8 Key Year-End Bookkeeping Checklist Items

Year-end is one of the most stressful times for bookkeeping firms. You’ve got clients dropping off paperwork and tax preparers demanding financials. Plus, there’s the additional pressure of preparing 1099s and W-2s. There is no shortage of demands on your time. To avoid overlooking anything, you need to stay focused and organized. Your firm should have a standardized checklist to ensure you prepare all the necessary forms for your clients and hit every deadline. 

8 Essential Monthly Bookkeeping Tasks to Include in Your Year-End Checklist

1. Review and Reconcile Payroll Records

If your clients have more than a handful of employees (and even if they have just a few), those employees will be asking for their W-2s sooner than later. Though the deadline for getting W-2s to employees is January 31, you’ll save yourself (and your clients) a lot of headaches by getting them out as soon as possible after the new year.

Before sending out W-2s, you should reconcile payroll for the year to confirm your clients’ records match their quarterly tax filings. If any of your clients use a separate payroll account, you should also reconcile that account before preparing W-2s. 

If there are any stale payroll checks, your clients should contact those employees and reissue them. If the checks are more than a couple of years old, most states require those checks be remitted to the state’s unclaimed property department. 

Finally, check that all payroll taxes have been properly submitted to the IRS and your state’s taxing authority for the year. Once you have verified that payroll is correct and properly recorded, get those W-2s in the mail or deliver them electronically.

2. Prepare 1099s

Bookkeepers know 1099s are an essential part of tax season. Form 1099 is a tax document used to report income not subject to withholding. Examples include income from interest, dividends, and certain types of self-employment income. Businesses are required to file 1099s for any individuals and most entities who were paid $600 or more during the year.

There are several types of 1099 forms, and each reports a different kind of income. The most common 1099 is the 1099-MISC, which reports miscellaneous income such as royalties, rents, and prizes. Other types of 1099 forms include the 1099-INT (for interest income), the 1099-DIV (for dividend income), and the 1099-G (for certain government payments).

Like W-2s, the deadline for sending 1099s to your vendors and contractors is January 31. If you fail to file a required 1099, you may be subject to penalties from the IRS.

To file 1099s on time, you’ll need to reconcile your clients’ bank accounts for the year to ensure all payments are included when you issue the forms. If you’ve been keeping up your clients’ books throughout the year, you should be ready to get those 1099s out promptly.

Remember, if you file W-2s or 1099s on paper forms, you should have the proper paper required by the IRS.

3. Complete an Inventory Inspection

Since bookkeepers are always involved in year-end physical inventory accounting, you will want to confirm your clients are reviewing their inventory.

A company’s inventory account is one of the most critical accounts on its balance sheet. Inventory represents the raw materials, work-in-progress, and finished goods a company has on hand and is one of the biggest assets a company can have. 

A year-end inventory count is necessary for several reasons. First, it ensures the inventory balance on the balance sheet is accurate. Second, it allows the company to adjust its inventory levels based on changes in demand. Third, it provides useful information for negotiating better terms with suppliers. Finally, it can help prevent fraud and theft. 

Ultimately, a year-end inventory count is a vital part of maintaining accurate financial statements and ensuring the health of a business. As a bookkeeper, it’s your job to make sure the year-end inventory adjustments have been properly recorded and that the cost of goods sold has been adjusted.

4. Review Backup Documentation

Keeping accurate records is key in accounting, whether you are a small business owner or a large corporation. 

Without accurate records, it’s difficult to track inventory, sales, expenses, and profits. That’s why backup documentation matters. When completing your year-end bookkeeping review, this is the perfect time to review your documentation for the year and check that everything is in order.

This includes keeping track of invoices, receipts, and other documentation. In a paperless environment, it means keeping digital copies of all statements, invoices, and deposit records.

5. Review Accounts Payable and Receivable

Your year-end checklist needs to include a review of accounts payable and receivable for a few reasons. This review is an opportunity to check that all invoices were paid and all payments were received. It’s especially important if there were any changes in staff or accounting software during the year. 

It helps you identify any areas where late payments were made or logged incorrectly. This information is useful for improving cash flow management in the future. 

