This has been an unprecedented year. With more than 10% of Americans facing unemployment and an economy on edge, many professionals are worried about the future. For real estate professionals, the uncertainty is palpable. Even as home sales continue to surge, other economic challenges in our families, our investments, and our communities impact our lives. Today, we’re examining financial tips for real estate agents, giving you economic tools to make it through this crisis unscathed.
Give Your Budget a Closer Look
First things first: if you don’t know exactly where every dollar is going each month, you will undoubtedly face trouble in tough economic times. Take a close look at your monthly budget and identify where you need to make changes.
Having a firm understanding of your financial position can help limit uncertainty and stress. Start by outlining essential expenses like housing, food, and utilities. Then, re-evaluate your monthly spending and determine where you can cut back if needed. Before you can attack the other items on this list, you’ll need to know exactly how much you can spare each month to meet your financial goals.
Need help creating a budget? We love financial counselor Dave Ramsey’s free Every Dollar app.
Manage Your Debt
If you have outstanding debts, consider tackling them while interest rates are low.
Because of volatility in the stock market, interest rates are at nearly historic lows. If you’re carrying credit card debt or other loans with high interest rates, now is the best time to consolidate that debt into a lower monthly payment. You might also consider borrowing money at a low interest rate and paying off high-interest loans like credit cards, car loans, or student debt.
If you still owe a balance on your mortgage, you might consider refinancing. Many lenders are offering incredibly low rates and refinancing your mortgage could save you thousands over the life of your loan.
Now that you’ve given your monthly budget the once-over, it’s time to cut corners. Assume this crisis will last for months or even years. If that’s the case, you’ll want to stock money away for a financial rainy day.
However, finding extra funds to pay off debt, invest, or put into savings is nearly impossible if you don’t cut back on wasteful spending. Even small steps can carve out significant amounts of capital each month.
Reduce wasteful spending by:
- Eliminating unnecessary streaming services, monthly subscriptions, and other unused products.
- Trim the grocery budget by clipping coupons, eliminating food waste, and making budget-friendly meals.
- Limiting dining out, including drive-through restaurants and coffee shops.
- Limiting impulse buys or unnecessary online shopping.
- Comparing prices when purchasing big-ticket items or services.
Finding a few small ways to reduce expenditures and move that money into other areas can have a significant impact on your overall financial health.
Pad Your Savings Account
Hopefully, you’ve followed previous financial tips and aside an emergency fund that you can tap into should the real estate market crash. However, if you aren’t prepared for an economic crisis, don’t panic. There’s still time to boost your savings.
While residential real estate is still going strong, take a portion of every deal, and set it aside. Ideally, you should have your savings in a high-yield savings account or another safe and easily-accessible account.
We’re all hoping the market remains steady. However, Realtors and other real estate professionals should assume that the market will get worse before it gets better. Therefore, Realtors could face several lean months ahead. It’s wise to prepare now for a financial dip, and add as much as possible to your emergency fund.
For more financial tips for real estate agents, check out the National Association of Realtors’ Center for Realtor Financial Wellness.
Invest if Possible
If you already have a sizeable nest egg set aside for a rainy day, consider investing your extra cash into the stock market or real estate.
Some sectors of the commercial real estate market – namely multifamily and industrial properties – continue to surge amidst the pandemic. Likewise, foreclosures are rising among single-family homes, giving investors a golden opportunity to purchase investment properties. Some stocks are seeing record growth, even among the economic downturn.
While some investments are riskier than others in this environment, it’s worth researching your options. Consult your financial advisor to learn which investments are right for you.
Share with Others
Finally, if you are fortunate enough to have a steady income, have sizeable savings in case of emergency, and have a diversified portfolio, consider sharing your resources with those less fortunate. Many families are struggling in this economy. As real estate agents, we should spread the wealth and help our neighbors.
How are you preparing for a possible downturn in the real estate market? What are your financial tips for real estate agents? Share them with us in the comments below.