Are you a high earner or a real estate investor?

Most people would assume that you have your finances all figured out, but that’s not necessarily true.

You know that having a high income doesn’t mean that you are good at managing your money and credit. That’s a different skill than the ones you use to bring in the big bucks.

In this video, I explain when and why high earners, including real estate investors are served by hiring a financial coach.

Transcript:

You’d think they had it all figured out, but they’re a lot like everyone else.

I have to start with addressing the money myth that underlies the assumption that high earners and sophisticated real estate investors are on top of their finances, don’t have excessive debt, and have high credit scores. Remember that someone’s income doesn’t give you any insight into how they manage and spend all the money they make. Earning a lot of money doesn’t automatically mean that you’re good at taking care of money. Big money makers can, and often do, still have unhealthy relationships with money.

On top of that, high earners and real estate investors tend to have more complicated finances. There can be a lot of expenses, debt, but also assets, and accounts, and not everyone comes equipped with the tools to handle that complexity. Financial fitness does not increase with income, it’s a function of effort and skill, not money.

I get to witness all of this up close and personal as a financial coach and especially as a mortgage loan officer. I’ve seen doctors and bankers and real estate investors with dismal credit – usually because of high credit card balances, or late payments. For some of these folks with a lot of accounts and properties, they’re simply too disorganized or distracted from taking care of their finances. And I get it, there is a constant pressure, either from external pressures or internal ones, on constant growth and expansion. It’s about obtaining more and more, getting bigger and bigger, having newer and newest. It’s what the entrepreneurial spirit looks like in a lot of people. This risk, the overleveraging, living on the edge. Basic money management feels boring and beneath them. They can feel that something is wrong with them if they’re worried about costs and spend any energy on something silly like cost-cutting. A true entrepreneur would just make more money instead of worry about costs.

But constantly looking towards the next deal  you’re working towards or making more money can mean that what you’ve already obtained gets neglected. High-earners and real estate investors need support and accountability in doing something that doesn’t come so naturally or feel very exciting – doing the mundane tasks that comprise smart money management. I get it, this stuff isn’t that same dopamine rush as closing a big deal, but failing to take a breath and doing the basics with money – like budgeting, tracking, and planning, can have some extremely unfortunate consequences.

When you’re not watching your spending and your debt carefully, you can miss bills and pay them late, which is especially dangerous if it’s a mortgage payment, or you can miss one altogether and it ends up in collections. The credit card balances get way higher than you realize, and all of these drop your score down. Now your next home purchase is more costly because your bad credit means you’re stuck with a bad rate. Or worse, I’ve seen some investors have their credit crash and burn so badly that they no longer qualify for a loan, and they only find out once they’re in escrow! Even if a financially unfit high earner or investor qualifies for a loan, getting it done can be the biggest pain because they’re so disorganized. It creates extra issues, stress, delays, and sometimes sinks the loan altogether. It sucks.

There’s no shame in getting support for where you’re weak, and if money management is not currently your strength, then reach out for help. It’s not something you can ignore. It will become your achilles heel and potentially stop your growth dead in its tracks. Worse, it’s not unheard of for high earners and sophisticated investors to go under and lose it all due to overspending or just poor money management habits.

But here’s the thing, this can’t just be hired out to a bookkeeper, accountant, advisor, or anyone. These people can help but the high earner or investor needs to be involved and care about what the numbers in the reports mean. You can’t hire a personal trainer to get fit for you, only to show you how it’s done and give you tips to get you there faster. Someone that helps with your money, can maybe track your money but they can’t get financially fit for you. So I’m not saying you can’t hire help with your money, for some people that makes total sense. But I’m saying that you still need to be financially fit yourself so that you’re not unknowingly taking too much risk or ruining your credit so that you don’t qualify for the next loan you need or you make it unnecessarily more expensive of a loan because your credit is bad. Being financially fit keeps you from wasting time and resources that you don’t realize is being leaked out – and financial leaks tend to grow bigger when they’re not caught when they’re small. Being financially fit helps you run a leaner operation that is more nimble and faster and easier to respond to changes in the economy or your own goals. It helps you maintain control of your money and business rather than feeling like your business controls you. It reduces stress and makes your business more fun to run.

Financial fitness, at first glance, may not be appealing to high earners and real-estate investors, but once they experience it, they never want to go back to what their life and business looked like before they got financially fit.

Thanks for watching and I’ll catch you in the next one.