As the festive season is coming up, people are turning their attention away from their jobs and towards their families. In this time of celebration, you should still be aware of your finances regardless of whether you own or work for a local business. This will help you avoid potentially dangerous scenarios such as overspending your holiday capital or failing to account for vacation losses for your staff. So that you don’t ruin the upcoming festivities, here are a few techniques that you can use to take care of your finances in a better manner.
Advice for Employees
If you currently work for a company, congratulations as you’re likely about to take some time off to spend with the family. So that you don’t blow out your budget over Christmas though, there are a few important points to remember. These will help you to boost your savings and manage your money over the festive season. So that you end up with some balanced books by the time January comes around, follow the advice below and find out how you can protect your cash flow and still have an amazing time over Christmas and New Year.
- Switch to a fee-free savings account with your bank. If possible, create a separate account to help build up your holiday savings.
- See if your mortgage has special Christmas rates. Some may even allow you to pay extra over the year to free up capital in December.
- Buy groceries in bulk and cook double meals, storing the second in the freezer. Don’t forget to keep the receipts for your books.
- Save on petrol by doing all your Christmas shopping on the same day. Again, save the receipts so you can keep track of cash flow.
- Sell something to earn extra money. Either make some handicrafts or auction off your old belongings. Record this income in your ledger too.
These are just a few tips to help you balance your books when it comes to your festive season cash flow. Keep track of your income and expenses during this time by installing some home accounting software and using it on a regular basis. In this way, you can track your finances in an accurate manner, ensuring that you have enough to last you throughout the holidays regardless of the extra expenses such as Christmas trees, presents and food.
Advice for Employers
On the other hand, you might be running a company which is shut down over the festive season. In this case, you’ll still need to balance the books when it comes to your staff wages. Even though your employees are out of the office, the fact that you’re not in operations and still have to account for holiday pay will be a drain on your bank account. Fortunately, this doesn’t have to be a time of loss by balancing your corporate finances throughout the year instead. For your information, we will look at recording and reporting these holiday liabilities when they are incurred using simple terms. Follow the steps below and you should end up with a balanced book even though your employees aren’t working during the upcoming holiday season.
- Calculate the yearly working days and holidays for each staff member
- Determine the percentage of vacation wages to be paid while working
- Add this amount to each hour that your employees work during the year
- When someone takes a holiday, include a debit to this holiday pay
For example, let’s say you offer 15 days holiday per year. Your workers come into the office for 240 days in that time (52 times 5). Therefore, the Holiday Expense you have to pay is 6.25% (15 divided by 240). If your employees earn $20 an hour, simply add $1.25 an hour to their books. This should be in a separate Holiday Expense column. Therefore, they’ll accumulate this amount over the year. When they finally take a holiday, you can then deduct from this column instead of incurring a loss!
We hope that this advice has been helpful and we wish you a very happy holiday season. Enjoy yourself this Christmas and New Year, safe in the knowledge that your finances are taken care of!
Zoe George is a freelance writer for Accountz, a leading provider of accounting software. They can also develop home accounting software for households or freelancers. A company with aims to help business achieve financial control.