And it’s not at $50/m

One of the biggest reasons real estate agents have difficulty putting money aside for their future is because all the websites talking about savings strategies are not designed for you.

Build a budget and spend within it
52-week challenge: $1 this week, $52 the last week
How to save $1M by age $65: only $481 per month if you start at age 35

The headlines are great, but they all assume the same fundamental flaw for most agents: a standard monthly income. Most of your income will appear in your bank account in the summer months when most houses close. Unless you have incorporated, a monthly income is going to be challenging to generate.

Rather than focus on monthly savings, start focusing on commissions savings.

Here is one set of steps you can take.

  1. Look at how much you earned over the last 12 months after expenses and assume you’ll earn the same over the next twelve.
  2. Based on that number, set a goal of how much you want to put into your savings.
  3. Divide the amount of savings you want by the amount of earnings you expect.
  4. Take that percentage from every paycheck (net of expenses) and put it into your savings plan.

To put an example around it.

  1. Let’s say you earned $60,000 after expenses in the last 12 months.
  2. Of that, you want to save $5,000 this next year.
  3. We take $5,000 and divide it by $60,000 getting 8.333%
  4. On your next paycheck, you net $3,000. 8.333% of $3,000 is $250, and that goes into savings.

Savings doesn’t have to be a monthly goal. It can be a quarterly goal or a yearly goal. But if you want to save for your next house or retirement, you need to start saving.