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    For many real estate agents, one of the hardest parts of running their own small business is managing their finances. After all, it’s a whole different ball game when you’re trying to budget and save on an up-and-down income. That said, there are some things that you can do to help yourself and your business feel more financially stable.

    With that in mind, we’ve brought you five smart money moves that every real estate agent should make. Read them over so that you can get a sense of what steps you can take to put yourself in a better financial position. If you incorporate some of these tips into your lifestyle, you should feel better prepared to handle whatever comes your way.

    1. Track your income and expenses

    The first thing to do when you’re getting serious about your finances is to look at how much money you have coming in each month versus how much is going out. You can do this by starting to track your expenses. These days, luckily, if you don’t feel like doing the math on your own, there are plenty of apps out there that will help make the job easier.

    You’ll want to do this for at least a few months, probably three or four is best. The idea, here, is to get a sense of what you’re making and spending on average so that you can eventually use those numbers to create a financial plan that will serve you going forward.

    2. Take a financial inventory

    Once you have your data in hand, the next step is to take an inventory of your finances. This involves looking at your average income versus your expenses and coming up with a budget that you can use to help guide future financial decisions. As an agent, you should really create two separate budgets — one for your business and one for your home life.

    Creating a budget is truly an individualized process. After all, only you have a say in what happens with your income. However, if you aren’t sure where to start with this process, there are plenty of templates online that can provide a set of guidelines.

    Whichever method you choose to use for budgeting, you should be sure to answer the following questions:

    • How much income do you make, on average, per month?
    • What recurring monthly bills do you need to take into account?
    • Are there any expense areas where you can cut back?
    • Have you left room in your budget to save for future expenses?

    3. Create an emergency fund

    One of those future expenses that you should be saving toward is an emergency fund. As an independent contractor, it is absolutely crucial to have a stockpile of money that you can fall back on when business is slow. Put simply, you never know when you’re going to need some extra monetary help and an emergency fund is there to fill in those gaps.

    To create your emergency fund, start by opening a separate bank account just for these funds. Then, make adding to the fund part of your new budget. Set a goal amount — no matter how small — that you’ll aim to add to the fund each month. Finally, push yourself to follow through on actually setting the funds aside.

    Conventional wisdom states that you should keep working on the fund until you have at least three to six months of expenses saved. Though, in this case, more is always better, so don’t feel the need to stop there.

    4. Remember to save for taxes

    One particular problem that newer agents often run into is forgetting to save for taxes. Remember, as an independent contractor, taxes aren’t taken out of your paycheck. Instead, you either pay them quarterly or at the end of the year and it’s up to you to save for when that big bill comes due.

    Our advice on this is similar to building an emergency fund. Start by getting a separate bank account just for your taxes. Then, when you get your checks after settlement, take out the percentage that’s commensurate with your tax bracket. Put that amount of money into your bank account for taxes and let it sit there until your bill is due.

    5. Talk to a financial advisor

    A quick disclaimer: We are mortgage experts, but we are not certified accountants, financial advisors, or tax experts. If you haven’t yet, you should talk to a financial professional like a financial advisor. He or she will be able to take a look at your finances on a larger scale and will be able to guide you through taking the steps that will help you get to your larger financial goals like handling education costs or planning for retirement.

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