Sales is an already stressful business to be in. If you don’t sell, you don’t make money. It’s a simple statement that can cause the most seasoned veterans to stress out, especially when starting with a new company/product. We all know the importance of saving money for not only a rainy day, but for retirement as well. When doing some research on the saving habits of Americans, I came across some extremely disturbing facts on www.creditdonkey.com.
26% of Americans have zero money saved. Zero. Nothing for emergencies, nothing for retirement. Just…nothing.
41% of Americans have less than $500 saved up.
On top of that, 36% have not started a retirement fund yet.
In 2014, the average savings rate was 4.4% of someone’s salary.
38 million households live paycheck to paycheck – meaning that they spend 100% of each paycheck.
59% of Americans said that running out of money is their number 1 fear.
So, we look at these statistics and have to wonder – how many of these folks are salaried employees who make a guaranteed amount? I’d wager that it’s a good amount. Unfortunately for us – we are not salaried. We are payed based off of performance, which means that some weeks/months, we might not get paid at all. Therefore, it’s crucial that salespeople know the importance of saving money and that they have superb money management skills.
Saving money can be very difficult if you work in sales. Some months, you might make a ton of money, while other months, you might be in danger of not paying your rent. This massive fluctuation in income can stress anyone out. I have seen salespeople who come in to work and are freaking out because of money problems. Overall, this will only hurt your performance.
Because of this and because of the average savings statistics that I stumbled across, we will be sharing tips on how salespeople can save money while working a job with an extremely volatile income.
Create a budget as if you were barely hitting your quotas
It’s easy to look at your potential salary as a salesperson and think that you can now automatically afford that Lexus. It’s even easier to have one great month and budget as if every month will be like that.
Unfortunately, as every seasoned sales rep knows, this is a terrible trap to get caught in.
If you budget as if you are absolutely smashing your numbers every month and are making 200k/year, you’ll have zero wiggle room once you crash and burn for a month. Even if you have a high yearly income, it won’t matter if you cannot afford your $700 car payment this month because you missed your numbers.
Budget as if you will barely hit your quotas. Even if you smash it, you’ll have a ton of leftover money to fall back on. If you have a bad month, then oh well! You budgeted for that anyway!
Cut out unnecessary expenses
Landline phones, cable TV, that third backup car..all these things are basically unnecessary expenses that can be trashed if needed. We cut out DirecTV in lieu of Netflix and Hulu. It’s not that we couldn’t afford it, but rather, we found that we NEVER watched TV and got all of our entertainment needs from Netflux and Hulu…so why pay the extra $125/month for satellite TV?
Start contributing to a 401k plan
It’s a no-brainer to do this, especially if your company matches your contributions. However, as noted, 36% of people don’t do this.
The math goes like this: Let’s say that your company will match a 6% contribution. If you contribute 6% of your pre-tax salary to a 401k plan, you will effectively be saving 12% of your salary for retirement. If you save 12% of your salary for 30 years, we are taking about some serious money.
Now, let’s look at compounded interest and growth potential.
If you just save 12% of your income and let it sit there, it won’t keep up with inflation and will not grow. A 401k plan allows for your money to grow with the market. My plan has been averaging 5-7% growth per year, which adds up in ways you could not even imagine.
Not only that, but compounding interest, which Einstein called the eighth wonder of the world, will carry you to a fund value that you could not even imagine.
I went through and did a calculation as to how much a 50k/year earner would have if they contribute to their 401k starting at age 25. All things held constant, the portfolio value would be around $1.2 million by retirement age!
If you go to this website and do the 401k calculator, you can see how much you can potentially have with your salary: BankRate 401k Calculator
Sign up for a small automatic computerized investment portfolio
Traditional mom & pop investment funds were tricky – they required you to talk to a financial representative, often required a minimum first-time deposit of $1,000 (sometimes $5,000), and had high yearly fees.
You might not have $5,000 sitting in the bank to invest all at once. You might not have the time to spend 30 minutes on the phone with a financial rep. You might not want to pay the ridiculous annual fees for them to manage it. Whatever the reason – there is a solution.
Phone apps, such as Stash and Acorns, have made investing easy. All you do is link your bank account to the app and it does the rest for you.
I use Acorns Investing. It’s great because it takes the “spare change” from each purchase you make, rounds it up, and invests it in the stock market. You can also set it up where it automatically withdraws money from your bank account each week to invest. It can be as little as $1 per week. However you decide to do it – it adds up after a while. I have been doing it for 7 months now and have $1,257.12 saved up! It’s basically a way for you to save money without even noticing. It also shows your estimated portfolio worth after 20 years – mine is estimated at $134,557. Not too shabby for a spare change investment app!
Obligatory note: I am not a licensed investment adviser or tax professional. I am not liable for any losses incurred by any parties. My results are pretty awesome, but may not reflect your results. The market goes up and down!
Join a personal finance group/forum
In the world of saving money, it pays to have help. It has dramatically helped me to join a forum of people who are looking to save money and get their personal finance lives back on track.
Any time I have a question about money or personal finance, my go-to forum is always the Personal Finance Subreddit. It’s loaded with great tips and tricks on saving money and making budgets.
Know that just because you make a lot of money, you are not immune to running out of it
We see it every say – famous celebrities and lottery winners going bankrupt. It’s easy to get sucked in to a lifestyle of luxury when the going is great. No matter how much you make, save money and be smart with it. You never know what might happen.
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Author: Jason Karaman
Hello! I’m a marketing, sales, and customer service expert, trainer, author, and doer. I live in the South Carolina Lowcountry with my wife, Ashley. I enjoy reading (history, philosophy, and science are my favorite topics), writing, hiking, kayaking, and all things beach. For media inquiries, send an email to JasonKaraman@ExpertCaller.com