What to Do With a 6-Figure Commission Check
The Problem With Big Commission Checks
You close a big deal. The commission check hits your account. It's more money than you've ever seen at once.
Your first instinct is to spend it. You've earned it. You deserve it. You've been grinding for months, and finally, it paid off.
But here's the problem: commission checks aren't salary. They're variable income. They're taxed differently. They're unpredictable. And if you treat them like salary, you'll make mistakes that cost you years of financial progress.
Here's what to do with a 6-figure commission check — and what not to do.
Step 1: Set Aside Taxes First
Before you do anything else, set aside taxes.
Commission checks are taxed differently than salary. Your employer might withhold taxes, but they might not withhold enough. And if you're an independent contractor or receive commission outside of your base salary, you might owe quarterly taxes.
Set aside 30-40% for taxes. This might seem conservative, but it's better to over-withhold than under-withhold. If you're in a high-tax state or high tax bracket, you might need to set aside even more.
Open a separate savings account for taxes. Don't mix tax money with your regular savings. When tax time comes, you'll have the money ready. You won't have to scramble or dip into other savings.
Consider quarterly estimated taxes. If you're receiving large commission checks regularly, you might need to pay quarterly estimated taxes. Talk to a tax professional to understand your obligations.
The worst mistake you can make is spending your commission check and then realizing you owe $40,000 in taxes. Set aside taxes first, then think about what to do with the rest.
Step 2: Replenish Your Emergency Fund
After taxes, replenish your emergency fund.
Sales is volatile. You might have a great quarter, then a terrible one. You might miss quota. You might get put on a PIP. You might get laid off.
Your emergency fund should cover 6-12 months of expenses. For sales professionals, this is especially important because income is variable. You need a larger buffer than someone with a stable salary.
If your emergency fund is low, top it off first. Don't invest. Don't spend. Don't do anything else until your emergency fund is fully funded. This is your financial safety net. It's what allows you to take risks, negotiate better, and avoid desperation.
Separate emergency fund from other savings. Your emergency fund should be in a high-yield savings account, not invested. It needs to be liquid and accessible. It's not for growth — it's for protection.
Step 3: Pay Down High-Interest Debt
If you have high-interest debt, pay it down.
Credit card debt, personal loans, high-interest student loans — these are financial anchors. They cost you money every month. They prevent you from building wealth.
Pay down debt with interest rates above 6-7%. Below that, you might be better off investing, but high-interest debt should be eliminated first.
Don't just make minimum payments. If you have a $20,000 credit card balance at 20% interest, you're paying $4,000 per year just in interest. That's money that could be invested or saved.
Consider the psychological benefit. Debt creates stress. It limits your options. Paying it off gives you freedom and peace of mind. For sales professionals, this is especially valuable because it reduces financial pressure and allows you to take calculated risks.
Step 4: Invest for the Long Term
After taxes, emergency fund, and debt, invest for the long term.
Max out your 401(k) or IRA. If you haven't maxed out your retirement accounts for the year, use your commission check to do it. This reduces your taxable income and builds long-term wealth.
Invest in low-cost index funds. Don't try to pick stocks or time the market. Invest in broad market index funds that track the S&P 500 or total stock market. This is boring, but it works.
Don't invest everything at once. If you're investing a large sum, consider dollar-cost averaging — investing a fixed amount regularly over time. This reduces the risk of investing everything at a market peak.
Think long-term. Commission checks are variable, but investments compound over time. A $50,000 investment today could be worth $200,000+ in 20 years if it grows at 7% annually.
Step 5: Spend Intentionally, Not Impulsively
You've earned the money. You should enjoy it. But spend intentionally, not impulsively.
Wait 30 days before making large purchases. Big commission checks create emotional highs. You want to reward yourself. But impulse purchases often lead to regret. Wait 30 days. If you still want it, buy it. But most of the time, the urge passes.
Separate reward from lifestyle inflation. It's fine to reward yourself for a big win. But don't let one good quarter fund a lifestyle you can't sustain. If you buy a car or upgrade your apartment based on one commission check, you'll be in trouble when the next quarter is slow.
Spend on experiences, not just things. Research shows that experiences create more lasting happiness than material purchases. Use some of your commission check for travel, experiences, or things that create memories.
Don't finance your lifestyle on upside. Your base salary should cover your lifestyle. Commission should fund savings, investments, and occasional rewards. If you're financing your lifestyle on commission, you're setting yourself up for financial stress.
Step 6: Build Optionality
Use some of your commission check to build optionality.
Invest in skills or education. Take a course, get a certification, or invest in professional development. This increases your earning potential and gives you more career options.
Build a side business or investment. Use some of your commission check to start a side business or make an investment. This creates additional income streams and reduces your dependence on commission.
Create financial runway. The more financial runway you have, the more risks you can take. You can negotiate better. You can walk away from bad situations. You can take calculated risks that lead to bigger opportunities.
Don't put all your eggs in one basket. If your entire financial life depends on commission from one job, you're vulnerable. Build optionality so you have choices.
What Not to Do
Here's what not to do with a 6-figure commission check:
Don't treat it like salary. Commission is variable. Don't assume you'll make this much every quarter. Don't finance your lifestyle on it.
Don't ignore taxes. Set aside taxes first. Don't spend money you'll owe to the IRS.
Don't make impulse purchases. Wait 30 days before making large purchases. Don't let emotional highs drive financial decisions.
Don't inflate your lifestyle. One good quarter doesn't mean you can afford a more expensive lifestyle. Base your lifestyle on your base salary, not commission.
Don't invest everything in risky assets. Don't put your entire commission check in crypto, individual stocks, or other risky investments. Diversify and think long-term.
Don't skip the emergency fund. Your emergency fund is your financial safety net. Don't skip it, even if you want to invest or spend.
The Framework: Taxes → Emergency Fund → Debt → Invest → Spend
Here's the framework:
- Set aside 30-40% for taxes
- Replenish your emergency fund (6-12 months of expenses)
- Pay down high-interest debt
- Invest for the long term (401(k), IRA, index funds)
- Spend intentionally, not impulsively
This framework ensures you handle commission checks responsibly. It protects you from taxes, builds your financial foundation, and allows you to enjoy your success without sabotaging your future.
The Long Game
Big commission checks are exciting, but they're not the goal. The goal is building long-term wealth and financial security.
Treat commission checks as opportunities to build your financial foundation. Use them to pay down debt, build savings, and invest for the future. Spend some on rewards, but don't let one good quarter fund a lifestyle you can't sustain.
The sales professionals who build lasting wealth aren't the ones who spend their commission checks. They're the ones who use commission checks to build financial security, reduce risk, and create optionality.
That's how you turn commission checks into lasting wealth.
Disclaimer: This content is for informational purposes only and does not constitute financial, tax, or legal advice. You should consult with a qualified financial advisor, tax professional, or attorney before making any financial decisions. Individual circumstances vary, and this information may not be suitable for your specific situation.