Stop Wasting Your Commission Checks: The 60/20/20 Rule
📚 Main Topics
Account Management
- Importance of having three separate checking accounts: personal, business, and tax.
- Recommended split of income from commission checks.
Income Allocation
- Breakdown of a $10,000 commission check:
- 60% to personal account
- 20% to business account
- 20% to tax account
- Breakdown of a $10,000 commission check:
Financial Discipline
- The necessity of living within the means of the allocated 60%.
- Avoiding the common pitfall of treating commission checks as personal income.
Business Growth
- Encouragement to increase sales and close more deals to improve financial stability.
- The importance of reinvesting in marketing and business expenses.
Tax Management
- Understanding tax obligations and the importance of setting aside funds for taxes.
- Clarification on how taxes are calculated based on personal income rather than gross income.
✨ Key Takeaways
- Organized Financial StructureEstablishing a clear system for managing income can prevent financial mismanagement and ensure that personal and business expenses are appropriately funded.
- Living on a BudgetAgents should adjust their lifestyle to live on the 60% allocated for personal use, which encourages better financial habits and reduces reliance on sporadic commission income.
- Proactive Business StrategyAgents should focus on increasing their sales volume to create a more consistent income stream, rather than relying on occasional large commission checks.
🧠 Lessons
- Separate AccountsAlways maintain separate accounts for personal, business, and tax purposes to avoid confusion and ensure financial clarity.
- Discipline in SpendingTreat commission income as business revenue, not personal income, to avoid financial pitfalls.
- Regular ReviewRegularly assess and adjust your financial strategy to ensure it aligns with your business growth and personal financial goals.
By following these guidelines, real estate agents can create a more sustainable and organized approach to managing their finances, ultimately leading to greater success in their careers.
Transcript excerpt
0:00 What I always recommend is for agents, let's take a $10,000 check just so that the math is really easy here. You should really have three different checking accounts. So, you're doing a split deposit or put it all in one account and transfer it the next day to utilize all three accounts so that you keep your books right. You're paying yourself correctly and you never get behind on expenses. You never get behind on your debt and you certainly never get behind on the IRS. What we're doing essentially is we're creating an operating account,
0:30 a personal account, and a tax account. All three of these are just basic checking accounts. You can get a free checking account if you check around with some of these banks. They'd love to hold your money. Essentially, what we're doing when we get that $10,000 check, you want to put 60% of everything you earn into your personal account. That's for your household bills, paying your mortgage, taking your wife out to dinner, taking your husband out to dinner, whatever it is. uh all of your personal expenses, you're only getting 60% of what you make. One big problem a
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