For every minute spent Organising, an hour is earned !!

We all understand the importance of personal financial planning quite well. However, most of us tend to ignore an important aspect of financial planning which is “record keeping”. Though record keeping might sound tedious and clerical, a systematic and organized-mannered record is not only essential but can add a lot of value in the time of need.

The act of record keeping entails keeping track of the history of one's own actions, usually by making and keeping consistent, official records. The first step of accounting is record-keeping, which involves keeping track of financial business transactions and understanding the true state of assets, liabilities, profits, and losses, among other things. Additionally, it helps to keep expenditures under control to reduce spending and to have crucial information for legal and tax reasons.

We all have a good understanding of the significance of money planning. The majority of us have a tendency to overlook record keeping, which is crucial to financial planning.

First and foremost, maintaining good records entails storing all your important financial documents in a safe location. This includes the contract you have with your personal financial advisor, the plan statement, the investment mix, the required certificates, account statements, and copies of your demat account, among other things. Such papers ought to be kept in a way that protects them from the elements, such as rain, fire, and waste.

Ensure that all of your documents have digital backups. Physical records will always carry some level of danger. Even though these physical documents are excellent for reference, you still need to make a digital backup. A backup may also be kept on an external device or in cloud storage and kept in digital lockers. If any papers are lost, the digital backup will make sure that the information can be quickly recovered.

The data must be categorized, tabulated, and arranged to make tracking simple. Your record keeping must include filing that is organized and has thorough documentation and an index of all files that must be accessed as quickly as feasible.

Now, the question arises, why is maintaining records so crucial to financial planning? Record keeping takes a long time and is a tedious and time-consuming task. Besides, it requires precision and focus to make sure nothing is recorded wrongly. However, there are important reasons for record keeping which are as follows-

You need accurate and thorough documents to back up your claims if there is ever a disagreement between you and your financial advisor. As a result, these documents have significant legal ramifications from a procedural standpoint.

Your mix of bonds, mutual funds, stocks, and insurance over time can get quite complex. All of these have tax ramifications and ought to come in useful when you file your returns each year.

There are long-term financial repercussions for many of the documents that make up your financial strategy. You don't want mishandled records to cause delays and financial damage. Therefore, it is imperative that documents and transactions be meticulously documented.

Now that you understand the importance of record keeping, you also need to be aware of the proper methods of record keeping so as to ensure all your important documents are easily and readily available as and when you need them. Following are some steps that can be followed to ensure efficient record keeping-

Assemble your money records

Gather all of your documents in one location to begin. There are many places where papers can collect, including the kitchen counter, home office desk, car trunk, under the bed, and other locations

Choose a location for your documents.

If something doesn't have a specific location to go, it's simple to lose it. Finance documents are no different. If you only need to keep track of a few papers, a binder might be adequate. A file box, drawer, or cabinet could instead have files with labels on them.

Keeping some of your documents electronically is an additional choice. Online papers like bank and credit card statements can be saved as copies. Additionally, it's simple to digitise and turn paper documents into electronic files today. But keep in mind that hard drives malfunction and machines crash. Keep a backup file (or two) on a USB drive or an encrypted online storage platform like Dropbox or Google Drive.

However, difficult-to-replace papers require an additional layer of security, such as a safe deposit box at your neighbourhood bank.

Be aware that a lot of records hold private data. Whether that means securing your file cabinet or encrypting your hard drive, take precautions to protect them.

Arrange chronologically

Within each folder, try to arrange your papers chronologically. Consider filing more recent things first. Additionally, you shouldn't be hesitant to recycle or destroy papers like old utility invoices and bank statements that you no longer need. To create room for new records, you should also schedule a once-yearly cleaning of your folders, whether they are physical or electronic. This could be done at the start of the year or in order to get ready for tax season. Arrange according to time.

Within each folder, try to arrange your papers chronologically. Consider filing more recent things first. Additionally, you shouldn't be hesitant to recycle or destroy papers like old utility invoices and bank statements that you no longer need. To create room for new records, you should also schedule a once-yearly cleaning of your folders, whether they are physical or electronic. This could be done at the start of the year, or in order to get ready for tax season.

List all the accounts you trust with your personal information

Make a list of the accounts you or a loved one would need to access. Include recipients as well as account names, numbers, usernames, and passwords. Include information on how to open your safe deposit box. Make the list secure because there are thieves out there, and only give it to people you can trust.

Organising your budget is a crucial part of making sure you are on top of your personal finances. Following are some ways to ensure that you organise your money properly so as to avoid any unnecessary spending of finances-

Check your budget monthly

To check if you've been living within your means, make it a practise to review your budget at least once per month. Reduce expenses and, if necessary, change your goals if your budget has been exceeded. For instance, if you spend a lot of money on new shoes, consider substituting some of the restaurant meals in your monthly menu with home cooking.

You can make a budget on your own if you're not already keeping track of your expenditures and creating a budget for your finances. You can create a budget that is specifically tailored to your requirements by using the 50/30/20 rule or zero-based budgeting for a seriously organised budget.

Automate savings

Before you go shopping or out to supper, pay yourself first to make sure you've taken care of your investing and saving needs. By setting up an automatic transfer of a part of each paycheck to your emergency fund and other savings, you can develop the habit of saving.

Keep discretionary spending separate

Try separating your essential expenses from your "fun money" if you're using one checking account for all of your expenses, such as your rent or mortgage payment, utility bills, groceries, and entertainment. This will help you better manage your spending.

Automate and Organize Your Expenses

Without a system in place, it's simple to neglect to pay the bills, but doing so has repercussions. Include utility bills, subscriptions, and minimum debt payments in the list of all your expenses you have. Next to the name of each provider, note the usual due date and sum. To be reminded when a payment is due and to ensure you have the necessary funds, think about adding calendar notifications to your phone or other device.

Overall, you're better able to allocate where and how much you'll spend your money without getting into debt when you keep your finances organised and remain conscious of the amount coming in and going out each month. After paying for necessities, you'll be aware of your expenditures and how much money is still left over.

Adopting an organisational strategy that will help you organise your finances is necessary for financial success. When you have a system in place, procrastination and disorganisation will lessen, which will make it much simpler for you to start preparing for the future and even increase your wealth. You can make wise financial choices and sort out complex emotional thoughts and feelings with the aid of organisation. Organization helps you maximise the value of the hard-earned assets you generate through sound long-term planning, which results in the creation of additional wealth.