Lastly, this review lets you reconcile any discrepancies between the accounts payable and receivable records. It keeps your records accurate and up-to-date, which is essential for maintaining good financial management practices.

6. Record Annual Journal Entries

At the end of the year, businesses need to record a few journal entries. You’ll need to carefully review your clients’ books to verify the appropriate entries got recorded.

The first entry records any revenue not previously added to the ledger. It could be for services provided but not yet invoiced or money collected but not yet recorded. Businesses also need to account for expenses incurred but not yet paid. This includes items like utilities, rent, and payroll. 

Additionally, businesses need to adjust their inventory levels to reflect the actual physical count of what they have on hand. Doing this ensures their financial statements accurately document the reality of what the business owns. 

7. Review Financial Statements

The end of the year is always a busy time for businesses, and you’ll need to review your clients’ financial statements from the past 12 months. 

This review can be helpful in identifying trends and making decisions about the future. It can also pinpoint any errors or discrepancies in the statements. 

Reviewing financial statements also allows you to update them with changes that occurred during the year. This may include new purchases, sales, or investments. Taking the time to review financial statements at the end of each year ensures your clients’ records remain accurate.

8. Review Your Plan for Next Year

One of the most important things you can do to give yourself an advantage in the new year is to plan your accounting tasks in advance. 

By mapping out what needs to be done and when, you avoid needless stress and save yourself valuable time.  In short, a little bit of planning goes a long way toward guaranteeing a successful accounting year. So set aside some time at the end of this year to plan for the next one. Your future self will thank you!

Source

What Is an Asset?

“Asset” is one of those words that has both a casual meaning and a specific definition. As part of everyday speech, asset is used favorably: “He’s a real asset to the community.” But in the business accounting sense, what do finance professionals mean by assets? In that context, an asset is something of value that a company expects will provide future benefit.

Assets are a key component of a company’s net worth. Lenders may also factor in a company’s assets when issuing loans. As a note, this article only addresses company-owned assets, not Right of Use assets (i.e. leased assets).

What Is an Asset?

The International Financial Reporting Standards (IFRS) defines an asset as “a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.”

Put another way, assets are valuable because they can generate revenue or be converted into cash. They can be physical items, such as machinery, or intangible, such as intellectual property. Assets are reported on a company’s balance sheet, one of its key financial statements.

Assets vs. Liabilities

It’s critical to understand the difference between assets and liabilities. A company lists its assets, liabilities and equity on its balance sheet. Assets are resources a business either owns or controls that are expected to result in future economic value. Liabilities are what a company owes to others—for example, outstanding bills to suppliers, wages and benefits due to employees, as well as lease payments, mortgages, taxes and loans.

As a note, for public companies, leased property and equipment is listed on the balance sheet as both an asset (Right of Use) and a liability (the present value of future lease payments). Private companies will soon be required to do the same under U.S. GAAP.

Equity is the company’s net worth—the value that would be returned to the owners or shareholders if all assets were sold and all debts were settled. The relationship between assets, liabilities and equity is defined in the “accounting equation,” one of the basic principles of accounting:

Assets = Liabilities + Shareholders’ Equity

A business with more assets than liabilities is considered to have positive equity or shareholder value. If assets are less than liabilities, a company has negative equity or owes more than it is worth.

Types of Assets

Assets can be classified based on a number of criteria. For companies, the correct classification is critical to financial reporting and evaluating the business’s financial health. Typically, assets are valued by the expected future cash flows they represent in their current condition, according to the IFRS.

Personal: Soft personal assets, such as intellect, wit or a winning smile are different than personal financial assets, which contribute to an individual’s or household’s net worth. Examples of personal financial assets include cash and bank accounts, real estate, personal property such as furniture and vehicles, and investments such as stocks, mutual funds and retirement plans.

Business: Business assets deliver value to a company because they can be used to produce goods, fund operations and drive growth. Assets include physical items such as machinery, property, raw materials and inventory, and intangible items like patents, royalties and other intellectual property. Companies account for their assets on their balance sheet and categorize them based on a set of criteria that reflect their liquidity, or how readily they can be converted to cash, as well as whether they are physical or nonphysical assets and how they’re used to derive value.

