Counting Pennies

Provided by Ethan Ewing, president, Bills.com in San Mateo, California

Bills.com holds the No. 257 spot on the Inc. 500 list for 2008, and the No. 3 spot on Entrepreneur Magazine’s Hot 100 list of the fastest-growing U.S. companies. 

1. People whose income fluctuates need to learn to adopt a longer-term view of finances than someone with a regular paycheck coming in each week or month. Generally, after a few years of fluctuation, people can observe patterns – a slump around the holidays or in the summer, for instance – as well as determine a typical monthly minimum income level. Then budgeting, spending and saving can be done with that “base” in mind.

1. Set baseline goals. A self-employed individual could establish an absolute baseline of sufficient savings to cover expenses such as quarterly estimated self-employment taxes and an emergency fund. Common wisdom suggests keeping six months’ living expenses in an emergency fund at all times. For those with fluctuating incomes, this fund can become a “floating” fund to pull from during leaner times, then replenish when income increases.

1. Try “zero-based budgeting.” Everyone has fixed monthly expenses such as rent/mortgage, as well as consistent variable expenses (those that occur each month, but fluctuate, such as food and some utilities). Some people accumulate savings by holding off on discretionary purchases until they achieve a certain level of savings. Then, continue to save and allocate a portion of that savings toward a planned seasonal purchase.

1. Stick to a percent. With each check received (whenever that is), set aside a pre-determined percentage, based on your budget, for savings and investment.

Mechel Glass, director of education for Consumer Credit Counseling Service, teaches a class on budgeting for pets and shared these tips with me this past week.

1. Determine the added expenses you may incur by owning a pet.
Having a pet not only adds joy to your life, but it will also increase your expenses. Before you acquire a pet, it’s important to review your pet’s size, space requirements, training needs, medical expenses and food needs so you can plan accordingly.

2. Establish a budget to make sure you have adequate income to support your future pet. Just like any other member of the family, your pet’s needs must be considered and included in the family’s budget. This includes weekly, monthly and annual costs. If you decide to take a vacation, who will take care of your pet when you are out of town? Will you need to board your pet? Will your pet need additional training classes to curb some bad behaviors? Will your pet require other needs that may not cost money but will require additional time out of your day? For example, if you live in an apartment or a high-rise building and do not have immediate access to a grassy area, you may need to walk your pet longer distances several times a day to get to a public park for play and exercise time. This may not cost you any money, but it will require additional time out of your day to care for your pet’s needs.

3. Investigate the additional costs that may come with owning specific breeds.
If you have your heart set on a specific breed of pet, you may want to research if the breed is prone to specific health problems, and if so, determine the costs of caring for your pet’s health. Will you need pet insurance to cover unexpected medical expenses or surgeries your pet may need in the future? Also, keep in mind your pet may need to be placed on a specific brand of food or medication to correct a known condition with that breed.