A generation ago balancing your checkbook was a weekly activity. However, in today’s high tech world it is often a task neglected by many. Lulled into a false sense of security by on demand services such as internet banking, many fail to see the importance of doing things the ‘old fashioned way’.
The convenience of internet banking is nice, but if you don’t reconcile your bank account you could miss mistakes or lose track of whether that big check you wrote has cleared. A check can be held for 90 days before being deposited, and if you accidentally spend the money in the mean time that check could put you in the red. Today more people pay NSF and overdraft fees than any generation before. Risking running afoul of companies like Chexsystems and losing the ability to even hold a checking account; all for15 minutes a week.
But I Don’t Know Where to Start!
Balancing your checkbook like anything else: The more you do it the better you will become. Just follow these simple steps:
1. Choose a start date. The beginning of the month is ideal but it can be any date. If you have online banking check your balance, if you don’t, call your bank and ask them for the balance of your account (remember that it could still alter from checks/credits posted to your account in the last few days but which aren’t yet showing).
2. Save all your receipts for the next week: ATM withdrawals, debit receipts, pay stubs and record any checks you write (most check books have an area for this in the back of the book)
3. At the end of the week get a print out of your last weeks transactions. Divide up your receipts into debits/credits and take out the list of checks you wrote.
4. Check each receipt/check to ensure it went out of your account correctly. Taking note of which transactions haven’t gone out yet, and any transactions posted to your account which you didn’t have marked down.
5. Add all the credits together then subtract all your debits. Take the final number and add or subtract it from your starting balance. Depending on whether it is a positive or negative number, what you have left is your actual final balance.
Fifteen minutes each week to check your finances will, in the long term. help prevent NSF and overdraft fees. Once your account is in order you can balance your checkbook bi-weekly, then monthly. Keep doing it and you should never again have to face the nasty surprise of having an empty account!