Convertible: Convertibility, or liquidity, refers to how readily a business can convert an asset to cash. Assets that are likely to be turned into cash within one fiscal year or operating cycle are called current assets. While any asset can be converted into cash within 12 months if the price is sufficiently discounted, current assets only include assets that are expected to be converted into cash within 12 months.

Current assets include:

• Cash and cash equivalents, such as treasury bills and certificates of deposits.
• Marketable securities, such as stocks, bonds and other types of securities.
• Accounts receivable (AR), or sales to customers on credit that must be paid in the short term.
• Inventory, or the salable goods and materials a company has on hand.

Non-current assets are items that may not be readily converted to cash within a year. Examples of such assets include facilities and heavy equipment, which are listed on the balance sheet, typically under the heading property, plant and equipment (PP&E). Not all companies use the term “PP&E” on their balance sheet—they may instead list non-current assets under the heading fixed assets, long-term assets or simply non-current assets.

Tangible: Assets that have a physical existence are called tangible assets. They include cash, PP&E, inventory, raw materials or tools and office supplies. Tangible and intangible assets that are expected to provide an economic benefit beyond the current year, such as manufacturing equipment or buildings, are called or “long-lived” assets.

Intangible assets, as the name implies, lack a physical presence. Examples of intangible assets include right of use assets, patents, copyrights and trademarks, the value of which can sometimes be difficult to quantify.

Some tangible and intangible assets are referred to as wasting assets, or assets that decline in value over a limited life span. Tangible assets that qualify as wasting assets include manufacturing equipment and vehicles, which wear down or become obsolete over time. Intangible assets such as patents also qualify as wasting assets because they have a limited lifespan before they expire. To reflect wasting assets’ reduction in value over time, accountants reduce the assets’ value on the balance sheet by applying depreciation (for tangible assets) or amortization (for intangible assets).

Asset Usage: Finally, an asset can be classified as operating or non-operating based on how a company uses it. Operating assets are necessary to the primary operations of a business, such as cash, inventory, factories and patents. For a mining company, heavy equipment qualifies as an operating asset, as does a manufacturer’s production equipment.

Non-operating assets are not necessary for funding business operations but have other peripheral value. Examples include short-term investments, marketable securities, interest from deposits and administrative computers. Source

Happy Holidays

 

Happy Holidays from all of us at Powers Bookkeeping Service, Inc. to all of you! Hope you have a safe and healthy holiday season! Let's make 2025 the best year yet!

Powers Bookkeeping Service, Inc. 

(916) 302-9153

info@powersbookkeepingservice.com

Accrual-Based Accounting

In accrual-based accounting, transactions are recorded not when cash comes in or goes out, but when they are initiated. With this system, you record revenue when you earn it, and expenses when you incur them, irrespective of when the payment is made.

 Let’s take the same example as above, but apply the accrual-based method;

Sales transaction:

You sell carpets worth $100 to your client on the 1st of July and your client makes payment on the 5th of July. The difference in accrual based accounting is that you record the sales transaction on the 1st of July (when you sell the carpets)

 Purchase transaction:

You buy carpets from your vendor for $100 on the 10th of June. But, you make payment on the 6th of July. Here, you record the purchase transaction on the 10th of June itself (when you buy the carpets)

The pros and cons of accrual accounting

Pros

• Accrual-based accounting is the more widely used of the two methods and is used by all large companies.
• Accrual accounting is suited for businesses that sell on credit. You can record transactions and keep track of invoices even if you haven’t received the cash for them.
• You record transactions in the accrual method when they’re initiated. This makes it easy to track what you owe vendors and what your clients owe you at any time.
• You can get a better picture of your financial position through this method. The accrual basis allows you to create financial reports like balance sheets and income statements, that are key to know where your business stands.

Cons

• The accrual basis for accounting suffers from disadvantages too.
• It is not suited for efficient cash flow management. Since transactions aren’t recorded at the same time that cash is transferred, it is cumbersome to know how much cash you have in hand at a given time.
• You need to use double-entry accounting if you follow the accrual basis. This makes things more complicated, as every transaction has to be recorded under a minimum of two accounts. This goes beyond the scope of a cash book, so it creates dependence on accounting software as well as an accountant.

