Mary Hunt, author of Debt Proof Living, wrote an article on the “Seven Habits of Financially Responsible People.” The number one habit of these people was that they balanced their checkbooks regularly. Some even balanced them after every single transaction.
By balancing your checkbook, you confirm that your financial records match the bank’s records, and you increase the possibility that you will catch mistakes. Remember, banks and credit card companies all make mistakes, and so do you. When you balance your checkbook, you verify that everything has been put in correctly. Simple mathematical mistakes by either you or the bank can lead to bounced checks, the resulting fees quickly growing beyond the initial $25.
Bank or Teller Error
Depending on your bank, you have 30 – 60 days to correct any mistakes they make. In situations where the bank has accidentally withdrawn money you never authorized, that means you will lose that money if you do not report it as soon as possible. In some cases, this will be true even if it was a preventable fraud. Read the fine print on your account agreement to verify how much time you have and what they require to report a bank error.
Not all creditors promptly cash their checks. While online payments through paypal and the like generally go through immediately, actual checks depend on the recipient to cash them. In some cases, your creditor might decide to wait until the end of the month to deposit the check or even later. That is money that is about to be taken from your account that you might not remember when you check to see how much money you have left.
Sometimes a creditor may not even receive your payment. As you dutifully believe that you have paid your bills, you might be surprised to find an overdue notice in your mailbox. Keeping up with this one simple task on a regular basis reveals checks that have not been deposited, and it serves as a method of demonstrating you paid. Should things lead to legal discussions, you will sound more convincing if you can say, “On Monday, July 17, I mailed $86.15 by Check #12
The person making the mistake in your finances could be you. It isn’t that hard to put a 6 in place of an 8 or think that a 5 is a 2. If the bank statement and your register refuse to reconcile, you know something has gone wrong. You’ll come out having more or having less than what your statement says, and that is cause for concern. The sooner you go back and fix that mistake, the easier it will be on you.
In some cases, that mistake will just be in your register. You accidentally transposed a number or two. In other cases, you will have paid the wrong amount. By checking your balance regularly and keeping good records, you may be able to catch and correct the payment before it’s too late.
No matter how fancy the financial applications and online offers get, nothing will be able to give you the same benefit as balancing your checkbook. And that’s because it makes you more aware of how much money you are spending and how much you have than all the graphs and pie charts on the web.
As you jot down each deposit and charge you’ve made in the past day or week, you are reminded of what you have. You watch that little bit of money increase and decrease, and you see what you spent the money on.
Some financial experts say that people should pay with cash because it makes people more aware of what they are spending. The same holds true with balancing your checkbook. When you stay on top of it, you understand how much everything cost. You know exactly where it has gone, and you know what you have left. That’s why the financially responsible people in Mary Hunt’s article balance their checkbooks after each transaction. It leaves nothing to chance, and it keeps the errors at bay.