Many people decide to become realtors because they want to stop living paycheck to paycheck. Or because they want enough income to support their families financially. Even better, because they want to accumulate wealth.
But excuse my French, too many Realtors today don’t have a pot to pee in. Many even make seven figures, if you can believe it.
In this article, we’re going to cover why, despite this high-income potential, realtors still struggle financially. Then I’m going to offer valuable advice for building and maintaining wealth.
Why Do Realtors Struggle Financially?
Many Realtors break through and generate a great amount of income. We’re talking multiple six to seven figures a year. But they face financial difficulties. You see, it’s easy to assume that a high income means financial stability, but that’s not always the case.
So why is it that so many realtors struggle with their finances? There could be many reasons for this, but one potential explanation I see time and time again with Realtors I mentor, is that they may not have a solid financial plan in place.
Just like any other profession, being a realtor doesn’t automatically equate to financial success. It takes careful planning and management of one’s finances to achieve financial stability and ultimately, generate lasting wealth.
Take Out Your Taxes First
Let’s talk about what you can do to start building your wealth. First up, paying taxes. That’s right, you’d be surprised how many people don’t manage or pay their taxes properly, and in a good timely manner.
When you receive income, you should set aside a portion to pay taxes. It can be tempting to spend all of your money right away, but if you don’t plan for taxes, you may end up with a large tax bill that you can’t afford to pay. This can add unnecessary stress and financial strain.
So, how much should you set aside for taxes? It depends on your income and tax bracket, but a good rule of thumb is to check with your accountant. By doing this, you’ll ensure that you have enough money to cover your taxes.
Create a Budget and Stick to it
This may sound tedious to realtors, but trust me, it’s an essential step in building financial stability. I’ve been in business for five decades. And I can’t stress enough why budgeting is important if you want to generate and maintain wealth.
Creating a budget means taking a hard look at your income and expenses, then setting a financial plan. It can help you identify areas where you may be overspending, and find ways to save money for later investments.
For example, you may discover that you’re spending an unhealthy amount on frivolous luxuries (sports cars, high-end clothing, leisure expenses, etc.) and decide to cut back on those costs. And I’m not saying you should never spend money on yourself, just live within your means.
Sticking to a budget can be challenging, but it’s crucial if you want to become wealthy over time as a Realtor. It requires discipline and a willingness to make sacrifices in the short term for long-term gain. By sticking to your budget, you’ll be able to pay off taxes, invest in real estate, manage emergencies, and ultimately, achieve your financial goals.
Invest in Real Estate
You help people sell and buy real estate — but why not invest in real estate yourself? The wealth I’ve accumulated comes primarily from my ownership and investments in real estate. Real estate is excellent for building wealth because it tends to increase in value over time, or can provide you with passive income.
You know, buying real estate isn’t easy. It requires a significant amount of money upfront and can come with risks. But it’s well worth the effort and is the number one source of wealth.
The Bottom Line
To get ahead financially as a real estate agent, remember, always set aside a portion of your income, and take out your taxes first. Secondly, create a comprehensive budget and follow it consistently. And finally, do what we recommend to our clients. Buy and invest in real estate. That’s how you get rich.
Building wealth may take some time and effort, but it’s certain to come eventually with the right mindset and strategy. So start planning today and take control of your financial future. As I always say, real estate sales can provide an excellent lifestyle… But investing in real estate is what creates real wealth.
Make sure to follow me for more wealth advice and wisdom for aspiring realtors. Also, check out The Core Truth playlist on YouTube, exclusively filmed by me to equip you with the right mindset and strategies to build a profitable real estate business.