Leaving a relatively decent full-time office job to work independently was probably the hardest professional decision I’ve ever made. Although I have no regrets, I admittedly did not know what I was getting myself into. Our most recent Special Report dug into the reasons why the failure rate for new real estate agents is so high, and more than three-quarters of respondents (77.39 percent) said that new agents fail at least in part because they are unprepared for the realities of working as an independent contractor.

  • To make it as an independent contractor, you must budget, create money "cushions," invest in the right tools and find sources of money (clients or leads) that are relatively reliable.
  • Calendars, time-blocking and understanding exactly what your time is worth are other critical tools and skills for independent contractors.

Leaving a relatively decent full-time office job to work independently was probably the hardest professional decision I’ve ever made.

I had my reasons for doing it — I craved a better work-life balance, more earning potential and a job that felt more meaningful. So I made the jump.

Although I have no regrets (and obviously bowed out of the independent contractor lifestyle), I admittedly did not know what I was getting myself into when I quit my full-time job to go indie.

Our most recent Special Report dug into the reasons why the failure rate for new real estate agents is so high, and more than three-quarters of respondents (77.39 percent) said that new agents fail at least in part because they are unprepared for the realities of working as an independent contractor.

I’m certainly not an expert, but I did learn some lessons about managing my money and time that might help new agents. Here they are.

Money tips

1. Budget, budget, budget

Ever wonder why every list about working as a freelancer or independent contractor includes this item, or why it’s normally at the top?

It’s because you cannot succeed without understanding your personal budget — not just your business expenses. Unless you have a trust fund or are financially gifted in some other way, it is impossible to be your own boss without keeping a sharp eye on your bottom line. (If you want to stay your own boss, that is.)

If you’re migrating from a job where you received a regular paycheck for the same amount every pay period, this is absolutely critical. Most independent contractors are paid sporadically, and there could be a sizable gap between checks. Know where you’re currently spending money and decide whether there’s any possible “fat” to trim from your budget.

If you skip this step, it’s going to make it difficult to even attempt to manage your money. Apps like Mint can help you get started and remind you about different expenditures so you don’t miss anything.

2. Create a money “cushion” wherever you can

This is easier said than done. Before you can do this, however, you’ll need clarity around when you can expect to get paid for the work you’re doing.

One of my clients paid me every two weeks. But most of them paid upon invoice receipt — however, one of my clients’ accounts department only processed external invoices once a month, so I had to remember to meet that window every 30 days or so.

And there’s nothing quite like the stress of watching your bank account dwindle while you wait to be paid for work that’s been shipped.

If you can build your budget around the assumption that you won’t get paid “on time” — if you plan on cashing any checks a month or two later than you might normally expect — then waiting for that auto-deposit alert or check in the mail won’t be as big a deal. It’s not always possible, but if it is, do it!

3. Find your “whales” and leverage them

I couldn’t have made the jump to freelancing if I hadn’t lined up two big clients before I even quit my day job.

One gave me a certain number of hours of work every week, for which I was paid on a regular basis.

The other gave me regular big projects; I was paid for those when the client received my work.

Having these clients in hand gave me a crucial cushion. It meant I didn’t have to hustle quite as hard.

Because working with just two big clients is clearly not possible in real estate (unless you’re working with an investor, I suppose), I’d amend this advice for agents to focus on lead sources instead of individual clients.

Find your own “whales,” whatever that means for your business. I’d recommend at least two — that way if something goes south with one, you still have the other.

4. Make sure your family is on board

One of my college professors recommended freelancing full-time only if you have a partner or spouse with a full-time job who’s willing to help support you during the gaps. That’s not something most of us can control very easily, but it’d be a big mistake to jump into an independent contractor lifestyle without the full support of anyone sharing your household.

Your family should be heavily involved in your budget discussions. The decisions about where to cut corners and how much to spend on which area of your budget aren’t just yours — you need to involve everyone who has access to your bank account (at least).

If someone else in your household does most of the food shopping, it’s especially critical to get that person’s buy-in. Your food budget is almost always the area where you have the most flexibility for cutting spending — so if you expect your food shopper to be clipping coupons or looking for deals, tell them!

5. Don’t forget about Uncle Sam

Arguably the worst part about working for yourself is paying the taxes you accrue. When your employer isn’t withdrawing them from your paycheck to give the IRS, it can be really easy to forget exactly how much you’ll need in your bank account come April.

