Most Realtors nationwide have enjoyed a booming real estate market over the past few years. This year, even though interest rates are expected to keep rising, the outlook still looks favorable for real estate businesses to succeed. You may be reveling in your success now, but perhaps it’s time to look ahead to the future and do a checkup of your financial wellness.
A 2018 report from the US Federal Reserve found that 40% of American adults do not have enough cash on hand to cover an unexpected expense of $400 or more. Furthermore, the same study found that fewer than 40% of non-retired adults believe their retirement savings are on track. This data suggests one big, glaring issue: Americans aren’t prepared financially for the future.
Financial Wellness and Real Estate Agents
Realtors face additional challenges when it comes to financial wellness. Not only does your income fluctuate over time – dips in the real estate market equate to lower revenue for you and your team – but you also have to deal with taxes, business fees, and other unexpected expenses along the way.
How does your financial wellness hold up? Do you have enough in savings to cover months without income? Moreover, are you investing in your future, building towards a comfortable retirement? Here are a few tips to get your financial wellness back on track and heading towards a bright future.
Establish Your Emergency Fund
If you’re one of the 40% of Americans who can’t cover a $400 emergency, it’s time to take a serious look at your finances. Most financial experts recommend having enough cash on hand (in a savings or checking account) to cover 3-6 months of living expenses.
For real estate agents, an emergency fund creates a buffer that can carry you and your family through tough economic times. It’s a life raft to rescue you should the real estate ship begin to sink.
How can you build an emergency fund, particularly if you’re already on a tight budget? First, consider saving money in the following ways, and then put the money you save straight into your emergency fund. These small changes can add up to big bucks over time:
- Cut out unnecessary expenses like cable, streaming music services, dining out, or takeout morning coffees.
- Carpool to work to save on gas and parking expenses.
- Save your tax refund.
- Adjust contributions to your investments until your emergency account is fully-funded.
- Have a yard sale and get rid of unused household items and furniture. You’ll be decluttering your space and boosting your savings at the same time.
Say Goodbye to Debt and Hello to a Budget
In 2018, CNBC reported that Americans have an average of $38,000 in personal debt, not including mortgages. That’s $38,000 per working adult, demanding steep interest payments that take away from your financial security and retirement funds.
Of course, real estate agents often succumb to the pressure to “keep up with the Joneses.” Realtors are expected to wear expensive clothing, drive fancy cars, and take clients out to eat at fine restaurants. But outside appearances can’t mask the fact that you’re drowning in debt.
If you want to enjoy financial wellness – and a secure retirement – it’s time to get out of debt for good.
Invest and Diversify
Real estate agents have a unique opportunity to diversify their investments. While you should have a 401K, IRA, or another retirement account, your profession allows you front-row access to exceptional real estate investment opportunities. Real estate investing is often an excellent long-term investment strategy with a reliable track record.
Hire a Knowledgeable Financial Planner
How much money will you need for retirement? It’s probably more than you think. If you don’t already have a detailed financial road map leading to a comfortable retirement, find a knowledgeable financial planner who can help you establish retirement goals.
Where to Begin
Not sure where to find a financial planner, where to get started with investments, or how to establish and stick to a budget? The National Association of Realtors recently created the Center for Realtor Financial Wellness, a comprehensive planning and education program designed to help real estate agents plan for retirement. The program is free for all NAR members, so Realtors can embrace financial freedom and enjoy a worry-free retirement.