When do you use accrual accounting?

The accrual basis for accounting is suitable when:

• Your business is large, and you generate financial reports like balance sheets and income statements to track your financial position and performance.
• You extend credit to your customers and let them pay you later from an invoice.
• You use a double-entry system where transactions are recorded under at least two accounts.
• You have many employees.
• You deal with relatively large numbers of financial transactions on a daily basis, and you use accounting software rather than a cash book or spreadsheet.

Source

3 Ways to Prepare Your Books for Tax Season

Tax season is right around the corner! Be prepared with these three tips;

1.) Organize Your Receipts and Records

Gather all your receipts, invoices, and financial documents from the year. Use a system (physical or digital) to sort them by category, such as income, expenses, and deductions. This will save time and ensure all details are noticed.

2.) Reconcile Your Accounts

Ensure your bank statements, credit card accounts, and bookkeeping software match up. Reconciling ensures your records are accurate and up to date, which is essential for filing taxes correctly.

3.) Review Your Financial Reports

Please review your profit and loss statement, balance sheet, and cash flow statement. These reports clearly show your business’s financial health and help identify potential deductions or adjustments.

Need Help? Tax season can be overwhelming, but you don’t have to tackle it alone. Powers Bookkeeping Service, Inc. ensures your books are accurate, organized, and ready for filing. 

Contact us today to schedule a year-end bookkeeping review!!!

Phone: 916-302-9153

Email: info@powersbookkeepingservice.com

5 Tips for How to Manage Payroll Effectively

If you’re not sure how to manage payroll effectively, you’re not alone. Many business owners and HR managers are unsure of the best ways to execute their payroll processes. It’s especially challenging, since HR best practices are always changing, and payroll rules are always being updated.

If you’re looking to maximize the efficiency of your HR department, use these five tips.

1. Stay Organized

Organization is essential when you’re hoping to maximize your payroll efficiency. When your payroll processing documentation is arranged in an orderly fashion, your tasks become much easier to complete in short order.

Your business also needs to be organized to avoid missing important dates. A payroll calendar could help you keep track of important dates, such as when you must remit payroll taxes or when certain forms are due. Not only will this remind you of your deadlines, it also provides a visual reminder of when tasks need to be completed to meet those deadlines. With a calendar, you can plan your time more effectively and limit stress related to payroll tasks.

2. Get Technical with the Right Software

Technology has made payroll processing easier than ever. If you’re searching for ways to manage payroll more effectively, the answer might be adopting the right software. There are many different kinds of software your company could use. Payroll tax deduction calculators can help you determine how much you’ll need to deduct for your staff. This includes calculations for federal and provincial tax withholding.

3. Stay on Top of Relevant Payroll Rules and Regulations

Legislation surrounding payroll is always changing. In order to avoid potential penalties or legal issues, you need to stay up to date on all relevant payroll rules and regulations. Staying up to date can also help you avoid costly processes like auditing or correcting tax filings when tax season rolls around.

4. Keep It Simple

Payroll itself has many steps and tasks, but that doesn’t mean your processes have to be complex. Simplifying your payroll process can help keep things running smoothly, with less effort from you and your HR department.

One example is switching from checks to direct deposit. Instead of having to track all the checks you need to prepare, issue, and hand out, you can keep a simpler electronic documentation of your bank transfers. This cuts down on paperwork, makes the transaction faster, and even helps you save on supplies.

5. Keep Calm and Get Help from the Experts

Managing your own payroll may be stressful, yet many business owners feel they have to handle this task in-house. The good news is you don’t have to.

There are plenty of experts out there who could help you streamline and simplify your HR and payroll tasks. A PEO, for example, can assist with payroll, compliance, benefits, and so much more.

