Set up a separate bank account for big annual expenses like insurance or affiliate fees. Divide the yearly total by twelve and deposit that amount monthly, so you're not blindsided by large payments. This keeps cash flow smooth across months when revenue fluctuates.
Alright, let's go over another budgeting tip and trick. This is for those big expenses that come out of nowhere. The tip is have an annual and large expense account. Now again, that is, first of all, for a lot of people like, what does that even mean? Well, let's get into it. An annual and large expense account is an account, a bank account that you create purely to just shove money into so that when that big huge affiliate fee payment, insurance annual payment, or whatever it may be comes and hits you, you're not in this moment of, oh crap, how do I cover my costs? You go to this side bank account that you've created and slowly been shoving money into and you say, oh my gosh, I don't need to stress about this. I'm going to pay that insurance and my family's still going to go to a steak dinner tonight because I've got my stuff in order. So how do you do this? You want to, um, go ahead and look at your general annual expenses. And again, you should know most of these— your insurance expense, your maybe health insurance if you do it quarterly or something like that. Um, again, if you have affiliate fees, you can go through your bank accounts and just see what big expenses come and like hit out of nowhere. Or if you, again, if you have a bookkeeper or if you do your own books, you can look at your books and see big expenses that jump out in the books if you do a month, a month-to-month P&L comparison. So look at your big expenses and then just divide them by 12. So if I have to pay $1,200 every year for random big expenses, I'm gonna take $1,200 divided by 12. So that's $100 a month. And every month I'm going to take $100 and put it into that account. And in my mind, I'm going to think, I will not touch this account except for large expenses. I will not reach into that piggy bank. It's not— it's like, it's like a prison. I am not allowed to touch it. It is in prison until the doors open for the time that my big expense comes, and I only take it to pay that big expense, and then the doors close again. The reason for this is it does a couple of things. One, it helps you kind of slowly pay these expenses month by month. So instead of you know, getting to the end of the year and having this big payment and thinking, oh my gosh, where's this money gonna come from? You have saved for it a little bit each month, and because it's so much smaller each month, it doesn't feel like such a heavy burden. So it's a way to lift some of that burden off of you. The other thing that this does is, again, it just allows you to have the money you need, because a lot of times what happens is, if this payment is due at a time when your business hits a low, For example, people that have really high sales in like December, November, October, like Christmas time because of all the sales. Maybe their big expenses hit in January when their money has dropped off. If they haven't saved for this big expense, half the time they can't even pay that expense because their money goes from such a high to such a low, but they've spent all of their money. So this is why you just wanna take it, divide it by 12 every month, put that into a large expense account. And when the time comes, you'll have the money in there that you need. Again, this allows you to be less stressed, and it allows you to have the money that you need. So you're not worried about going into debt or other things for this. And if you're not sure how much your large expenses is, if you're, if you're looking at the thing that I said earlier, a P&L comparison month by month, and you, your thought was like, what the heck was that? Go ahead and reach out to our team, and we're happy to help you with this. Again, it's something that we do all the time.
