As a successful sales professional, you have the potential to earn a significant amount of income at any given time. Between your salary, equity compensation, bonuses, and other variable compensation, you can accumulate a generous amount of wealth in a relatively short period of time. Hypothetically, you can earn more in a quarter than some individuals in more traditional careers can accumulate in years.
However, there is a tradeoff. This, of course, is no news to you, but you work and operate in a risky profession. A number of extant factors can disrupt your high earning season. There will be times that elements outside of your control will impact the level of business you are able to generate. A corporate blunder, a successful up and coming competitor, or even a market drop could suddenly affect your ability to continue earning what you’ve grown accustomed to.
The challenge for sales professionals, then, is learning how to balance high-earning periods with those where income isn’t as abundant. Essentially, it’s like planning for a drought in the middle of a flood.
Sales professionals simply need to save more, in general, than the average investor to hedge against the vulnerabilities their job presents.
Preparing for the Unpredictable
Even though the financial markets, and largely the economy as a whole, have been on a winning streak over the past decade, no one can predict why or when this will change. When the next recession hits, big businesses and corporations will naturally be looking for ways to cut back and save. This could not only affect your job security, but the value of any company stock you own.
Is your budget and long-term financial plan prepared to handle a recession? Would you be able to maintain your current lifestyle if you were out of work for a year? Saving robustly ahead of time helps to prepare for this possibility and protects you and your family should you have to spend any notable amount of time looking for a new position.
Protecting Against Emergencies
Doesn’t it seem that financial emergencies tend to occur right at the wrong moments? Would you be able to handle significant extra, untimely expenses in your lower earning season? If the answer is no, then you simply aren’t saving enough—or perhaps you aren’t saving the right way. You always want to have a balance of liquid savings—that which can be accessed immediately—and other savings that is invested and working to earn you some additional income while also being protected from market risk.
While the general rule of thumb is to have three to six months of savings set aside in a liquid emergency fund, this rate typically should be higher for sales professionals. Sales professionals should aim to have at least twelve months of living expenses available to them at all times in case sales are slow or you suffer a loss of employment.
Creating Wiggle Room for Leisure, Travel, and Entertainment
Saving isn’t always for emergencies. It can also be for last minute opportunities that arise you haven’t budgeted for. I have a client whose children began the 2020 school year remotely. Since both he and his wife were also working remotely, they decided to spend the month out of state in a place with warmer weather. Because this sales professional had a hefty savings, he was able to up and make this exciting opportunity with his family. Extra savings not only protects against financial ruin in times of emergency, but gives you flexibility to live life on your own terms.
The Bottom Line
Risk is something you are well familiar with as a sales professional, but putting your financial life at risk should never be an option. Even if you have spent the last five, ten (or even more) years earning a praiseworthy income, there is no guarantee in the sales world that this will last. You must adjust your savings rate to prepare for the high volatilities inherent in your profession.
Unsure if you’re saving enough? Contact me today to learn more about how Meenes Wealth partners with sales professionals and executives to prepare for all the possibilities of the future. We will take a look at your financial picture and decide on a savings target that allows you to enjoy your earnings while also preparing for the unexpected.