Let’s suppose you haven’t sold anything for the last six weeks. How are you feeling? Many would admit to feeling a bit, well, desperate.
How will you react when you hear a home in the neighborhood you work might be coming on the market? Will you feel pressured to call on them as soon as possible, hoping against hope you’ll land the listing and it will sell in a hurry?
What about when you’re on the floor and a potential client walks in. Do you find yourself pushing them a bit, out of your need for a commission?
It happens. Even old pros in the real estate business, those who know they shouldn’t let their own bank account dictate how they treat customers can fall victim to the fear when the sales dry up.
And they always will dry up – not forever, but for awhile. It’s the nature of the business.
Savings relieves the fear
Now suppose you haven’t made a sale in 6 weeks but you’ve got more than 6 months living expenses in a savings account you can tap easily and quickly.
How does that feel?
Most recognize that knowing they have available cash eases the strain of a business slow-down. When there’s less fear stress it’s way easier to focus on being truly of service to clients. They know that when they’re backed up by savings they can come from their real strengths.
Savings takes some discipline
If you’re on a salary, the easiest way to save is with an automatic deduction from your paycheck. Obviously that doesn’t work for real estate agents. Uncertain income is one of the hallmarks of selling real estate, and if you don’t handle that rollercoaster well it may drive you out of the business.
The trick is to decide on a percentage you want to save, and make sure when you deposit your commission checks you put at least that percentage much in a savings account.
Even if you have to take the money out the next day, get in the habit of putting a specific percentage in from every bit of income. Eventually it will begin to stick.
You’re more likely to actually deposit into savings if it’s super easy to do. One option is to have the savings account at the same bank as your checking account.
If, as many do, you discover it’s just too easy to take money out of savings because it is right there next to your checking account, try opening up an online savings account at another institution. Both Ally and Capital One 360 (formerly ING) are “branchless” banks. They make it easy to deposit money from your other accounts. Plus there’s generally a delay of three to five business days to transfer money back into your liquid account which can act as a break on impulse spending.
Multiple accounts can also help
Having multiple savings accounts can lessen the pressure even more.
For example, a separate savings account just for your taxes means you’re prepared when tax time comes around.
An account for a new car helps you save for the down payment. One for equipment means you’re prepared when a hard drive goes down or a cell phone gets dropped.
Imagine what it would be like to pay for your next vacation out of an account you’d set up just for that!
With the right kinds of savings, you might not need credit cards at all.
Sure, these days savings accounts pay almost nothing in interest. So save for an investment or two. Meanwhile, you will be able to rest easy with the vicissitudes of your chosen career.
How do you protect yourself against the ups and downs in income? Let’s talk about it in comments.