Getting this outside assistance is even more beneficial for international employers. Since the expert professionals on the team already know their way around the payroll system, they can help you navigate with ease. Source

Importance Of A Cash Flow Statement

For a business to be successful, it should always have sufficient cash. This enables it to pay back bank loans, buy commodities, or invest to get profitable returns. A business is declared bankrupt if it doesn’t have enough cash to pay its debts. Here are some of the benefits of a cash flow statement:

• Gives details about spending: A cash flow statement gives a clear understanding of the principal payments that the company makes to its creditors. It also shows transactions which are recorded in cash and not reflected in the other financial statements. These include purchases of items for inventory, extending credit to customers, and buying capital equipment.
• Helps maintain optimum cash balance: A cash flow statement helps in maintaining the optimum level of cash on hand. It is important for the company to determine if too much of its cash is lying idle, or if there’s a shortage or excess of funds. If there is excess cash lying idle, then the business can use it to invest in shares or buy inventory. If there is a shortage of funds, the company can look for sources from where they can borrow funds to keep the business going.
• Helps you focus on generating cash: Profit plays a key role in the growth of a company by generating cash. But there are several other ways to generate cash. For instance, when a company finds a way to pay less for equipment, it is actually generating cash. Every time it collects receivables from its customers quicker than usual, it is gaining cash.
• Useful for short-term planning: A cash flow statement is an important tool for controlling cash flow. A successful business must always have sufficient liquid cash to fulfill short-term obligations like upcoming payments.  A financial manager can analyze incoming and outgoing cash from past transactions to make crucial decisions. Some situations where decisions have to be made based on the cash flow include for seeing cash deficit to pay off debts or establishing a base to request for credit from banks.

Source

What Is Cash-Based Accounting?

As the name suggests, the underlying factor in cash based accounting is cash itself. Transactions are recorded whenever you receive cash payments from customers, or whenever cash leaves your company in the form of expenses or vendor payments.

Let’s look at an example that illustrates this method with a sales and a purchase transaction;

Sales transaction:

Suppose you’re a carpet retailer, and you sell carpets worth $100 to a client on the 1st of July, and your client makes a cash payment on the 5th of July.

In cash accounting, you record the sales transaction on the 5th of July (when you receive the cash).

Purchase transaction:

You buy carpets from your vendor for $100 on the 10th of June. For this purchase, you make cash payment only on the 6th of July.

Here, you record the purchase transaction on the 6th of July (when you pay cash).

The Pros And Cons Of Cash Accounting;

Pros

• Cash accounting is simple offers many advantages to very small businesses that operate purely on a cash basis.
• It doesn’t require you to have vast accounting knowledge and its simplicity allows you to maintain your accounts without having to hire an accountant.
• It also doesn’t require accounting software, because you can accomplish accounting tasks with a simple cash book, or with spreadsheet software.
• The most important advantage of this method is that it records your transactions purely in terms of cash inflows and outflows. This provides an accurate picture of how much money there is in your company at any given time.

Cons

• Although it’s simple to implement and provides accurate insights about your cash flow, cash accounting has a few downsides.
• Companies that account on the basis of cash don’t usually employ an integrated accounting system. This can increase the chance of errors, as there is no built-in error-checking mechanism.
• While it shows you how much money you have, it doesn’t show you your financial position. This is because cash accounting doesn’t make it easy to generate reports like income statements and balance sheets that are necessary to determine your financial position accurately.

When Do You Use Cash Accounting?

Cash-based accounting is usually used by very small businesses. You might follow the cash basis of accounting if:

• Your business is very small, held by sole proprietorship or privately.
• You do not sell on credit, i.e., you do not provide goods without immediate payment and invoice customers later.
• You use a single-entry accounting system.
• You have only a few employees working in your company, and a cash accounting setup is enough to handle employee salaries and reimbursements.
• You have relatively few transactions each day and they can be recorded in a cash book or a spreadsheet.
• You do not own many physical assets and tracking inventory for them isn’t necessary.

Source

6 Steps To Improve Work Productivity This Year

It’s also a new year, and that means it’s the perfect time to step back and get a fresh perspective of your team’s work productivity. After all, there are always areas for improvement. Utilize this slow period in the year to evaluate your work relationships, processes and procedures. After taking a retrospective view, you can implement incremental changes that will set the pace for the year to come. As you consider what’s worked (and what hasn’t), here are some steps for thinking through how you can motivate, encourage and inspire the best from yourself and your team.

