How to Set Financial Goals, Step 5: Decide Where Your Money Will Flow.

We’ve already talked about breaking your money down into categories. If all that money stays in one account, then those are just invisible boxes that will stay in your head and soon fade away to nothing. I sincerely hope that you’re not depositing your checks into a personal checking account. If you are, stop that now and open a business account. I’m not your financial advisor, so the type of account you choose to open is between you and them. But once you have that business account open, you need to start opening a few more accounts and moving the money appropriately right away into each:

Tax account
Home account
Fun account
Savings account
Investment account (Don’t make the mistake of not buying enough of your own product)
Business expenses account

How to Set Financial Goals, Step 6: Make a Commitment.

You’ve decided what you want, refined it, chosen a strategy to get you there, set up accountability, and put your banking system in order. Now I want you to make a written and verbal promise to those holding you accountable that says you will follow this plan and achieve these goals by doing everything you possibly can. It’s time to become the best possible version of yourself because now your ass is on the line.

Strength and courage,
Wade

Financial Freedom Strategies For Realtors© 2022

Wade Webb on May 4, 2022

financial freedom strategies realtors 2022One of the greatest benefits of becoming a real estate agent is financial freedom and an unlimited income opportunity. However, the downside to this freedom is that it leads to undisciplined spending. The early years of my career I read and studied all I could about financial management and wealth building and this week I want to share the top ten financial independence tips that helped me personally and know will help you about saving for retirement, how to start accumulating your wealth, and how to have the right mindset when it comes to your finances.

1. Pay Yourself First – First on our list of financial independence tips is to pay yourself first. But this doesn’t mean buying material items. Instead, it means putting your money into a savings plan. You need to think of saving as paying yourself. Most people tend to spend their money every month, and then they don’t have anything left over to save. You have to watch the flow of your money. Otherwise, you’re going to lose it. Start saving now, and save as much as possible. Start out by putting 10% of your income into a long-term savings plan. Every bit you save goes towards paying yourself in the future.

2. Continually Seek to Increase Your Savings Rate. – Even as a real estate agent you should calculate your dollar-per-hour wage. Take how much you earned last year or plan to earn this year, and divide it by 2000 (the average amount of hours one works in a given year). If you’re currently saving 10% of that amount, try to get it up to 20%. You can increase your savings rate in two ways. You can either earn more money, or spend less. Your ultimate goal should be to try to save 50% of your income. As a realtor, this is challenging because you’re not on a fixed income. As a result, you will have to be more disciplined with your income and how much you spend. One of my goals every year is to increase my dollar-per-hour wage. You can do this by either earning the same amount and working more hours, or earning more with the same amount of hours. Figure out which method is best for you so that you can eventually get to a point where you can save half your income.

3. No Debt For Liabilities – One of the most common financial independence tips you might hear is to be careful with your debt. There is an argument for taking out debt for an asset. However, it’s not the same when it comes to liabilities. For example, going into debt to purchase a car for real estate agents. When you do this, you’re stealing money from your future self and will pay the price in the long term. If you’re in the habit of taking out debt and never saving, that’s ultimately costing you your wealth. If you currently have debt for liabilities, get on a system, like You Need a Budget (YNAB), to try and eliminate that debt as quickly as possible. Check out my other post on how to eliminate debt. Three small bags with dollar signs sit inside of a wooden outline of a house.

4. Invest in Education. – This can be specific education related to your job, or just general financial or business education. Investing in your education is important because we get paid for what we contribute through our knowledge. Think of it as investing in yourself. Utilize resources such as classes, conferences, training courses, videos, and books that can help you build on your current skills. Check out this post on the 25 best real estate agent books to help you get started.

5. Take Ownership of Everything. – The sooner you take ownership of everything, the sooner you can get on track to improving your time management and growing your wealth. For example, if something negative happens to you, take on the responsibility to figure out the solution. Try and see how you can be a part of that solution, rather than waiting on somebody else to find it for you.

6. Actively Seek Out Problems to Solve. – You need to have the mindset to actively seek out problems rather than avoid them. You should solve your own challenges first before you move on to helping other people. Solving other peoples’ problems will make you more valuable, help you contribute more, and get wealth to come your way. When you start to solve people’s problems, you stop being a dollar-per-hour employee and instead begin moving up the ladder to eventually run your own business.