Take advantage of every last tax deduction you possibly can. The time and hassle it takes to do your own taxes might make it worth your while to find a good CPA — preferably one who has experience in your field. Your CPA should fully understand how important it is to get that mileage deduction and why you might not have a designated home office, for example.

6. Invest in the right tools

For me, this meant a decent computer so that I could actually get some work done instead of watching a spinning rainbow wheel of death.

For you, it might mean a new phone or some decent tires for your car. Whatever you need to do your job more efficiently.

If you find yourself waiting to complete a task — or unable to complete a task — because your equipment is faulty, then it’s time to upgrade.

Time tips

7. Keep track of your time

The freedom inherent in being an independent contractor is both heady and terrifying. You can spend your time however you want!

What are you doing with your days? Do you even know? Better learn fast if you don’t — and saints help you if you’re trying to work as any kind of independent contractor without using a calendar, either paper or digital. (I used/use both.)

8. Block your time

Finding new work isn’t very much fun, is it? I don’t care whether you’re talking about buyer or seller leads or proofreading gigs — it’s hard.

It would have been pretty easy to spend all my time doing fun things like playing on Facebook, seeing how high I could get my “like” count. Or tweaking my website, or designing business cards. Looking for work and selling my skills was quite literally the last thing I wanted to do.

Thankfully, taking time to handle the thing I didn’t want to do wasn’t a lesson I really needed to learn. I was terrified of failing and made sure that I included time every day to work on the tedious — frankly, hated — task of combing through potential gigs and applying for them.

I spent at least two hours — at least a quarter of my ideal working day — doing this. The other six hours of my working day were spent working on current projects (four hours or so) and tending to any administrative or marketing tasks I needed to address (about two hours).

And if I’d lost one of my “whale” clients, I would have immediately increased my gig search to four hours a day.

If you’re counting on working eight “billable” hours every day — maybe it’s time for a reassessment of where you plan on spending your time and where you need to spend it.

9. Niche yo’self

There are a lot of people who want to write for a living. Just like there are a lot of people who want to sell real estate.

You can be a jack-of-all-trades, someone who accepts any and all business that comes your way, no matter how big or small. There’s no shame in doing this — but you might have to spend more time looking for work.

On the other hand, if you develop a special skill set that you can hone and leverage, you’ll have people coming to you and asking if they can hire you.

My niche was writing about health insurance and workplace wellness. I landed on it because I’d been writing about healthcare before I decided to go independent, so I had some foundation of knowledge to use. There were gigs available — people and companies needed this skill that I had cultivated. (It sure didn’t hurt that I was writing about health insurance in the wake of thePatient Protection and Affordable Care Act, aka Obamacare.) And it’s a writing area without as much competition as, say, writing about music or food, which I’d also done.

By picking a relatively “unsexy” area in which to specialize, I was able to generate quite a bit of business. I got to know PR agents, who would send me exclusives on their clients. I had people read my byline in industry publications and reach out to me for ghostwriting help. And those niche jobs paid better, too.

What kinds of housing trends are happening in your city — or state, or country — that you can spin into a career?

10. Know what your time is worth

Quick — how much money do you make an hour?

If you can’t ballpark what an hour of your time is worth in dollars, then you should figure it out.

Know how much money you make and how many hours you work. Crunch some numbers.

And then use that knowledge to make informed decisions about how you spend your time and money. How much does it cost to pay someone to clean your house? If it’s significantly less than you’d command in an hour, maybe it’s a good investment to hire that person and spend your time working instead of mopping.

If you’re asked to volunteer some of your time, this will also help you understand the potential cost of those hours you’re devoting.

11. Learn to say no

If you nodded along when you read about how I wanted a better work-life balance, you might be a new agent. But if you laughed when you read that, then you’re obviously a seasoned professional when it comes to the independent contractor lifestyle.

You probably took this job to have more time with your family, not to burn the midnight oil seven days a week.

Where can you set boundaries in your professional life? Maybe it’s by limiting the number of hours you’re available a day, or maybe you need to rethink whether that needy client is really going to be worth the earned commission.

This is also where No. 10 is key. If you know what your time is worth, it’s a lot easier to decide where (and on whom) you’re spending too much of it.

What have you learned about managing time and money on your own? Leave a comment with anything I missed!

Email Amber Taufen

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