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7
FORECASTING
The Right Stuff in the Right Bucket

In the Wealth Cycle Process, you will deliberately and purposefully plan how you will spend your money. Rather
than looking at your current obligations to see how far you can stretch your earnings, Forecasting pushes you away
from the constrained world of small expectations into your greater, grander, and very doable vision. In order to
forecast, you need to break out your revenues and expenditures into personal and business, perhaps multiple
business, categories. The initial effort should be to maximize your tax strategies by creating entities and making sure
to deduct all your legitimate business expenses instead of carrying them on the back of your personal accounts.
Every time I worked for a company I always had another source of revenue, a Cash Machine, so that I could forecast
my legitimate business expenses through an entity and maximize my tax advantages. For example, when I worked at
an oil company, I also had personal health and fitness clients and made about $1,000 extra a month to keep my tax
strategy going.

The Leaky Bucket
Jim Quinlin was a personal trainer in Topeka, Kansas. He was 25 and single, and he thought his personal training
business was doing well, but apparently it wasn’t doing well enough, because he could barely pay his rent. In fact he
was losing money every month.
“I thought I was so smart,” he said. “I set up all these companies to protect myself, you know, because it’s a
personal fitness company and I don’t want liability. But I’m still making no money. I’m running my company as an
LLC, and then I also have an S corp and a C corp, but I don’t really use them for anything. I don’t know why I have
them.”

Question 1: What Is Your Monthly Income?

“My business grosses $80,000 a year, and I pay myself $625 a week and pay personal income taxes on that.”

Question 2: What Are Your Monthly Expenditures?

“I spend about $3,000 a month,” Jim said. “For personal, that’s not business stuff.”