Preparing your personal and business finances for the holidays

It's that time of the year again, and among all the hustle and bustle of the holiday season, preparing financially both as an individual and small business owner is one of many things on the to-do list.

Preparing personal finances comes with steps like budgeting, determining holiday travel plans and managing your spending. Small business preparation includes forecasting cash flow, hiring seasonal help, and managing the marketing budget, among many things. Both are critical for creating strong financial confidence during the holiday season.

How to prepare your personal finances

There is a wide range of purchases to be made during the holiday season, such as gifts, decorations, travel and more, so it's important to get started on your financial plan in advance. The following tips can help you keep track of your spending and eliminate some stress from the hectic holiday season.

1. Start a budget early.

Creating a holiday budget is one of the most effective ways to stay on top of spending, which includes both essential and nonessential purchases. Firstly, start by listing out all your essential items and be as specific as possible.

Then determine what you can spend on any nonessentials or last minute, unforeseen purchases. All of these items should be divvied up and fall within your predetermined budget limit.

2. Don't wait to plan holiday travel.

The closer you get to the holidays, the more expensive it becomes to make travel purchases such as transportation and accommodations. The holidays are already fast approaching, so it's best to act fast on any travel plans, whether they be for leisure, business, or visiting relatives.

3. Set a limit on credit card spending.

Credit cards can be an easy way to cover holiday expenses, but it can also be easy to get carried away, especially with last minute purchases. It's important to be wary of approaching your credit limit too quickly as well as being aware of your debt-to-credit ratio.

Lenders typically prefer a debt-to-credit ratio of 30% or less of your credit limit and going above that could negatively impact your credit score.

How to prepare your small business finances

Planning in advance for small business finances is also critical for keeping sales coming in, boosting profits, and minimizing headaches. Here are some best practices for keeping your business running smoothly during the holidays.

1. Forecast expected cash flow and expenses.

A great way to forecast your cash flow and available capital during the holidays is to analyze your metrics from last year's holiday season. How were sales performing, and what steps were taken to create sales?

Were there any unexpected expenses or emergencies that impacted capital? Did you meet, exceed, or fail to reach your financial goals during that time period? If sales and costs have changed, you may need to adjust your investment approaches.

2. Take advantage of holiday marketing.

The holiday season is a perfect time for reaching existing customers as well as bringing in new ones through strategic, tailored marketing.

Many companies boost their marketing budgets during this time to allow more room for holiday-related campaigns and advertising. Once you've determined your overall end-of-year budget, see how much you can set aside for investing in a strong marketing plan, and be sure to use data about your customers' needs, historical buyer behavior and current trends.

3. Hire seasonal staff.

If it falls within your budget, hiring seasonal staff can help take some heavy lifting off full-time employees' shoulders while also increasing productivity and improving customer service. However, hiring them sooner is better so you have ample time to train them fully. Improperly trained seasonal workers can conversely add to the stress of an already fast-paced time of year for businesses.

Ask for help from the experts

The holiday season is a busy and oftentimes stressful time for everyone, both personally and in business. To help ease some of the burden, talking to a financial professional or adviser can give you some additional assistance in setting up a concrete and comfortable financial plan to round out the year.

To help point you in the right direction, you can reach out to the team at Republic Bank of Chicago by visiting rbankchicago.com or calling directly at (800) 526-9127.

Happy Holidays.

• Mark Wojack, SVP/Head of Business Banking, Republic Bank of Chicago.