The other day I received an interesting question from Bobbi concerning balancing a checkbook. Here it is:
With banking and statements being completely accessible online, do you still balance your checkbook on paper?
Personally, I have never really balanced my checkbook. I know that many of you will think that is outrageous, but it has always worked for me. I don’t even look at my statements online. For the past several years, I have used Quicken on a daily basis. It automatically gets my transactions for me and I don’t have to worry about writing them down. I have never overdrawn my account. I guess I would never know if one of my small transactions were wrong, but at least I keep track of the big ones with receipts. Quicken also helps me stick to a budget as it has a great budget tool in it.
My fiance still religiously balances her checkbook. I always see her doing it every week and it makes me cringe every time. She is always like 1 cent off somewhere and she goes nuts trying to find that penny. I would have easily given up at that point and just added (or subtracted) the penny from my checkbook. I just do not have the patience. Hopefully she will still let me use Quicken when we combine the money!
Have you stopped balancing your checkbook? Why or why not?
Article Written by Adam
Adam is the founder of this site. He is a twenty-something man just trying to spread the word on sound financial planning. You can find him on Twitter! You can also contact him via email if you have specific questions or comments.
Adam has written 132 articles for Your Money Relationship.
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When I first opened a bank account with my father, he told me that it was very important to balance my checkbook. At first it was easy- the occasional CD or movie here and there, but after a few years, when I started to buy more stuff and pay for bills, I stopped balancing it. I found that it took a lot of time and I also didn’t overdraw my account (I got close to it twice).
I access my account online, and check to see that the withdrawals make sense. I also keep my credit card receipt and go over the statement when it comes in the mail.
I have heard that many of you young’uns don’t think it’s necessary to reconcile your checking account. I would never feel comfortable with this practice. Is your fiancée really reconciling her checking account EVERY WEEK? It is more common to reconcile once the checking statement is available each month - maybe it just SEEMS like every week. Since your fiancée likes to reconcile her account, I suggest you make all the entries into Quicken and when the statement is ready, let her do the reconciliation. This way you’ll both have an active part in your financial bookkeeping. Quicken will make it much easier to reconcile. I have found my account being off by one penny more than one time to be two or three transactions that were not entered, throwing off the ending balance by quite a bit. I don’t think I will ever not reconcile my accounts. To me, it is an important step in managing my finances, and I would rather know that my results match the banks, then leaving it up to the bank to keep track. Old school and proud of it… ~Mrs. Accountability
Okay - I am asking this because I’m really curious - is this what they are teaching in college nowadays? I would think with a master’s degree in financial planning, reconciling one’s accounts would be a part of the education you received. I cannot imagine a business deciding to just not reconcile accounts - and I believe our home finances should be run similarly to a business. I guess part of my thought process here is in defense of your fiancée… especially if you join your accounts and commingle your finances, it could get messy.
@Mrs. A - I don’t think she reconciles it each week, as she just makes sure to check and see if they cleared yet. Over the past 6 months I have been entering every receipt into Quicken and then waiting for the transaction to clear with the bank. If you wanted to, I guess you could call the balancing my checkbook. I just do not look at my monthly statement because they are downloaded to Quicken. For a few years I did not write in the small transactions (other than checks). I’m not sure if that bit me in the butt but I really have no way of knowing now!
In reply to the college question, the answer to that is a BIG FAT NO. They do not teach you how to balance a checkbook at any school level. I learned it in high school but only because I took an ELECTIVE class that VERY FEW students took. Most graduated without knowing what to do. I am a big advocate of getting financial literacy into high schools as a required course. I think it will save people a lot of headaches in their lives. Hmmm..I actually think I just came up with a post replying to you!
I’m one of the “young’uns” Mrs. A is referring to. I was balancing my checkbook right of high school while I was working part-time during college, but I eventually stopped because for me it served no purpose. During college I was writing a few more checks, but now I only write 1 or 2 a month. 80% of my transactions go on credit (payed off every month and I never ever use debit) and the rest are electronic bank transfers. Those transactions get pumped into Yodlee Moneycenter and are categorized so I can see how I’m doing against my budget throughout the month and track spending with almost zero effort on my end.
So I could theoretically balance my checkbook and write every single electronic transfer down, but why? I’m already reviewing every single transaction the day after it posts to my checking account. Do I need to look at my monthly statement just to say “Yup I spent all that money.”?
Like Adam I don’t even look at my monthly statements, I just have to check in at Yodlee Moneycenter every couple days and see what’s posted to my accounts.
I don’t run my finances like a business because I don’t need to account for my expenses. How much did I spend on groceries last month? Was I under budget? Great, that’s all I need to know.
Using e-statements has made me bad about balancing the checkbook monthly, but I do it every time I have a deposit or make a purchase in the register. In a way, e-statements are bad, because they’ve made me less efficient, but I can’t stand the accumulated paper. Even though I give myself enough leeway with a balance to never come close to being broke/overdrawn/bank fees, I feel I must know exactly what I have. And this household has been run like a business from the beginning. I’ve also used DayTimers for years, and I made an accounting system out of it.
