In the beginning of their career as an independent agent with National Agents Alliance, some young agents struggle with the “independent” part.
When agents work for themselves and are paid commissions, some make the mistake of living off their “gross” income, while employees are accustomed to living off their “net” income with taxes being withheld from their paycheck.
As an independent contractor, the agent is responsible for paying all expenses for running a business, including paying quarterly tax payments to the IRS. Other expenses to be considered are all of the office type expenses – office supplies, cell phone, internet service, and many more, including buying leads. If the agent is spending all of the “gross” income on living expenses and recreation there will certainly be a shortage of funds at some point.
CEO, Andy Albright recommends reading The Richest Man in Babylon for a simple money management philosophy. In this book the agent will learn an effective strategy for living on 70 percent of the monthly income, allowing for a system that will cover taxes and business expenses, savings and giving.
The book emphasizes living on much less than the total income to put the individual in a position to withstand the inevitable emergencies that life throws at us all from time to time. If you are not putting money away to cover your taxes you’ll face the music on April 15th when you file your tax return. If you don’t save for emergencies you’ll be in for a big surprise when you suddenly have a $700 car repair bill or need to buy an airline ticket to fly home for a family emergency.
As a financial services provider you must learn to manage your money and set an example for others. The top agents at National Agents Alliance learn early in their careers to save for a rainy day, and prove the power of compound interest by putting money into savings while they are young and watching it grow into a huge fund. By doing this they never have to worry about being knocked down by any of life’s surprises.