Want to make next year’s annual expenses easier on the monthly budget? You can protect your monthly income by starting what I call a “Cyclical Fund” (C-Fund). When you start your Cyclical fund, you will deposit a smaller amount each month towards these costs and save enough over 12 months to have all of them covered when they come due! The alternative is what most of us do now, having to pay the large bill is all at once out of one month’s income. That can be very stressful and hard on your monthly spending plan!
3 STEPS TO START A CYCLICAL FUND:
1. MAKE A LIST OF ALL YOUR NON-MONTHLY EXPENSES. INCLUDE THE THINGS THAT RENEW QUARTERLY, SEMI-ANNUALLY, AND ANNUALLY. MOST BUSINESSES HAVE ABOUT 5-6 OF THESE. THINK ABOUT:
- Business and professional license renewals
- Subscription renewals for things like software
- Membership fees
- Annual domain and website renewals
2. TOTAL UP ALL OF THESE EXPENSES AND DIVIDE BY 12. THIS IS THE AMOUNT OF YOUR MONTHLY DEPOSIT.
3. SET UP AN ACCOUNT AND MAKE YOUR FIRST DEPOSIT.
Do not open a savings type account if you will make frequent withdrawals to pay these bills as they come due. In the US, “Regulation D” limits the amount to free transfers or withdrawals to six each month. Then the bank can charge a fee for every subsequent withdrawal.
These 3 steps are a surefire way of starting and growing your cyclical funds!
It’s so easy to get frustrated when we forget when the annual bills come due, and of course, they still come due. Start your Cyclical Fund to put a little away each month to cover what you will need. The stress is really reduced when the amount you need for an expected expense isn’t squeezed 100% from the same monthly budget. Take time this week to sort this out and you will have a jump start on next year’s renewals.
There’s still time to join the Q1 2021 Income and Profit Planning Intensive Session to have an actionable plan for your business offers, income, and profit through March 2021.
Visit this link to register, the next workshop is on December 12th.