I don’t balance a physical checkbook, but I do balance our accounts using Microsoft Money and online statements. I guess that’s the new generation way of balancing a checkbook. We also have a set budget that we follow every month so we follow our spending/etc pretty closely because of that.
My wife still religiously balances her checkbook just because she prefers to do it that way. I guess it’s all in what your comfort level is.
I think that anything you do to keep a track on things is a positive thing - whether its online statements or a physical checkbook.. so do it!
I have never balanced my own checkbook…everything is online and I check my accounts relatively often as I do a lot of wheeling and dealing with rates and credit.
It’s sad that balancing a checkbook is kind of out of date, yet people still can’t do it, and it’s about the only thing high schools will teach anyone about finance.
So I’ve been thinking about this as I read over the comments. Perhaps this is a problem with semantics. When you said “balance your checkbook” I took that to mean “reconcile your account” for that is literally what balancing a checkbook boils down to. Up until two years ago, I did keep a checkbook register, but it was difficult as I would record every debit card transaction whether from checking account #1, #2 or credit card transaction from account #1, #2, etc. Nowadays I use Quicken to retrieve the transactions from the various accounts, and I add in supporting information from the receipts I’ve saved, but I *still* reconcile the accounts each month. It’s a calming feeling to know my records match up to the banks. It’s not just to be able to look at and say “this is what I bought this month”. I also have overdraft accounts set up, in case I should accidentally overdraft, so it’s not so much that I’m worried about overdrafting (although my main account does charge a small fee for overdrafting). However, I am on a fairly tight budget, and I don’t have a cushion in my account. And in response to Andrew, you must be a single guy. No children? No wife? Finances get complicated pretty quickly when more than one person is involved with handling the money. I happen to know this from from very recent experience. Up until three years ago, I was the one making the money, buying the groceries and spending the money. Then I remarried my husband and now he’s taken over grocery shopping, and has his own business. It’s a lot more complicated, and I can also still remember how simple it was when I was a single gal in my early twenties. That was even simpler. I still have checkbook registers that show I spent $35 a week on groceries. Anyway, I think like Adam I also have fodder for an upcoming blog post. Thanks for the discussion.
I reconcile my accounts, but I don’t balance my checkbook. What I mean by reconciling is keeping an eye on my transactions and making sure I know where it all went. With Quicken, I really don’t feel like I need to do a paper version.
If I wrote more than 2 or 3 checks a month (sometimes just the one for rent) and used cash more than a couple times a month, I might do something like that. But since I don’t, it’s not much of an issue.
I know one couple who enter all their transactions manually, it’s kind of cool and works for them.
I don’t balance my checkbook because I only write checks a few times a year for taxes. All my purchases go on credit cards so I can earn cash back or points, and I check my online banking and credit card statements once or twice a week just to make sure there are no unauthorized transactions.
Whether you do it “old school” with a register or via a Quicken download, I think the only important thing is that you do it.
I personally use an excel spreadsheet to enter my receipts, autodrafts, and the few (very few) physical checks that I write.
I try to do this every few days because it’s easier if you just have a few.
But I do want to be sure that 1) everything has cleared, and cleared for the $ amount that I thought it was for and 2) nobody’s tried to slip an extra fraudulent charge in there.
There was a fraud case I read about recently where the perp had siphoned off fairly small amounts (around $75, I think) from people’s checking accounts several times - one person had been hit like 12 times. And didn’t even know it until their bank notified them! Their excuse was that they didn’t look at their check book balances.
Now most of us would notice one $1000 withdrawal, but maybe not several little ones……..
I stopped balancing a checkbook more than 20 years ago. After years and years of finding no mistakes, it was clear that all the balancing problems were associated with my errors in writing in amounts or misinterpreting my scribble.
I simply scan the checks written, which today are only a handful, and do an at-a-glance calculation to see if it makes sense with respect to my beginning and ending balance. I only investigate more if there is a hint of trouble.
The same holds true for my credit card statement. Just recently I saw a $6.86 charge entered twice on the same day at the same location - a place that I shopped. I thought that I had been double charged. After finding my receipts, it turned out that I had purchased an item for $6.86 and then went right back into the store to get a different item that I had neglected to get. It was also $6.86 exactly.
I could be much more careful and rigorous with balancing my checking account and matching receipts with my credit card statement, but it just isn’t worth the time. I only write a few checks a month, and I can recall each charge that appears on my credit card statement. Only when I suspect a problem so I take the time to investigate.
My finances are “under my thumbnail,” so I don’t see that it’s necessary to use software or balance my accounts to the penny. I wouldn’t recommend this to others with a financially intensive lifestyle, but it works just fine for me and my simple lifestyle.
Clair