The High Cost of No Plan: Ryan Gomez, CFP® on Commission Management

In a recent LinkedIn post, Ryan Gomez, CFP® discusses the critical importance of having a financial plan in place, particularly for individuals who receive significant commission-based income. He highlights how even substantial earnings can vanish quickly without a clear strategy for allocation and investment.

Gomez, CFP® shares a specific, anonymized client scenario to illustrate his point. He writes:

“$17,382 commission check. Gone within 3 months. Money without a plan gets spent instead of building wealth…”

The Pitfalls of Unplanned Windfalls

Ryan Gomez, CFP® argues that the issue isn’t necessarily a lack of financial literacy, but rather the absence of a predefined system for handling unexpected or large income influxes. He outlines a structured approach he implemented for his client:

• 50% of the commission was designated for investment.
• The remaining 50% was allocated for spending.
• The funds were automatically split the day the commission cleared to ensure adherence to the plan.
• Quarterly check-ins were scheduled to manage any cash surplus beyond the established emergency fund and short-term goals, directing it towards further investment.

According to Gomez, CFP®’s analysis, the financial loss extends beyond the immediate amount. He quantifies the potential long-term impact, stating:

“She didn’t just lose the $17,382 commission. She lost the $116,942.11 it could’ve become invested over 20 years. (Assuming 10% rate of return)”

Planning as the Antidote to Overspending

Gomez, CFP® emphasizes that the client’s situation wasn’t a reflection of poor character but a consequence of a missing financial framework. He elaborates on this crucial distinction:

“Her commission check didn’t disappear because she’s bad with money. It disappeared because she never had a plan of what to do with it.”

This perspective underscores a common challenge faced by many professionals, especially those in sales or commission-driven roles. The fluctuating nature of their income can make consistent financial planning difficult without a deliberate strategy. Gomez, CFP®’s approach focuses on creating automatic systems and regular reviews to mitigate the risk of impulse spending and to foster long-term wealth building.

In conclusion, Ryan Gomez, CFP®’s recent LinkedIn post serves as a potent reminder for all professionals, particularly those with variable income streams, about the necessity of proactive financial planning. As he advises:

“Make sure you have a plan for every hard-earned commission check.”

By implementing structured allocation and regular financial check-ins, individuals can transform significant commission earnings from fleeting windfalls into powerful engines for sustainable wealth creation.