How Much $$ to Save Before Leaving Job for Full Commission

How Much Money to Save Before Leaving Job for Full Commission.png

Unless you have a spouse or very generous parent bank rolling your new career choice to become a real estate broker, you will need to save some cash before you leave your full-time job.

There are two reasons you need to save money before you leave behind the steady cash flow from your job.

1.      You will need to keep up with your lifestyle expenses (or a version of it). This includes mortgage and car payments, utilities, insurance, cell phone, FOOD, children’s school, etc.

2.      You will need to make an initial investment in your real estate career and save for monthly recurring business expenses.

Now that you know WHY you need to save, the million-dollar question is “How much?” While I cannot predict how soon your career will take off (because I know eventually it will), I can give you a conservative approach to prepare for what I typically see with my clients that are new brokers.

Lifestyle Expenses

Let’s start with lifestyle expenses. I suggest that you save SIX months of lifestyle expenses before leaving your job. This is NOT money is your 401(k). This is cold, hard cash that can be taken out of your savings account tomorrow if you need it.

While I typically see new brokers make their first commission within the first three months of starting, that commission check is usually not enough to cover their lifestyle expenses. The goal is to get in your groove by 3-4 months in and never need to touch that last two months of savings. The excess savings will roll right into your emergency fund if you don’t already have one. That’s a blog for a different day!

So how do you know how much your monthly lifestyle expenses are? If you don’t already have a personal monthly budget, it’s time to login to your bank account and get to crunching some numbers. I am providing you a worksheet to add up your expenses, all you have to do is put in the dollar amount for each expense category!

Business Expenses

The second reason you will need to save is for the investment in your new career. There are one-time costs when you get started and monthly recurring costs you will incur whether you make a commission or not.

Even if your spouse’s income covers all your lifestyle expenses, you should not make it a habit for your spouse’s income to support your business. You are not starting a new hobby - you are starting a new career that should be able to sustain itself without contributions from your personal budget. Therefore, you will still need to save about $5,000 for business expenses before you leave your job.

Initial Investment

Almost every new business owner has to make an initial investment in their business. If it didn’t cost money to get started, a lot more people would try to be real estate brokers. Making this initial investment shows you are serious about your new career choice! For your initial investment, you will need about $2,000 to pay for pre- and post-licensing, initial MLS dues, marketing, etc. By using the worksheet below, you can enter your state’s course and licensing fees to come up with the most accurate initial investment amount for you.

Monthly Recurring Business Expenses

The monthly recurring business expenses can sneak up on new real estate brokers. Even though you have not received a commission, you will still have monthly business costs. These include insurance, marketing, monthly MLS and board dues, office fees, etc. You will need to save about $500 for each of the first six months of business because you may not have the commissions income to cover your costs. That means you need to save about $3,000 for monthly recurring business costs. There is also a section in the worksheet that allows you to calculate monthly recurring business expenses that best fits your situation.


After calculating all your expenses, it wouldn’t surprise me if you need to save $20,000 before leaving your day job. While it would be best practice to have this entire amount saved before you leave your job, it may not be a realistic option for you. At the bare minimum, you do need cash to pay for your initial investment or else you won’t become a real estate broker.

If necessary, you can get a part-time job to supplement your savings deficit. Bonus points if it is a part-time job where you learning more about your new career or it provides a network of new potential clients, such as being an office assistant at your brokerage firm or driving for Lyft in the evenings. Who knows, you may find your first client while dropping someone off at their rental apartment!

How Much $$ to Save Before Quitting Your Job WORKSHEET!

Sample Budget.jpg

Drop questions below or let us know how much $$ you saved before becoming a real estate broker!