Best practice for tracking spending for efficient budgeting

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Good budgeting is crucially important, whether you are creating a budget for your own personal finances or managing the financial affairs of a whole business. Recent statistics from the UK government demonstrate that average weekly spending in households is £528.90. Whether you have more or less money to play with than this, good budgeting skills will enable you to pay all of your bills and to make the most of the cash that you have spare.

Store all of your budgeting information in a safe place                                    

There is nothing worse than deciding to fill out your tax return and realising that you have left most of these items scattered around the house, with many of them irrevocably lost. Ring binders are perfect for keeping receipts, invoices, tax forms and other financial information safe and sound. Get into the habit of popping receipts and tax statements into your ring binder as soon as they arrive.

The best way to structure budgeting files

Files can be structured by date (for instance, you might have a separate ring binder for each month of the year) or by their contents (for instance, there might be one file for receipts for items that you have bought, one for invoices that have been paid and another for invoices that are awaiting payment). Colour coding your files and labelling them clearly will make finding the right file as quickly as can be.

Why is it so important to keep an archive of your financial materials?      

Accurate accounting is so much easier when you have kept copies of all of the relevant documentation. In addition, receipts and other copies of documents may be requested by the tax authorities if they decide to audit your accounts.

The importance of keeping both digital and physical forms of your documentation                                                                                                           

It is always sensible to keep both a digital copy and a physical copy of all your financial documentation. A recent study in the US found that 140, 000 hard drives crash every year in that country. And, the same study indicated, the results of losing data through a digital disaster like this can spell doom for companies with 93% of companies that lost their digital data filing for bankruptcy in the subsequent 12 month period. Physical documentation can be lost or stolen, too, but it provides essential backup in the case of the loss of your digital copies. Thus, it makes sense to keep both a digital and physical copy of all of you budgeting information. Keep them in separate places (for instance, one at home on a shelf full of files, and one in the office). For good measure, back up your digital information on a cloud based storage system so that even if you hard drive fails, you will be able to recover it. A top tip for online documents is to use an online storage system as this eliminates the risk of losing documentation due to computer failure.

Keep track with your budgeting as you go for an easy life                                

Use a good filing system and sensible storage and cataloguing practices to ensure that you are always on track with your budgeting. That way, whenever you need financial information you will know exactly where to find it.

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