As an agent/business owner one of the the most important things you must do is reinvest a portion of what you make BACK into your business. Many people, especially those who are newer, have horrible spending habits (thank you school) and have no idea what to do with their commissions. Considering the size of some of the cheques you receive, it's important to manage your finances well to avoid getting into a trap of borrowing and debt.
In order to keep your finances check with EVERY cheque one of the simplest things to do is to create four accounts at your bank.
- MAIN CHEQUINGS - The account where you spend out of.'Here you will deposit (or have your commissions deposited into) and disperse the funds from.
- INCOME TAX - Understand what you plan what your income combined tax rate will be and put that amount aside every paycheque. This will guarantee that you have enough to pay the CRA when June comes around.
- HST - 13% in Ontario - In many brokerages you are paid your HST in your commission which means you should put it aside for tax season. Take the 13% and put it in this account.
- MARKETING - I suggest saving 10% of your NET commission as an investment into your business. Whether it is for gifts, advertising or marketing material, it is always better to have money set aside to invest in yourself. Even if you don't do any of it -- you would have money set aside for you to use it. 10% of a $100k year means you would have $10k to invest in your business any way you'd want.
Managing your money well requires #discipline but is definitely something you should pay attention to. Without it you may be putting yourself in a difficult position that could be problematic to your business in the long run!