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What to Do with Your Next Commission Check

By Matt Mahoney

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What To Do With Your Next Commission Check

You closed the deal and popped the champagne, and your next commission check is on it’s way.  It’s nice to have money, but what are you supposed to do with it?  It’s always great to have extra cash, and while you may be tempted to spend it, I’ve compiled a list of things to do before you treat yourself.

  1. Build an Emergency Fund

Building an emergency fund of savings is one of the smartest things you can do.  Looking back at 2020, remember that the entire economy shut down in two weeks and layoffs followed quickly after.  It can happen any time and for any reason.  I recommend building an emergency savings account with 6 months of expenses.  To estimate this, add up your monthly rent/mortgage payment, car payment, insurance payment, student loan payment, and living expenses and multiply that monthly amount by 6.  This buffer should give you plenty of time to find a new job and get back on your feet. Savings accounts like give some of the best rates in the market.

  1. Pay Down Debt

Debt comes in many different forms and can be confusing.  Low rate debts, like your car payment or mortgage payment (generally less than 5%) are healthy and shouldn’t be rushed to pay down.  However, credit card debt and personal loans with high rates (often 20% or higher) should be paid down immediately, as you can be spending hundreds of dollars a month… essentially making a donation to your bank.

  1. Fund your Retirement

Once you’ve saved enough money for your emergency fund and paid down your high interest debt, saving for retirement should be your top priority.  Experts recommend saving at least 10% of your income toward retirement, but if you want to maintain your current lifestyle you should start as soon as you can and aim to save 15% of your income.  Always take advantage of your company’s 401k match… if you don’t, you’re leaving free money on the table.  If you’re nearing retirement and aren’t comfortable with your retirement account balances, you’re allowed to make extra “catch up” contributions after you’re 50.  While the investment options can be confusing, you can always use a target date fund that manages the portfolio risk for you. Consulting a financial advisor can be a great move!  Save now so you can enjoy vacations and a nice lifestyle later!

  1. Save for short term goals

Once you’ve completed steps 1-3, focus on things you want to do.  Whether it’s remodelling your kitchen, going on vacation, or buying your first home, you’re going to need cash.  Setting aside extra money every month adds up quickly!  Keep any money that you’ll need to use in the next two years in a savings account or CD, not an investment account.  You don’t want the market to crash the year you need the money!

  1. Invest for the long term

Setting up a brokerage account is easy and puts your money to work for you.  Most experts recommend investing for long term goals if you don’t need the cash for at least two years.  Historically, the S&P 500 has averaged 10% returns annually, which is 20 times more than what top savings accounts are currently earning.  Putting money into the stock market lets it grow over time and helps you save for things like college for your kids, or the lake house you always wanted.  Almost all major platforms allow for free trading and have no monthly fees, and we recommend investing to anyone who has the extra cash!  Fidelity, ETrade, and Robinhood all offer great platforms to investors looking for an entry point into the investing market.


Automate your savings.  It’s easy and it takes all of the guesswork out of it.  Set up direct deposit so certain percentages go to your checking, savings, retirement, and investments.  If you never see the money in your paycheck, you won’t be tempted to spend it and you’re more likely to reach your financial goals.  Set it and forget it!

Following these steps will enable you to become financially successful and reach your goals!  While I can’t guarantee that you’ll be a millionaire or buy a mansion, I know that these steps will put you on the right path.  Good luck on your financial journey!

Important to note, while I am not a financial advisor, I know that these steps are tried and true and lead many to financial success and wellness.  If you have any questions, reach out to us and we can put you in touch with some great financial advisors we work with.  No one paid us for this article and I really do believe in the companies I’ve listed, as they’re the ones I use myself. 

Disclaimer: Matt Mahoney is not a licensed financial advisor and this should not be taken as professional financial advise. Please consult a licensed financial advisor before making any decisions with your money

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