Armageddon

Enterprise Account Executive

Do you factor "commission" into your budget?

I was working on retirement planning over the weekend and set up a budget based on my income that I am going to try to stick to.

One question I'm running into is, "what role should my commission play in my budget planning?"

Because commission isn't guaranteed, I feel like I should budget based on my base and treat commission as a bonus- however doing this will leave me pretty strapped if I try to stay within a budget based purely on my base salary.

Do you all include a % of of your OTE when calculating your budget, stick to your base, or include your full OTE?

Thanks!

🍾 Commission

27 comments

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braintank

Politicker

Enterprise Account Executive

Live off your base. Splurge with commission.

boredAnti

Tycoon

That One Guy

I only factor in a minimum amount of my commission into my budget. Anything over that minimum number I know I'll make is extra and then added into the monthly running budget accordingly.

Edit to elaborate:
I know for a fact that I will get a certain amount of commission from my book of business and this is separate from my true commission, but still commission all the same.

DomeToDollars

Executive

CRO

Totally agree here

jefe

Arsonist

🍁

Always budget off base. Everything else is gravy - for fun or for investment.
Only your guarantee is guaranteed

coletrain

Politicker

Account Executive

I live off of below the base, everything else is gravy

Retired Sales Professional

Question, if you calculate a certain percentage or all of your commission to lets say cover your mortgage, utilities, food, clothing and so forth and like you said commission is not guaranteed wouldn't you fall short of your budgetary commitment. This would leave you scrambling to make up the difference if you fall short on your mortgage or anything else. I would personally base my budget on what is guaranteed to pay my primary needs and look at commission as icing on the cake to do anything extra. This is only my opinion. All the best.

CuriousFox

WR Officer

🦊

@poweredbycaffeine has a pretty good system.

poweredbycaffeine

WR Lieutenant

☕️

Commission is not a hard budget line item. It’s a discretionary line of income that can he flexed to achieve whatever goals you have set at that time.

Lately I’ve been on an annual bonus structure as a leadership team member, but that doesn’t change the fact that I put 10% into a fun account and the rest spread across my 1) debts 2) Long-term investments and 3) short-term investments.

This priority strategy sets me up for a long-term financial outlook built on security while also enabling me to enjoy the hard work with a watch, bike, espresso machine, ski trip, etc.

oldcloser

Arsonist

💀

This is solid, except riding the bike up the mountain to the ski trip while carrying the espresso machine can be a bitch. I've learned to plan around the logistics.

poweredbycaffeine

WR Lieutenant

☕️

You’re describing my average Saturday morning.

Kosta_Konfucius

Politicker

ERP Sales

Budget off your base and guaranteed commission

Sunbunny31

Arsonist

Sr Sales Executive 🐰

Budget off of what is guaranteed.
And don't forget to put money into savings - 401(k), 529, mutual funds if you're more hands on - and don't touch it.

HappyGilmore

Politicker

Account Executive - SMB

I do not, just budget off my base.

Pachacuti

Politicker

They call me Daddy, Sales Daddy

Unless you can count on a specific number monthly, don’t count it into your equation.

Heisenbum

Big Shot

Senior Account Executive

My base isnt quite enough to live off of solely. But I basically budget like ill make about 80% of my variable comp. Im usually between 80-110% so it works well.

HVACexpert

Politicker

sales engineer

Yeah it’s tough not to count your chickens before they hatch so to speak, but in the end you are only guaranteed your base so it’s best to budget off of that or as close to it as possible. Then all the commission is gravy.

pirate

Big Shot

Account Executive

If you are feeling strapped, try and see where you can downgrade? What you can sell, what can you get rid of, what can you do on the side, any hobbies that could turn profitable in 10 years time?

Diablo

Politicker

Sr. AE

I go by base so I know the minimum I will be saving. Commissions are all over it.

ThatNewAE

Big Shot

Account Executive - Mid enterprise

I don’t. I often (in this market and economy) don’t factor commission into my budget. The idea is very very simple - I don’t want to overspend if I am not sure I’ll make that much.

GDO

Politicker

BDM

The bear minimum. For me it’s also sad since over 65% is taxed away

Sunbunny31

Arsonist

Sr Sales Executive 🐰

Where do you live? My commission gets taxed higher on the monthly paycheck, but if I've managed correctly, I'm still getting overall taxed or effectively taxed somewhere between 25-35%. Basically, if you overpay, you get it back. But I'm in the US.

GDO

Politicker

BDM

Belgium. 🇧🇪 world champion in taxing people.

I’d be long gone if I could. But my family and friends are too important to me

Armageddon

Opinionated

Enterprise Account Executive

Wow! I thought taxes were bad here in the States... Sorry to hear that, that seems criminal :(

JustGonnaSendIt

Politicker

Burn Towns, Get Money

For annual planning and basic operational expenses, I stick to my base only.

I plan to hit my saving and investing goals on the base. That does mean I am introducing some forced scarcity that many people will struggle to rationalize.

On a monthly budgeting basis, I can factor in any expected commissions to pile up cash for long-term purchases, or do other projects (house improvements, other lifestyle inflation items).

I talk to reps nearly every day that are SWEATING the deal close timeline and getting their commission in a certain time frame to pay for something they've already committed to. Don't be like these reps. You will enjoy selling far more when the commission drops and it's not already lined up to go straight back out the door.

There are a number of schools of thought on how to plan for retirement / your wealth building journey. I am a big fan of The Money Guy show on Youtube.

My goal is to replace my W2 income with investment dividends as fast as practically possible. You may have other goals or constraints. But planning to live on your base and make commission the slush fund to upgrade your life and have fun will leave you far less anxious in the long run.

Beans

Big Shot

Enterprise Account Executive

Nope.
Use it to invest, throw chunks at the mortgages, and the occasional splurge.

FranchiseSalesQB

Politicker

Franchise Sales QB

If you hit quota consistently then maybe for a payment here and there but @braintank is on the button.

countingmyinterest

Politicker

Account Executive

absolutely the fuck not.
Live off your base, invest the rest.
I lived off my base in VHCOL areas. Doable, but might be a bit tight.