Go line by line through each expense (past and present), even if you are not incurring the expense anymore, and with the pen, mark the expense with a **P for any expense that directly generates (P)rofit; R for any expense that while necessary, can be (R)eplaced with a less expensive alternative; or U for any expense that is (U)necessary** for delivering your offering. .. Review every expense, including salaries, commissions and bonuses for employees, rent for the office, equipment, health care, raw goods, your office Spotify subscription. **Everything. If money goes out of the business, we need to categorize it as a P, R, or U.** .. Now circle any expense that is recurring (even if it happens to be in a different amount), meaning **it will happen again at least once in the next year** or more frequently, such as monthly or weekly. .. Add up all the expenses for the year. This includes everything you labeled and/or circled. Exclude any tax payments and owner’s distributions or salaries. **Now divide that number by twelve to determine your monthly “nut”—the total amount you have decided you need to cover each month.** --- **Tags** — [[quotes]], [[personal-finance]] , [[frugality]] **Source** — [[202303291359 - B - Profit First]]