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Become your own financial superhero & build a healthier relationship with money: 8 steps to budgeting for realtors

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If I asked you how you feel about your personal finances, would you respond empowered, excited and confident? If so, congratulations! You can skip the rest of this article. However, if you don’t feel this way but want to, please read on. 

As a financial educator with 15 years of experience, I want everyone to have healthy financial habits that enable them to live their life on their terms. I understand the unique challenges and uncertainty that real estate professionals, in particular, face due to the irregular nature of their income.

Real estate is a dynamic industry characterized by unpredictable cash flows. But this is not an insurmountable challenge. It’s certainly nothing to avoid or ignore and is actually quite easily defeated. All you need is a budget. 


Initial feelings of resistance turned to confidence & empowerment 


While budgeting may initially bring feelings of resistance, its superpower is that it actually breeds confidence and empowerment — just like Clark Kent’s glasses hide the power that lies in Superman. I’ve personally experienced it and have seen it in my friends, family and clients. 

You don’t have to take my word for it though. The Financial Consumer Agency of Canada agrees. According to a study on the long-term effects of budgeting, “When individuals adopt the use of a budget, they grow their confidence when they achieve better outcomes such as keeping up with their financial commitments and limiting their spending. This results in a positive feedback loop whereby individuals grow their confidence through their behaviours, which in turn strengthens these behaviours.”


How to create a budget


If you still feel like you’re all alone next to your personal kryptonite, you’re not. You’re not alone and there’s no kryptonite in sight, just an annoying rock that you will soon blast away. Get ready to put on your cape.


1. Calculate your average income


Review your income over the past several months, or even a year, to determine your average monthly income. This will give you a baseline.


2. Identify essential expenses


List your fixed expenses such as rent or mortgage, utilities, groceries, transportation and debt payments. These get paid every month before anything else. 

Think Superman jumping in front of Lois Lane to protect her. 


3. Address discretionary expenses


Allocate a portion of your budget for variable expenses such as entertainment, dining out, clothing and other non-essentials. Be realistic about how much you typically spend in these categories.

Clark Kent splurged on those fancy glasses because it gave him more freedom in his day-to-day life.


4. Build a buffer


Create a “peaks and valleys” savings account to store extra savings in high-income months and to draw on in low-income months, which allows you to maintain a more consistent monthly budget. This should be separate from your emergency fund, which should be enough to cover at least three to six months’ worth of essential expenses.


5. Prioritize your spending


Create a prioritized spend list so that when you have a windfall or higher-than-average income month, you already know where you want that money to go and are more likely to avoid impulse spending. Your prioritized spend list should include your “peaks and valleys” account, paying down debt and funding goals such as retirement, kids’ education or a dream vacation.

When you’re ready to leap buildings in a single bound, you already know which one you’re conquering first. 


6. Track your income and expenses


Track your income and expenses at least monthly. I recommend weekly for the first month. This will help you stay on top of your budget and make adjustments as needed.

Keep an eye out for danger (aka overspending) and head it off. Danger can’t stand up to Superman. 


7. Adjust as necessary


Be prepared to adjust your budget as you become more aware of your spending, if you decide to prioritize other spending areas and as your income changes. Making adjustments is not an indicator of a problem. On the contrary, it shows that you’re taking control of your financial future.


8. Budget loudly


Let friends and family know you’re choosing different financial priorities. Find people who will support and encourage you. Enlist a colleague to hold you accountable or, even better, to join you in mastering the habit of budgeting.


It takes the average person 67 days to create a new habit. Don’t expect your spending to perfectly align with your budget the first month. It won’t be perfect, but it will be progress. Celebrate your successes and keep going. 

To help you get started, I’ve created free resources you can access (below).

Put on that cape. Strike the power pose. You’re ready to fly.


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