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Getting paid on commission for advanced real estate in California can provide a variety of rewards. Most importantly, there is no limit on the amount of money you can earn. But commission-based compensation also has its drawbacks. For real estate professionals, it can be especially difficult to deal with the unpredictability of income. In this article, we'll cover 3 tips on how to deal with unpredictable earnings. 1. Plan for Lean Times It's easier said than done, but having a sizable savings cushion for lean times is necessary for anyone with an unpredictable income. If you don't have a cushion of savings at the moment, it's not too late to start one. Ideally, you'll take at least 10% of your next paycheck and put it aside in a savings account earmarked for lean times. Eventually, you'll want to save up to cover 3 to 6 months of living expenses. 2. Project Your Income and Expenses It's easy to get excited when a big commission hits your bank account. But if you want to ensure that you can pay your bills for the foreseeable future, you need to project your income and expenses further out than the current month. There are plenty of software products that can help you budget for every month, but even a simple Excel sheet or a piece of paper can do the trick. First, you need to cover the necessities. This includes rent or mortgage, transportation, and food. Don't forget to list include job-related expenses and taxes here, too. If you run out of gas money to show properties, then you don't get a chance to earn that next big commission. And you probably already know what happens if you don't make payments to the IRS. 3. Don't Make Big Commitments When your income is unpredictable, it's easier to plan when your monthly commitments are manageable. It doesn't mean that you can't afford to pay for a few luxuries in life. But when you keep your monthly expenses relatively low, you can use any extra income to make a big splash on occasion. Any expense that's recurring falls into this category. While you're projecting how long your income will last, you can determine whether your expenses are truly needed or if it might be a good idea to trim the fat a little. Living with unpredictable earnings can be unnerving. But professionals that deal with advanced real estate in California can use these tips to make the most of their earnings.
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