Living off only commission can be quite stressful for some people. With the inherent irregular income, you’ll never know how much you’ll end up with month-to-month, or even week-to-week.
How to Live on Only Commission
Below we’ll go over tips on how you can successfully make a living off only commission. These tips can help you create a financial roadmap for your life.
1. Determine Your Fixed Expenses
Your fixed expenses are things like your housing, car payments, phone, utilities (depending on your area), subscriptions, babysitting, daycare, etc.
Once you’re able to determine all of your fixed expenses you should do the following:
- Look at what subscription services you aren’t using and cut them out or cancel them.
- Negotiate where you can to get a lower monthly fee in your phone or your utility bills by asking for special offers, price shopping, etc.
These bills won’t change much month to month, so cutting out what you can and negotiating lower bills elsewhere can save you a lot of money over the year.
Housing and transportation account for almost half of one’s expenses. If you can downgrade to an economical car or a smaller house closer to work, it may be worth it to keep your expenses low.
2. Determine Your Irregular Expenses by Tracking Your Spending
Your irregular expenses include things like eating out, groceries, entertainment, electronics, gas.
These can be hard to track on your own so we recommend you use an online personal finance tracker that can help categorize your spending and see where you’re spending your money.
Cash flow can especially be a problem when it comes to living on only commission, so finding a service like https://mycommission.com can also be helpful in planning your budget.
Once you have 2-3 months of data, you’ll start to see the trends where you’re spending a lot of your money. With this data, you can budget a certain amount of your income to the various categories, or take the steps to cut down on spending in a certain category.
3. Save up 6-12 Months for All of Your Expenses
In order to alleviate some of the financial stress when you’re working with variable income, you will want to save up aggressively anywhere from 6-12 months for all of your expenses.
Another thing would be to set up an emergency fund strictly for, well, emergencies, whether it’s for medical or housing or unexpected bills.
It’s important that you set a buffer of anywhere between 30-40% of the total budget to account all of your expenses.
4. Set Your Income Goal
Once you have your total amount of expenses plus the 30-40% buffer, you can effectively determine how much you need to make in order to cover your expenses.
5. Review Your Budget Weekly/Monthly/Quarterly
You’ll want to review your budget weekly to ensure that everything is on track. Depending on the systems that you set up, including setting up automatic withdrawals and automatic bill pay, you can get it down to only having to check and anticipate expenses weekly.
Monthly and quarterly checks give you more of a bird’s eye view to show where your spending habits are shifting towards.
Working on Only Commission Doesn’t Have to be Hard
If you’re interested in learning more on how to make a living on only commission, check out more of our how-to articles on our blog.
