It's almost that time again. The dreaded tax deadline is coming. We're all getting ready.
Anxiety levels are rising. Nails are being bitten. Palms are getting sweaty.
But it doesn't have to be that way. Tax time doesn't have to be the giant weight on your shoulders that too many of us make it out to be. By adopting a stronger and healthier outlook on our money, we can avoid the struggle that arrives this time every year.
There are three actions I advise agents to take to help develop this new positive outlook and take control of your money. When you perform these three actions, taxes stop becoming a nightmare.
Tax Action #1: Look at the Big Picture
I've noticed that agents usually give too much focus to either:
a) income, or:b) expenses
a) income, or:b) expenses
By focusing too heavily on either one or the other, you end up shooting yourself in the foot. It is much better to keep your eye on the "big picture" when it comes to your money.
One of the key tasks I give to agents is to face the facts. Really get to know your numbers - ALL of your numbers. Not just what you want to make.
I hear agents say all the time, "I want to make a hundred grand a year."
I reply by asking them, "Do you actually know what a hundred grand really looks like at the end of the day in terms of what you can spend?" When they figure it out, the numbers are a lot different than what they had originally expected.
What they really meant was, "I need a hundred grand to cover my bills." If that's really the case, then you need a lot more than a hundred grand.
Sit down, take your time, and really get to know all of your numbers. Don't hide from them. Don't be scared of them. Face them and know them so that you can be fully prepared to deal with them at tax time.
If you are in debt and you are not performing a monthly net worth analysis, then all you're ever going to see is the negative of your money. It's time that you begin to see the positive of your money.
The beauty of the net worth analysis is that if all you do is pay bills, then you will be rewarded at the end of every month when you see your net worth go up - even if it's just a little bit. You need to see and experience that tiny jolt to your bank account.
Tax Action #3: Get Somebody to Take a Look at Your Expenses
Ask somebody you admire - a mentor, a broker, or just someone you know who is financially secure. Ask them to take a look at your expenses. You may be surprised at what they tell you.
Every time I have been asked by an agent to look at expenses, I have always been able to make some kind of a recommendation.
Maybe you're spending too much on advertising. True, advertising is important and necessary. But if it's not providing returns on your investment, then you need to step back and take a cold hard look at how you're using it. Advertising should not be breaking your bank - it should be growing your bank.
The key to advertising - as in so many areas of being a successful real estate agent - is to be a contrarian. This means to do the opposite of what everybody else is doing.
Too many times I've witnessed an agent spending tons of money on advertising - but for ads that look just like everyone else's. This is a huge waste of money.
Maybe you're spending too much on travel. How can this be? An agent needs travel expenses, right? Yes, but I know agents who have reduced their travel bill in half by taking smart actions.
For example, how about previewing with another agent? Some agents I know have significantly reduced this bill because they realized they don't need to be the solo agent in the car alone during tour time.
Starting today, make a commitment to your money. Get to know it and to understand where it flows and where it's getting stopped up. Plug the gaps immediately.
Then, adopt the monthly net worth analysis as your greatest inspirational tool for your money. You will LOVE to see that number tick up every month. It will galvanize you into action to keep things flowing - just to be able to see your money grow.
When you get to know your money, you will help it to grow - and tax day will be just another day.