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You just sold a property. The commission check is about to hit your bank account. Time to party, right? Not so fast. It’s not time for bottle service just yet.
Every dollar in that commission check has a job to do, and it’s not all earmarked for bubbly. Savvy agents know this. They’ve probably already felt the pain of not having cash in the right place at the right time.
That’s why many of the top-tier agents we work with use a simple cash-management strategy to keep all their dollars in line and working hard. You might know this strategy as the “envelope method” or the “bucket method,” or as a simplified version of Mike Michalowicz’s Profit First method. Whatever you call it, it works.
Business accounts
First, let’s start with your business accounts. You’ll need five of them. The type doesn’t matter; just be mindful of fees and account minimums.
Your first business account is your revenue account. Every commission check gets deposited here, but no money stays in this account for very long. It’s just a clearing account. You will be taking all the funds out of this account and allocating them to the other four business accounts.
Your second business account is your tax savings account. Move 25 percent to 30 percent of each commission check from your revenue account to this account. This account is pretty self-explanatory. You will use the funds here to pay your estimated quarterly taxes.
Your third business account is your operating account. Move…