Balance Your Checkbook Please!

There was a day in the not so distant past where balancing your checkbook was a given. Before the days of the debit card and electronic banking, it was pretty important to make sure that you agreed with the bank about how much money you had. The bank would snail mail your statement and then you would painstakingly check off the bank charges, bank interest, the checks that had cleared, and the deposits that had cleared and then figure out what was still outstanding. Every month like clockwork. But not these days.

More and more people are forgoing this important piece of money management. As a financial coach, I see it all the time. Just because I can go online anytime day or night and see what my balance is, doesn’t mean that I have an accurate snapshot of my account. It is my opinion that we need to be keeping some kind of ledger (paper, electronic or whatever melts your butter). And then we need to systematically make sure that we are balanced with the bank TO THE PENNY. I am not going to spend the time talking about how to do this (Google it if you don’t know how.) But keeping track of your transactions and then reconciling with the bank is part of ABCs of cash flow management in a family’s finances.

I had a friend of mine that scoffed at me about the need to balance his checkbook and then a few months later he confessed that one of his automated withdrawals had gotten messed up and he had not been giving to his church for several months like he had intended to do. He had plenty of money in the bank so the issue wasn’t with bouncing checks but rather the issue was him accomplishing one of his financial goals.

But, a mistake in the other direction of an account that is tight can cost you a lot of money. You have to pay a fee for every transaction you bounce. In this day and age where we have more transactions via debit cards, you can get in trouble in a hurry. I have discovered this the hard way before. A few years ago, I made a mistake in the account and before we caught it we had bounced 12 transactions for less than $10 each. The penalty adds up pretty quickly at $37 apiece.

The big deal in my mind is that if we want to be the kind of God-centered money managers that we are espousing then we need to know where we are on our trip. Most trips require a map and taking a left turn is different than taking a right turn. Don’t let the convenience of automated banking cause you to lose your way.

Tim Howington is Executive Vice President for Freedom 5:one and is one of our Financial Life Coaches.  He lives with his wife Terri and son Josh in Rogers Arkansas.

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