Nurse Practitioners and other clinicians are wise to have built up a cash reserve for their practice. If you’ve not yet done this, this tip will get you started.
Financial experts often advise us that we should have a three month cash reserves at all times. The premise behind this is to protect you should you get sick, lose your job or have unexpected expenses crop up.
This is even more important for your business. In fact, three months is not enough. You really need to look at five to six months (or more) of having a cash reserve. If you haven’t done this yet, you’ll need to start now. With all of the uncertainty and the economy today you will certainly want to protect your business and yourself.
Do this now! Regardless of what your current financial status is, this is something that all of us need to do. And once you get into the habit of saving, you’ll be amazed at the results.
Here are a few suggestions to get you started.
- First of all, if you are still employed while you are building your business, start by setting aside 5-10% of your net pay into a reserve fund.
- To determine the ideal amount of your reserve fund, add up all of your monthly expenses and multiply it by the number of months you wish to have in reserve. Hint: you will want to do this for your personal expenses as well as your business expenses.
- Put aside a set amount. If this sounds like too much work, or your expenses vary too much, consider setting aside $100 (or more) a week. At the end of the year you will have $5,200, which is a nice cushion to start with.
- Keep in mind, this reserve fund is for emergencies, large purchases, etc. You will still need to do this for taxes, in a separate fund. Many businesses find themselves in trouble and are unable to pay their taxes. Do not let this happen to you.
NPBO™ Action Step:
- Open up a separate account for this fund, one where you will not withdraw from it readily.
- Identify the maximum you can set aside each week.
- Identify the minimum you can set aside each week.
- Strive for the maximum and don’t fall below the minimum.
- Establish your deposit schedule and stick with it.
- Keep this fund separate from your tax fund
Click here to read more Barbara C. Phillips, NP.
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