7. Leverage Resources. – At a certain point, it becomes hard to progress your business when you’re the only one running the show. This is why you should leverage other people to help you. For example, you could hire a virtual assistant and transaction manager. Additionally, you can find other ways to diversify your income streams. Building my online content business is yet another way I can diversify my income and solve problems for other people. In addition, you need to leverage your money. This can mean putting your money into a wealth account or purchasing rental real estate. Think of every dollar as an employee that can work for you to earn more money.

8. Stop The Dollar Per Hour Mindset. – If you want to advance your career, you need to stop thinking of yourself as a dollar-per-hour employee. When you have a dollar-per-hour income, you’re at a ceiling because there’s a maximum amount that somebody’s willing to pay you. But when you tie your value to helping other people, that ceiling becomes endless. For this reason, you have to start thinking about how you can help other people, even if it’s just a side hustle that you do in addition to your primary job. Build something that you can scale up over time and that can start to accumulate wealth. Build something that provides value for other people. A person dropping a quarter into a jar of money labeled “Retirement.”

9. Have a Clear Plan For Your Financial Future. – To come up with a plan for your financial future, you should ask yourself: What is your net worth today? What do you want your net worth to be five years from now? Ten years from now? Do you have spreadsheets that you track your goals on? Know what you want your wealth to be in the future, and then you can start to figure out what you need to do to get there. Even if you don’t have any wealth and just want to get out of debt, what is your one-year plan to do that? Three-year plan? Once you have a concrete plan for yourself, it becomes easier. There’s a saying that goes, “If you don’t have a vision for yourself, you’ll become part of somebody else’s vision.”

10. Take Calculated Risks. – Calculated risk means taking safe risks that you believe have a high probability of paying off. For example, every year I allocate 10% of my annual budget for “R&D” (Research and Development). If you think about it, almost every company has this built into their budget. So why should it be any different for real estate agents? This could mean investing in a new type of lead generation, or a new side hustle entirely. But the 10% doesn’t have to be purely financial, it could also include your time. It’s better to take calculated risks and learn all the necessary skills to be an entrepreneur. That way, no matter what happens in your financial future you’ll be prepared.

Final Thoughts on Financial Independence Tips for Real Estate Agents. Following these ten financial independence tips will help you have the proper mindset to properly manage your finances and save for retirement. Increasing your wealth takes time. But if you stay disciplined and stick to these tips, you’ll have a bright financial future ahead of you. What are you currently doing to diversify your income? What investments are you putting your savings in? I’d love to hear from you! Now, be well and go sell some homes!

Strength and courage,
Wade

Realtors© Get And Keep Your Financial House In Order

Wade Webb on March 16, 2022

realtors financial house orderRealtors© do you have your financial house in order? Working towards financial stability is a process and two days of work won’t make us any richer than yesterday. Scientific research indicates that it takes about an average of 66 days for a behavior to become a part of your lifestyle/routine, in other words, a habit. So, if there is a good time to start working towards our personal financial goals and inculcate some financial discipline, it is now. Here are some habits one could cultivate to accomplish your goals in 2022. These are just a few simple and powerful ways that I have learned to shift my financial house in order.

Track Your Expenses – A good first step in financial planning is to start tracking your expenses. Know where your expenditure is going and how much. Sometimes, looking at things from a vantage point helps in understanding them better. So, take a look at your income and expenses from a broader perspective to identify what can be cut down and then narrow down your focus to optimizing your spending. In case it gets tedious to keep a tab of all your expenditure, expense management apps can come to your rescue. Since the apps would have a record of all your transactions, it will help you review your expense profile better and help prioritize your spending. Considering that there has been a massive shift to digital spending in India in recent years, expense management apps can come in handy for those struggling to get a sense of their spending habits.

Build Your Savings – Saving is difficult. But saving for a rainy day is essential as a solid savings base would give you a cushion to handle uncertainties in a better way. A plan for savings should begin at the budgeting stage itself. A systematic approach for budgeting often suggested by financial experts is the 50-30-20 rule of thumb. According to it, an individual should allot 50% of the income to essential expenses or “needs” (living, food, and other expenses), 20% towards personal expenditure or “wants” (luxuries and leisure) and 20% towards savings or financial goals such as investments. However, it is important to know that there is no one-size-fits-all. You can arrive at your own rule of thumb after taking into account your income and financial goals. Set a target and work towards it. If you can save more, do so by all means. And if you have reached your savings target, give incremental savings a shot. Remember: A penny saved is a penny earned.

