Personal finance tips take center stage when tax season is in full effect, and for good reason: it’s this time of the year when the importance of saving is made most apparent. It’s worth noting, however, that personal finance tips are valuable to individuals well beyond April 18th. With the right mindset and a little financial literacy on your side, there is no reason to believe you can’t maximize how far your own finances take you over the course of the entire year, but I digress. Financial literacy can transcend more than tax season; it can greatly benefit everyone and their respective businesses. In fact, it’s entirely possible to take many of the personal financial tips you learn at home and apply them to your real estate business.
Those with above average financial literacy are likely ahead of the curve, and there is no reason you can’t be right beside them. With a few personal finance tips, there is no reason you can’t elevate your financial literacy and help yourself at home and at work.
1. Create A Calendar: The financial responsibilities of owning and operating a real estate investment company are as important as they are varied. All things considered, even small real estate business owners could find themselves with an overwhelming amount of financial obligations. From keeping track of due dates to managing expenses, each and every financial aspect of a business needs to be accounted for, and there is one way I highly recommend doing so: creating a financial calendar. Instead of relying on your own intuition, eliminate the risk of a misstep by creating a calendar dedicated solely to your financial obligations. Instead of bogging down your mental real estate with figures and dates, simply write them down on a calendar the same way you would any other upcoming events. Are your quarterly taxes due in three months? Put it on the calendar. When should you make a point of checking your credit report? Put it on your calendar. Whatever financial obligations you may have, don’t hesitate to write them down on a calendar. Not only will it be easier to keep track of everything, but it could very well improve your financial literacy and preparedness.
2. Account For Your Payment Schedule: Investing in real estate has become synonymous with several different streams of income. Savvy investors are awarded the opportunity to pad their coffers by exercising one or more of several exit strategies at their disposal: wholesaling, rehabbing, rental properties, and REITs — just to name a few. And while each is an excellent wealth-building vehicle with the right systems in place, they are inherently different. Most notably, each exit strategy comes complete with its own payment schedule. If for nothing else, each exit strategy takes a different amount of time to complete from beginning to the end. It’s entirely possible for a wholesale deal to take a s little as a few hours, whereas the average rehab can take anywhere between a few months to a year. Investors aren’t able to rely on the steady paychecks those who work a nine-to-five have come to expect. Instead, they get paid when their job is complete, which could be a few hours away, or even a few months. In the event you are relying on rehab income, account for the large gaps that will likely take place between each paycheck and budget accordingly, which brings me to my next personal finance tip.
3. Budget Accordingly: There isn’t a financial tip worth more to real estate investors than the concept of formulating a well-designed budget. If for nothing else, your budget is essentially the foundation on which the rest of your business will be built. With a budget, it’s entirely possible to set realistic financial goals and spend your money more efficiently. Without a real estate budget, however, you could burry your business behind a wall of debt before you even get it up and running. Therefore, nothing (as far as I am aware) is more beneficial to an individual or a company than learning how to budget within their means. It’s entirely possible for a regimented budget to simultaneously minimize expenditure while maximizing your return on investment. Remember, it’s not about how much you spend; it’s how you spend the money you do have. And those who implement a sound budget will find that their money is well spent.
4. Regularly Review Your Credit Report As your average, everyday citizen, a great credit report can work wonders for relatively large purchases. Homes and cars, for example, can be acquired a little easier in the event your credit report deems you worthy of a great interest rate. It’s worth noting, however, that a good credit report is even more important to those who base their entire business off of leverage. Real estate investors, in particular, rely heavily on leverage, and a great credit history can mean the difference between success and failure. If for nothing else, a great credit report will make it a lot easier to receive the financing you need to both acquire and work on deals, but I digress. Having a good credit score isn’t the same as maintaining one. And if my years as an investor have taught me anything, it’s that few things are more important to a business than its respective credit score. That’s why I maintain real estate investors need to get in the habit of checking their credit report regularly. Only then will they be able to maintain it and ultimately use it as it’s supposed to be used: like one of your most valuable assets.
5. Reflect On Daily Expenditures: Whether you call it balancing your checkbook or reviewing your latest expenditures, I want to encourage investors to get in the habit of reflecting on their daily spending tendencies. Simply set aside a small window of time in which you can go over all of the money you spent on the day. Include everything from business expenses to personal expenses. Though relatively simple and far from revolutionary, doing so can identify flaws in your budget and set the tone for the rest of the day, if not the rest of your week. In identifying where every dollar is going every day, you are more likely to stick to your budget.
Personal finance tips can run the gamut from extremely beneficial to painfully devastating. That said, it’s important to identify which tips will be of the most use to you and which ones will help you pad your coffers the most. The personal finance tips I mentioned above are exercised by today’s best investors, and there is no reason you shouldn’t be doing the same. Whether or not you want to implement them into your daily routine is up to you. What I do know, however, is that these personal financial tips are sure to help everyone from seasoned investors to those getting their feet wet in the real estate industry.