The Dave Ramsey Show
How To Budget on a Commission Based Income
Episode Summary
AI-generated · Mar 2026AI-generated summary — may contain inaccuracies. Not a substitute for the full episode or professional advice.
The Dave Ramsey Show tackles the unique challenges of budgeting on a commission-based income, focusing on how to manage fluctuating paychecks. Dave Ramsey responds to a caller who explains their monthly income varies significantly, from a baseline of "about $2,500 a month" to sometimes earning an additional "$700 in a bonus" or even "three grand," while other months yield no bonus at all.
Ramsey introduces a specific strategy called the "hills and valleys fund" to counteract this income volatility. The core idea is to intentionally save money during high-earning periods to supplement income during lower-earning months, ensuring consistent financial stability.
He illustrates the fund's mechanics: during a prosperous month, such as when an extra "$1,000 bucks or so" is earned, that surplus should be deposited into this separate "hills and valleys" account. This proactive saving builds a buffer for less predictable times.
Conversely, when income dips, for instance, a month where only the "$2,500" baseline is earned without any commission, money can be drawn from the "hills and valleys fund" to "pay your part of the bills." This approach allows individuals to smooth out their cash flow and meet regular expenses despite an inconsistent income.
Listeners walk away with a practical, actionable framework for managing the unpredictable nature of commission-based work, transforming income variability from a source of stress into a manageable financial rhythm.
👤 Who Should Listen
- Individuals employed on a commission-based salary
- Anyone with an unpredictable or fluctuating monthly income
- People seeking practical strategies to stabilize their personal budget
- New sales professionals navigating inconsistent paychecks
- Listeners interested in Dave Ramsey's specific financial frameworks for managing variable income
🔑 Key Takeaways
- 1.Budgeting effectively on a commission-based income requires a specific strategy to manage income volatility.
- 2.A caller on the show reported a fluctuating income, ranging from a $2,500 monthly baseline to an additional $700-$3,000 in bonuses, or sometimes no bonus at all.
- 3.Dave Ramsey proposes establishing a "hills and valleys fund" as a solution for individuals with inconsistent income.
- 4.The "hills and valleys fund" involves actively setting aside extra earnings from high-income months to cover expenses during lower-income periods.
- 5.For example, when an additional "$1,000 bucks or so" is earned in a good month, it should be deposited into this dedicated fund.
- 6.During months where only the "$2,500" baseline is earned without commission, money can be withdrawn from the fund to ensure regular bills are paid.
💡 Key Concepts Explained
Hills and Valleys Fund
This is a financial strategy introduced by Dave Ramsey designed to manage income volatility for individuals on commission-based or fluctuating salaries. It involves proactively saving surplus income from high-earning months into a separate account. This fund then serves as a buffer, allowing individuals to draw money during low-earning months to cover essential expenses and maintain a stable monthly budget.
⚡ Actionable Takeaways
- →Identify your baseline income and typical fluctuations if you work on a commission-based salary.
- →Create a dedicated "hills and valleys fund" account specifically for managing income variability.
- →During months where your income exceeds your baseline, deposit the surplus, such as an extra "$1,000," into your "hills and valleys fund."
- →In months when your income only reaches your baseline, like "$2,500" without commission, withdraw necessary funds from the "hills and valleys fund" to cover your bills.
- →Focus on controlling your savings and spending habits to stabilize your financial situation, especially with unpredictable income.
⏱ Timeline Breakdown
💬 Notable Quotes
“"When you have a great month, that means you're probably going to put,000 bucks or so into this other account. So that when you have a month that's just $2,500 and you don't earn a commission, you can pull some money out to pay your part of the bills."”
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