Do you need to balance your checkbook?

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We live in a time where you can keep your calendar on your phone, carry your debit card in your back pocket, download a personal finance app to track your spending on the go, even sign important documents electronically, according to investorjunkie.com. Balancing your checkbook seems like an old-fashioned task, but is it still something you have to do?

In the days before the ease and convenience of credit cards, debit cards, and direct deposit, people carried a checkbook (a stack of checks with a log of the check register). You would write a check that the merchant would take to the bank along with their other deposits, and the bank would cash the check, deducting the money from your account. When you write the check, you will note the date, amount and merchant in your check register. You’ll also keep track of the deposits and withdrawals you’ve made during the month in your checking register.

At the end of the month, you take your checking account statement and check register and match your entries with your bank statements. You have corrected any errors, such as deducting the amount of the check you forgot to write and subtracting any bank charges you were charged, and reconciled your account.

While most of us no longer carry checks and record expenses by hand in a checkbook – some of us rarely even write a check – we still use a traditional checking account as our bank account. major. Our paycheck is deposited directly into it, our debit card is linked to it, and we pay our bills online from it. Then the bank sends us a monthly statement for our records.

Although you don’t have a formal check register to balance, you should still reconcile your records with your bank statement for a few key reasons, two of which follow.

  • Reconciling your current account helps you discover errors and rectify them quickly

Banks make mistakes. They process hundreds of thousands of transactions a day, and even in the electronic age, banks make mistakes – and it’s up to you, the account holder, to bring mistakes to your bank’s attention. And since you usually only have 60 days to detect an error in your account, you should maintain a regular schedule of balancing your account.

You make mistakes, and mistakes cost you dearly. Overdraft and ATM fees are an important source of revenue for financial institutions. Banks charge consumers millions in ATM and overdraft fees every year, according to an analysis.

The fact is, overdraft fees are completely avoidable if you track your spending and balance your account regularly, and most banks only charge ATM fees when you use an ATM provided by another financial institution.

With a little planning, you can easily limit your withdrawals to ATMs provided by your bank. Everyone makes mistakes, but by balancing your account regularly, you can prevent mistakes from becoming disasters.

Traders make mistakes. Although the companies are fundamentally honest, there are human errors and electronic processing errors, and hidden or undisclosed charges may be billed to your account. Typically, you only have 30 days to catch these errors and bring them to the merchant’s attention.

The scammers are there. We regularly make ATM withdrawals, use debit cards and credit cards, shop online, file tax refund claims online. All of this provides opportunities for someone to hack into your account or steal your identity.

Balancing your account will help you find fraudulent charges quickly. The sooner you react, the sooner the bank can freeze your account to prevent any further theft from occurring.

  • Reconciling your account helps you manage your money and saves you money.

This is a key aspect of good money management. Keeping a close eye on your account transactions can provide useful information on how to budget your money more effectively. It helps you know exactly your balance so you can control cash flow and manage your money efficiently.

Important Tip: Do not use your ATM printed receipt as a reliable way to check your balance. The printed balance is just a snapshot of the amount in your account at that moment. It will not reflect transactions that have not been posted, such as debit charges or checks that have not been cashed.

It can support your savings goals. Regularly managing your account balance could help you save money on bank charges by emptying your account unnecessarily. Combined with the habit of budgeting, you might even find extra funds to add to your savings account on a regular basis.

It has never been so easy. With online banking, you can enjoy all the benefits online, including automatic text messages, email alerts, and personal finance software synchronization. Register your account online for easy reconciliation. You don’t have to wait for your statement to arrive in the mail. You have 24-hour access to your accounts. You can monitor your transactions and make sure your balance information is correct. Most financial institutions allow you to sign up for email and/or SMS alerts. If there’s a fraudulent charge, you’ll know right away. And most online bank accounts can be synced with personal financial software.

It can save you money and frustration. Eliminate costly (and unnecessary) fees. If you forget to record an ATM withdrawal, debit card purchase, or other transaction, you can start writing bad checks and incurring fees.

How to balance your account

The concept of reconciling or balancing your account is simple. You check your records against bank records to discover any errors or unauthorized activity. So how exactly do you balance your account?

Start with your records, anything you use to personally track your expenses and deposits: your check register, your receipts, or the transactions you’ve recorded in your personal finance software budgeting app. You should always keep track of three key things: the date of the transaction, the amount that was paid, and the beneficiary. Be sure to also include all ATM transactions.

Match your records with the bank statement. If there is anything in the bank statement that is not on file, include it in your file. It could be something you forgot to record, or it could be bank or ATM fees or maybe interest paid to you on the account.

If something is in your file but not in the bank’s, it’s probably because that payment or deposit hasn’t cleared the bank yet; don’t just delete it from your recording.

From the bank statement balance, subtract any payments on your file that have not yet cleared the bank and add any deposits that have not yet cleared. This new balance must correspond to the balance of your file. If not, investigate why there is a difference. Maybe you transposed two digits somewhere. Or maybe the bank made a mistake; If so, be sure to contact your bank immediately to discuss the discrepancy.

Whether you decide to manually reconcile your account balance or track your account online, do it. Maintaining and tracking your checking account is an important step in managing your personal finances with accuracy and confidence.

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All rights reserved. This material and any other digital content on this website may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without the prior express written permission of PUNCH.

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