Thriving on Inconsistent Income: Finance Tips for the Commissioned Sales Person

by Linda P. Kester March/April 2018
Even top salespeople can run into trouble if they don’t know how to effectively manage their finances, and many can fall into the trap of living from commission check to commission check. Linda Kester shares the story of a coaching client who turned his financial life around after learning how to approach spending and saving from a place of strength.

One of my coaching clients, Keegan, is a top producing sales rep who couldn’t seem to get ahead financially. Between commission checks, he lived on credit cards and didn’t keep track of his spending. When he closed a deal, he used the commission to pay off his credit card balances. He’d been living this way for years. He got to a point where his commission checks were barely covering his living expenses, and he had meager savings. He was stressed and started lashing out at his coworkers. He became anxious over every deal because the money had already been spent. Despite his high level of sales success, his personal finance situation made him feel embarrassed and ashamed.

Living off of an inconsistent income is tricky. Keegan finally reached out to a friend, who gave him this advice: “Just don’t spend so much. Do the math, and set up a budget.” This sounds like an easy solution, but, for some people, budgeting is to money like dieting is to food — they feel restricted and end up spending even more. When creating a typical budget, you list your bills and spend what is left. Unfortunately, the idea of a budget brought up painful emotions for Keegan, and he couldn’t get himself to do it.

Managers frequently talk about the unlimited earning potential of a career in equipment finance sales. They don’t mention income can plummet when business is off, and inconsistent paychecks can make salespeople feel like they are riding on an emotional roller coaster.

Commission Plans

Keegan made good money. Originally, he thought, “I’ll just increase my sales to increase my income. Maybe I can earn more with a competitor.” We investigated salary and commission plans in the equipment finance industry. Unsurprisingly, they vary between funding sources, banks and brokers. Compensation can be a taboo topic, but knowledge is power, and several
websites are available to check if you are being fairly compensated. is the most well-known website for salary information, but it’s not the only option. Comparably, Payscale and are databases with millions of salary profiles.

Keegan works for a large lessor that sells the paper he originates. He typically builds between three to eight points into a transaction. The number varies depending on the size of the deal and the creditworthiness and rate sensitivity of the customer.

Keegan realized increasing his income wouldn’t solve his problems. In Mind Over Money, Dr. Brad Klontz writes, “If we want to improve our psychological and financial health, the solution is not to focus on making more money but instead on developing a better, healthier relationship with it.” Keegan was caught in a repeating pattern of yo-yo debt and overspending. He would pay down credit card debt and run it up again. Unless he changed his spending patterns and developed periodic savings, it would only be a matter of time until his cards were charged up again.

To stabilize his financial situation, he had to stay out of debt. He was good at getting out of debt, but he didn’t know how to stay out of it. The first thing he did was track his spending, but getting him to do this was like reining in a wild horse — he violently resisted. He was used to buying whatever he wanted with no accountability. He had been unconscious about his money behaviors, and when he finally got the hang of tracking what he spent, his financial fog cleared.

Karen McCall writes in her groundbreaking book Financial Recovery: “Tracking is a way of telling yourself the complete, unvarnished truth about your money behaviors as well as acting with financial integrity.” Once he realized tracking his spending was just another tool in his toolbox and not a form of self-torture, he started writing everything down. Then he upgraded to a computer-based system. There are many money management software programs on the market like Mint and Quicken. He found Money Minder Online to be the easiest and friendliest to use.

Next he made a spending plan. By planning his monthly expenses before he spent the money, he was able to become proactive without feeling deprived. The hardest step was not using his credit cards for personal expenses. He resisted doing this, too, until he realized no magical solution was going to appear. He had to make a commitment and alter his lifestyle. As Will Rogers said, “When you’re in a hole, stop digging.” The only way Keegan could buy anything was with cash or a debit card. He longed for a sense of financial peace and freedom, so he made the changes.

After that he started a savings plan. Keegan had been contributing to his IRA, and he had tried to have a savings account, but he was disappointed in himself whenever he would pull the money out of the account. He thought savings should never be touched. He discovered that there are three different categories of savings:

  1. Periodic Savings
  2. Safety-Net Savings
  3. Investment Savings

He needed periodic savings to break free from living off of credit cards between commission checks. When his next commission check came in, he put money into a periodic savings account. This money was to be used for non-monthly expenses like appliance/car repairs, vet bills, or membership dues. One of the reasons Keegan couldn’t get ahead was that he was always whipping out his credit card for unplanned expenses. Once he had a periodic saving account, he could pay for intermittent expenses without resorting to credit. Setting up this account freed him from the debt cycle. This one change, having a savings account that he contributed to and withdrew from, was a game changer. Periodic saving combined with not using his credit cards began the transformation of his financial life.

Keegan used his spending plan to determine how much money he’d need if a recession hit and his commissions dried up. He put this money aside into his safety-net savings account.

Once he started doing this, he was able to earmark some of his investment savings beyond his IRA and into shares of a start-up company. Finally, he felt like he was an adult, and he was happily working with his money from a position of strength rather than a position of fear.

Keegan is not alone with his struggles. A lot of sales reps have money disorders. They tend to be in a fog about expenses, earning and debt. It’s one of the reasons they are good salespeople. They are often better at communication and intuitive people skills than left-brain skills. Some reps don’t even know what financial wellness is supposed to look like. Dr. Klontz lists the following factors that contribute to a healthy financial life:

  • Maintaining reasonable and low debt
  • Having an active savings plan
  • Having and following a conscious spending plan
  • Lack of conflict with family/partner around money
  • Experiencing high levels of financial satisfaction
  • Experiencing low levels of financial stress

Instituting techniques to gain control of your money will also positively affect your sales results. Reps who have sound money behaviors report more enjoyment, satisfaction and fulfillment in their jobs, which leads to increased sales.

Sales managers and coaches should realize that even top performing reps could struggle with money issues. Offering personal finance tips and strategies can strengthen your team and your bottom line.

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