Coach Patti's Blog

We all know that there is no financial security in the real estate industry. We are independent contractors; we own our own businesses. There are no 401(k) plans or pensions, and there is no one who will look after us but us. So like many others today we are being more careful with spending.

That's a good thing, but it's not the way to build wealth. For that, you need a plan that goes beyond cooking at home instead of going out to eat. It doesn't have to be a fancy or difficult plan; all you need are three buckets. Using those three buckets (or pots or any other container you want to visualize) will help you build wealth and a future for yourself and your business. 

The first bucket (no, not a real bucket!) is for your living expenses. You need 3 to 6 months of living expenses somewhere for emergencies. It can be cash in the bank or a line of credit, though if you are tapping that reserve you probably don't want to take on new debt if possible. Whatever form it is in, you need to have quick access in the event of an emergency.

Once Bucket #1 is full, only then can you start filling Bucket #2. This is your retirement bucket. This is where you are getting a good annual return on mutual funds, stocks, bonds, or real estate. You diversify your holdings so that you don't risk great losses in one market segment. When your are ready to fill the second bucket, you should be budgeting a percentage of your income to go directly into this.

How much? Start where you are and look ahead. If you are 40 years old now, you want to retire at 55, and you need $1.5 million to do that, they you can figure out how much you need to put in Bucket #2 every week or month to reach that goal. There are many places online that offer such retirement calculators. As long as you are putting that money away regularly, then you are on track with that bucket.

Now you can think about a third bucket. This is your high-risk bucket. If you have Bucket #1 full and you are on track with bucket number 2, then anything left over goes into the high-risk bucket. In that case, if you had $10,000 left over at the end of the year, maybe you take that trip to Vegas, or go buy those clothes, or my style is to put that money into a high-risk market. You might get into a business opportunity, a risky stock, or something else that has potential for a big return, but also carries a risk of loss. The only bucket you can touch for that kind of gamble is #3. You might invest in a high-risk venture that pays off and find you have filled Bucket #2 early. But you might also lose that investment. Either way, you still have Bucket #1 full and Bucket #2 on track.

No, I'm not an investment adviser or financial planner. But I believe common sense and responsible planning will take you far toward your goals. Just by following a simple plan like this you’ll start building wealth, you'll be monitoring your finances, and be in more control. And that leads to flexibility for your business, with money to put into marketing, which generates the leads, and turns leads into sales. You are building wealth, building a business that is worth something whether you pass it on to the next generation or sell it. You are building the future you want with peace, balance, and security.

Patti Kouri, Accelerated Performance Coaching
Helping You Through Self-Made Limitations! 

Will you Take My Challenge and increase your income? Here's what one student said:

"In 2006 I left REMAX and went to Prudential in West Chester OH. I was in a slump and Bob Daniel handed me $100 and told me to sign up for some Real Estate Game that Patti Kouri was conducting. It was the best money spent.  Last year (2008) I did 100 transactions. It all began with you, Ms. Patti. My thanks." - Pamela Bensen

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