But salespeople with commission-based salaries often have trouble tending to be optimistic which in turn becomes the problem that needs to be tackled. Not focusing on their current position they are already picturing how they'll spend the entire commission nor bothering to invest them for future safety. Can they risk going into debt during lean times or save for the future? An honest look into their current personal finances, and by looking at the future they can escape the trap of their own making which they shouldn't be walking into in the first place.
What's Your Cash Flow?
To stabilizing your finances do a monthly cash-flow projection on a spreadsheet which shows ups and downs. The cash-flow sheet has a positive influence as when put down in writing it becomes a goal sheet. Goal sheets help in tracking actual outlays and makes sure nothing substantial is omitted. Consulting an accountant can assure you that you're creating a financial analysis sufficient to serve as the foundation for a sound plan.
Make Two Budgets
The next step is to create a spending and savings plan that will enable you to cover current expenses and save for a house down payment, retirement and other major goals while weathering the downs and ups of life on commission
There is a need to create a savings plan to weather ups and downs that follows spending a life on commission. It will enable to cover current expenses and save for a house down payment and retirement. Two budgets are better than one in sensing danger when your income is sporadic. When money is slow in coming you can switch to baseline budget to make things happen. Or you may save a set percentage of each commission for which you'll need a buffer in your spending account to get you through the lows.
Without Outside Help
With each check set aside a percentage based on your budget for savings and investment through automatic transfers from your checking account to a savings account. Do it without outside help to oversee your financial arrangements -- including tax liabilities. This can be done in several ways.
Firstly, prepare a list of monthly expenses such as mortgage or rent, car payment, insurance, medical expenses, gasoline, utilities, food, entertainment, personal expenses and miscellaneous expenses. This gives a picture of how money flows through your bank account and helps to cut back spending in less important areas to provide a monthly retirement fund deposit.
You can also create a budget based on the spending decisions you made to set aside each month a reasonable amount for your pension. It may not be large enough for meeting the requirements of a pension fund but it show how important it is to budget and reasonably enough to put away each month.
Hard Decisions
Grappling with your finances doesn't ensure success as baseline budget could exceed average income over a period spoiling your well laid out plans. This calls for some hard decisions.
