BUILD A BETTER BUDGET – PROTECT THE PATH TO YOUR GOAL
Oct 17, 2018 2:44:40 PM
By Jackie Ellis
I was that real estate agent who learned how to make a lot of money – and spend even more – for many years. Then, Keller Williams taught me how to build something and protect it …
Creating a budget has helped my business thrive. It can do the same for you.
Early on in my career, I would have balked at the idea of a budget. I’m not really a numbers person. So, you’re not alone if your first thought is that a budget will limit you. But, believe me, it won’t. A budget gives you permission to spend money.
To build a better budget, you must first understand how it goes hand-in-hand with your production goals. Next, you need the right tools. The good news is that, as Keller Williams agents, we have amazing tools at our fingertips. We just need to learn how to use them.
Smart Money vs. Trouble Money
Let’s first talk about what a smart flow of money versus a troubled flow of money looks like. Take Allie Agent, for example. She gets a commission check and deposits 100 percent into her personal checking. She spends most of it, and when tax time rolls around, she doesn’t have the cash to pay. Amy Agent, on the other hand, deposits hers into her business checking. She then earmarks – and moves into separate accounts – a percentage for federal and state taxes, plus a percentage to invest in her business.
Managing money like Allie stops you from being able to take advantage of opportunities and grow. If you’re like Allie, an amazing opportunity could come along, but you can’t partake because you don’t have the funds. Worrying about money, and juggling it between accounts when you come up short, saps time. It creates unneeded stress and robs you of sleep.
What do you think happens when you walk into a listing appointment with this stress? Do sellers see it? Do you think you’re making decisions at that listing table you wouldn’t make if you were more financially sound? Desperation can be read. Financial unsoundness can also be expensive. Why? Because if you’re not smartly managing your money, you’re likely paying late or overdraft fees.
When you manage money like Amy, you’ll be worry-free, stress-free and sleep well. You’ll be able to take advantage of opportunities. Your money will work for you, not the other way around. You’ll also have a reserve, which will prepare you for challenging times.
Engage with the CGI
The Millionaire Real Estate Agent’s models are your foundation. Part of the Economic Model is the CGI, or Career Growth Initiative, Calculator. It’s a magic tool. Start by asking yourself, how much money do I need to fund my life for a year? What are my personal expenses?
Once you’ve come up with a profit goal, enter it into Kelle – your AI-powered virtual assistant- with a simple voice or text command:
Hey Kelle, set my CGI goals.
After entering your profit goal and a couple other numbers, the calculator starts working for you. It tells you your annual goal, as well as how many commissions and listings you need each month.
For example, to have $200,000 in my pocket, with taxes at 20 percent, cost of sales at $27,000 and yearly expenses at $48,000, I’d need to bring in $350,000 in commissions. A lot of us have filled this out, but we aren’t watching it. It’s not a one-and-done tool; we need to engage with it, keeping it posted on our appointments.
Play “Financial Friday”
From there, you’ll want to dive into the MREA’s Lead Generation, Budget and Organizational Models. Another great tool is the “PNL,” or profit and loss statement. It’s another term real estate agents want to run from, but I encourage you to get involved. Once you get into it, it will be revealing. You’ll love it, really.
A PNL is an income statement, and all businesses need one. It tracks income, operating expenses, and cost of sales and profit. Should you buy that new, shiny thing? A PNL will help you decide with confidence. You also need to hold your dollars accountable. Did that new marketing strategy make you money? That’s why it’s so important, as you develop your budget, to track expenses – meals, plane tickets, continuing education fees.
How often should you look at your PNL? Make it a game: call it ‘Financial Friday.’ Each Friday, run a report. What are your expenses? Are you on track to spend too much? How much have you made so far this year? Do you need to adjust your plan to meet your profit goal?
My best advice for learning to read a PNL statement is to attend your market center’s financial committee meeting. It’s a great place to learn and get on track to building a better budget.
Here’s to a successful new year!
About Jackie Ellis
Jackie Ellis is the owner and operating principal of two KW market centers in Boynton Beach and Boca Raton, Florida. She has nearly 30 years’ experience in the industry, is a member of Gary Keller’s Top Agent Mastermind group, and is a master faculty instructor for Keller Williams University.
Original Source: KW Blog – Build a Better Budget