Back in the day, merchants had a “Wall of Shame” posted behind their registers. If you gave them a bad check, the store owner received your red-stamped insufficient funds check back, and it was posted for all to see on the “Wall of Shame” behind the counter. From then on, you were banned from check writing at that establishment.
Balancing a checkbook was critical since you couldn’t check your balance online or get an alert on your mobile app. Now, with the assistance of online banking and mobile apps, many people don’t bother to balance their checking accounts.
Most transactions are made with a debit card and clear instantly or within a day, and you can check your online or mobile account quickly to see your available balance.
So who cares about keeping a bulky checkbook and register?
There are benefits to balancing your checking account. You can improve your financial awareness and security. Let’s look at the hows and whys of this “Ancient Art” you should still master!
The New Check Register
At its core, a check register is a simple running list of credits and debits (money in and money out). It can be an added bulk to carry around, especially coupled with your checkbook. Additionally, the written register can quickly turn into a scribbled, white-out painted, sloppy ledger if errors or adjustments are made. It’s much easier to use the device that you feel lost without… Your beloved smartphone.
A quick check of the app store offers several checking account balancing apps. If you’re looking for something shareable, a Google Sheet that you and your partner share for a joint account would be helpful. Or if you’re an old-school kind of person and like the register with your checkbook, there is nothing wrong with that! However, a pencil is recommended for easy corrections and neatness!
Whatever you use, the process is the same. You write your current checking account balance on the first line. Whenever you write a check or use your debit card, write the check number, date, a description, and the amount. Don’t forget to enter online bill payments or automatic withdrawals. Then, subtract the debit from your balance and record the new balance next to it. When your payroll or another income is deposited do the same but adding to the balance. Easy, peasy! For those days of shopping sprees, it might be helpful to hang on to receipts so you don’t forget anything and balance when you get home to access the damage!
Once a month, sit down with your register and compare it to your account statement. Put a checkmark (the apps have this capability too) next to items that appear on your account statement. This is called reconciling your checking account. Not only do you make sure nothing is overlooked, but if there is anything that you don’t recognize, you’ll be able to quickly contact your financial institution if fraud has occurred. That is if you haven’t noticed it already with the help of your online or mobile account access.
Say Goodbye to Overdrafts!
The most obvious reason for keeping your checking account balanced is to have constant tracking of your finances.
You’ll never have to worry if the next tank of gas or a night out with friends will put you in the red. Because transactions, even today, process at different speeds; a debit card transaction processed as a credit can take up to 3 business days. A busy restaurant may not process the receipt until the next day or two so even your online account might not show your available balance accurately. By updating your account balance the day the transaction occurred, you’ll know the true balance in your account before your smartphone can tell you. Who’s smart now?!
Reconciling your account daily and monthly, you’ll be able to spot any transactions that you did not authorize right away.
Your record will be an excellent form of evidence if an identity thief strikes, saving you from huge hassles and headaches when recovering stolen money.
Facing your Finances
A lot of us have monthly subscriptions or memberships that automatically debit from our accounts. Every morning you buy that coffee and breakfast sandwich with your debit card. You may not realize how quickly these little purchases add up to big expenses when you reconcile and record them each day. Seeing these types of indulgences in black and white can help you control your spending.
Keeping a checking account register seems like an outdated habit, but knowing where your money goes is a timeless need. It might be the first step you take on achieving your financial goals and security.
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