Step 1: Take ownership

Managers can fall into the trap of analyzing their team’s productivity without considering their own liability in the team’s successes and failures. Take ownership of the fact that you have faults, and focus on overcoming those shortcomings.

This shouldn’t be an exercise in beating yourself up. It’s about learning from your weaknesses and being open to self-improvement. Said another way: compare yourself to who you were yesterday, and strive to be a stronger leader tomorrow.

Consider which of your habits sap your productivity. Are you setting a poor example for your team? For instance, if you persistently multi-task and run from meeting to meeting, you may be spread too thin. You may not be allotting sufficient mental bandwidth to properly address your business’s needs.

Quality of work can suffer, and you can burn out. By focusing on yourself, you breed success elsewhere. Incremental improvements in a manager can create a significant ripple effect among your team, because you’ve created an atmosphere where vulnerabilities are accepted. This leads to creative breakthroughs and coworkers being more supportive of one another.

Step 2: Allow healthy conflict

Be honest: Do you or your team members argue without listening to what others are trying to say? Tend to think you have all the answers? Take secret pride in a trigger temper that discourages discussion? Retreat into silence if your idea doesn’t win over the team?

This type of behavior wrecks productivity in the workplace. Working together requires healthy conflict. If you or your employees don’t know how to keep conversations productive, then your team’s ability to succeed will be squelched.

If you suspect you or a team member has some bad habits where conversation and conflict are concerned, don’t hesitate to get help for yourself or encourage better communication skills among your employees. Listening and productive conversation are learned skills that can be acquired or improved through coaching.

Step 3: Get buy-in for new goals

When it comes to setting specific goals for your team, it’s wise to avoid making unilateral decisions 100 percent of the time. Sometimes getting consensus about team goals can build buy-in and enthusiasm for what lies ahead.

If you’ve dictated all goals in the past, consider a change: Ask how your team thinks things are working before setting new targets. Find out if they feel like they’ve got the tools, training or experience they need to do their jobs well.

Listen and try to understand the points employees are making so that any new goals address their concerns. Consulting your team about process improvements may also uncover areas for improvement that aren’t on your radar.

For instance, your accountant may have ideas to fine tune your invoicing system that will improve how quickly invoices go out. You’ve gathered vital information on a key process that impacts cash flow and can work with the accounting team to set defined, realistic goals for improvement.

Step 4: Be open to change

It can be difficult to admit when an investment in the business or a new process isn’t working and needs to be changed. It’s especially hard when large amounts of time and money have been spent.

But, if you’re committed to better productivity, it’s important to recognize failure and take steps to correct the situation. Consider that open office you invested in just three years ago. Everyone loved the idea of more natural light and casual gathering spaces. But is the reality of working with no walls killing employee productivity? Has coworker conflict increased?

Rather than digging in your heels and insisting your employees work in an unproductive environment, offer solutions to appease their concerns. Maybe a third of your employees need walled offices for quiet, while others thrive in the open spaces. Maybe those casual gathering places need walls so impromptu meetings don’t disturb the whole office. Being open to change will improve productivity.

Step 5: Trust your people

Trust is probably the most important element needed to improve employee performance. Employees want to feel like their leader trusts them to perform the assigned tasks to the best of their ability.

A strong manager sets clear standards, communicates goals and removes roadblocks. But they also trust their staff to accomplish what needs to be done. If you feel like a glorified babysitter, consider whether the real problem is your micromanagement.

Say Taylor comes in at 9:15 a.m. rather than 9:00. Do you write her up for tardiness? Or, do you stop to remember that you were copied on a batch of client emails she spent an hour answering from home before coming into the office? Some managers find it hard to look at the quality and quantity of someone’s work, rather than whether the person is sitting at their desk at 9 a.m. sharp. However, if you focus on the work getting done, you’ll find that trust is the foolproof productivity hack you’ve been looking for.

