Checks and Balances

Here’s how it begins.  You open a checking account.  You’re given a checkbook, a check register and a debit card.  Then you’re sent off into the fast paced world of spending.

For someone that’s not had to manage an intangible object such as money in the bank, keeping track can sometimes seem overwhelming.  If you want to achieve that Master of Household Management title, I’ve got two basic rules to share with you of which I hope you will make a mental note…

“Rule No. 1: Never lose money.  Rule No. 2: Never forget rule #1.” – Warren Buffet

The confusing part about having a checking account is the use of two systems tied to one account – checks and debit card.  Not only do we have to keep track of the checks that we write, but we also have to make sure we write down the ATM withdrawals and debit purchases made.

In a quick rush, we’ll make a purchase or withdrawal and will forget to write it down at that moment or will tell ourselves that we’ll make a note of it later.  Well, later never comes.  We forget all about it and lose track of what we actually have left to spend.  Keeping track is a little easier now because of online banking, but there are ways to work smarter – not harder.

My advice:  Make a note in your check register as soon as a purchase or withdrawal is made.  I know it’s easier said than done, but you’ll be amazed how starting a new habit will improve your flow of life.

Another tip:  The use of the “duplicate checks” feature offered by check printing companies.  I don’t write many checks, but with the few that I do write, I always have the carbon copy of who the check was written to and the amount.

The Balancing Act

I’ve heard many reasons around this task, but I believe it should never be overlooked – reconciling or balancing your bank account.  This is a basic task of comparing your check register to your bank statement for a specific period of time…usually monthly. I know it seems tedious, but there are several benefits:

1. You avoid overdrafting your account.
2. It’s a great way to find any errors made by you or your bank.
3. You can uncover unexpected bank fees.
4. Unauthorized withdrawals or charges are discovered quickly.

 

So for now, the pros far outweigh the cons to balance your checkbook monthly.  When it’s all said and done, I’d rather walk around with the comfort in knowing that the amount I want to spend is actually in the bank.  No more guessing game!

If you are already doing a great job of keeping track of your purchases/withdrawals, this message can be considered as a reminder to keep up the good work.  If you’re a veteran checking account holder and haven’t been following these principles, I urge you to take a few extra moments to start today.

Yes, I understand that you’ve been doing it this way for years, but I promise you won’t be disappointed trying it this way.  I’ve heard that it takes 21 days to create a new habit.  If you start today, you’ve only got 20 more to go.  We don’t want Mr. Buffett to be disappointed!

So what do you do?

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Tagged as: balance, lessons, Managing Money, reconciling bank statements, shopping, time management