Start Investing – It is never too early or too late to start investing. You need not necessarily be ‘The Big Bull’ or ‘The Big Bear’ in the capital markets to start investing. Start off with small but smart investments. Try convenient and smart tools like Systematic Investment Plans (SIPs). SIP has become popular for investing regularly in mutual funds. It is like a recurring deposit, but market-linked. Hence, it gives you the flexibility and convenience to invest the amount of your choice. Start small and then you can work towards having a diverse portfolio of various financial instruments once you get a hang of it. Look at low-risk mutual funds and keep long-term in mind always. Options such as fixed deposits, recurring deposits, provident funds, national pension scheme and others are other traditional yet safe bets for those with a lesser risk appetite. Don’t underestimate the power of compounding returns. Neither chase after high returns in the short-term. Slow and steady wins the race for a reason. But that said, risk is inevitable in market-linked financial programs. Hence, building a risk appetite in line with our goals is critical. One of the most important things to remember while investing is not to be swayed by the fear of missing out. Don’t wait until too long to invest, but never invest out of the fear of missing out. Always do your research and never solely rely on others’ advice as capital markets are associated with risks. Patience is a virtue.

Secure Yourself and Your Family – The importance of health and term insurance policies can’t be stressed enough. Not only does insurance protect you from unforeseen risks, but could help you in the long run, provided there is adequate coverage, by covering your medical/health costs. Your out-of-pocket expenses shall be restricted. You don’t need to dip into your savings, and they are also great tax savers! Having health/medical, term and/or life insurance is prudent and it helps secure yourself and your family in times of uncertainty. And opting for insurance at a younger age will give you benefits such as lower premium charges. But, thorough research is imperative while purchasing health/medical and life/term insurances. Carefully read all the terms and conditions, before opting for one.

Tax Planning – Tax planning is a basic and important part of financial planning. It helps in reducing tax liabilities. Therefore, don’t just look for tax savings initiatives at the end of the financial year or when it is time to file your tax returns. Start planning early, preferably at the beginning of a new fiscal year. There are various ways to reduce your tax liability such as minimizing taxable income by investing in various government schemes. Another way is to plan your tax deductions well in advance so that you could claim a reduction in taxes payable. Life insurance, health insurance, mutual funds, home loan interest and others are some of the areas where standard deductions can be availed. Bottom line, financial planning is the first step towards financial security. It’s important to set out simple goals and start off on the journey. The basics can go a long way in ensuring you have a solid start on your financial journey.

Strength and courage,
Wade

Four Patterns For Realtor’s Financial Freedom

Wade Webb on July 24, 2019

4 patterns realtor financial successAnyone can get lucky and win the lottery. Anyone can pick a winning stock from time to time. But if you want to achieve lasting financial success, you need more than just the occasional lucky break. What I’ve found over almost four decades of studying success is that the most successful people in any field aren’t just lucky. They have a different set of beliefs. They have a different strategy. They do things differently than everyone else. I see this in every area of life, whether it’s sustaining a happy and passionate marriage for more than a half century, losing weight and keeping it off for decades, or building a business worth billions. The key is to recognize consistently successful patterns and to model them, using them to guide the decisions you make in your own life. These patterns provide the playbook for your growth and success.

When I embarked on my journey to find solutions that could help people financially, I studied the best of the best, ultimately interviewing more than 50 investment titans. I was determined to crack the code—to figure out what explains their stunning results. Above all, I kept asking myself one question: What do they all have in common? I discovered what I call the Core Four patterns that can powerfully influence your ability to achieve financial freedom, whether you’re investing in the market, or considering a new business venture.

  1. Don’t lose. The best investors are obsessed with avoiding losses. They understand the simple fact that the more money you lose, the harder it is to get back to where you started. If you put $100,000 into an investment and lose 50 percent the first year, you now have $50,000. If you then make a 50 percent return on that $50,000, you still only have $75,000. You’re down $25,000.
  1. Understand risk and reward. Conventional wisdom suggests you need to take big risks to achieve big returns. But the best investors don’t fall for it. Instead, they hunt for opportunities in which the rewards vastly outweigh the risks.
  1. Manage your tax burden. There’s only one number that truly matters: The net amount you actually get to keep.
  1. Diversify. In investing, everything comes down to owning an array of attractive assets that don’t move in tandem. In business, it’s important to be able to serve your clients or customers in multiple ways. Not many successful restaurants have only one item on the menu.

When it comes to these principles for healthy financial growth, execution is everything. These principles make for a simple, invaluable checklist. Whenever I’m speaking with my financial advisors about a potential investment, I want to know whether or not it meets the majority of these four criteria. If not, then I’m simply not interested.

Strength and courage,
Wade