Step 6: Review the basics

Business trends ebb and flow over time, but the basics of good management don’t change. This requires that you pay attention to the most common reasons why productivity suffers:

• Do employees attend meetings all day, leaving no time to get work done? Can some meetings be eliminated? Can you give employees permission to skip meetings if they have a more pressing deadline?
• Do multiple meetings leave staff with blocks of time too brief to get meaningful work accomplished?
• Are employees thanked for their hard work and accomplishments?
• Does your staff have the equipment and training that they need?
• Are your productivity apps really helping?
• Does your onboarding process support a new employee’s ability to ramp up quickly?
• Are you measuring the right things?

A solid internal review of your own work habits, combined with a review of team productivity, can spur year-long results for you and everyone around you. Source

3 Things You Can Do This Week to Get Your Finances in Order

With the holiday season fast approaching and Black Friday deals flashing everywhere, I’m here for a quick time out to help you make a plan that works for your goals. This is especially important because the 2024 Deloitte holiday retail survey found that shoppers plan to spend 8% more than last year. I know you have a lot going on and (not but), now is the perfect time to pause, reassess, and get your finances in order before the holiday rush. Set yourself up for an stress-free season and a strong start to the new year with these three simple steps. 

Let’s take control of your financial wellness this week. Here are 3 things you can do to keep your finances in order this holiday season;

1. Review Your Monthly Spending: Get a Clear Picture of Where Your Money Goes 

The first step to getting your finances in order is understanding where your money is going – not where you think (or wish) it’s going. Even if you follow a budget, take this week to review your actual spending from the past 1-2 months. Reminder: This isn’t about judging yourself, in this exercise, you’re after facts and clarity. 

Here’s how to do it: 

Gather your statements: Pull up your bank and credit card statements from the past 30 days, and don’t forget to check your mobile payment apps like CashApp and Venmo. 

Categorize your expenses: Break down your spending into three categories: essentials (housing, groceries), non-essentials (entertainment, dining out), and holiday expenses (gifts, travel).

Look for patterns: Are there any surprises? Are you spending more than expected in one of the categories? Spotting trends can help you adjust. 

When you know where your money has gone, you’re better equipped to decide where it should go for the rest of the year. This review also gives you a clearer picture of how much disposable income you have, making it easier to set limits for holiday spending. 

2. Build a Holiday Spending Plan: Set Limits Before the Sales Start 

Before Black Friday and Cyber Monday sales tempt you, create a holiday spending plan. Without a plan, you will fall into the trap of impulse buying. The good news? Holiday shopping provides a great opportunity to get creative with your gifts without derailing your financial goals 

Here’s how to do it: 

Set a total holiday budget: Based on your spending review, decide how much you can realistically spend on gifts, travel, and entertainment. Then plan celebrations at free venues, make people come to you (with a dish to pass) and feel the magic with a lower price tag. 

Make a gift list: Write down who gets a gift and set a budget. Remember to allocate part of your budget to experiences rather than physical gifts—making memories can often be more meaningful. 

Shop smart: Take advantage of sales, compare prices, use discount codes, and consider browser extensions like Honey or Rakuten for extra savings. Abandoning your online cart for 24-72 hours may even earn you a discount. Remember that buying nothing means you keep 100% of your money. 

A clear holiday spending plan helps you stay within your means and enjoy the season without the dread of a large credit card bill in January. Knowing your limits ahead of time may help you confidently say no to last-minute purchases or invitations from people you don’t like that much anyway. 

3. Start Preparing for 2025 Now with Automated Savings and Payments 

While it’s easy to focus on the holidays, I have to remind you that the new year is just around the corner. By automating your savings and payments this week, you’ll set yourself up for a strong financial start in 2025. 

Here’s how to do it: 

Automate bill payments: Set up auto-pay for recurring bills like rent, utilities, and debt payments to avoid late fees and protect your credit score during the busy season. 

Schedule savings contributions: Small amounts add up over time. Whether for a high-yield savings account, retirement fund, or emergency fund, automate regular transfers from your checking account or use direct deposit through your employer. 

Consider a holiday savings account: If holiday spending usually throws off your budget, open a dedicated savings account in January. Automating contributions into this account will give you a cushion for next year’s holiday expenses. 

Automating your finances takes much of the effort out of money management. It also creates a system for ensuring that your savings and bills are prioritized no matter how busy you get. Source