Confession time : I use a checkbook register and balance my checkbook every month 😯 . I know, I know, I’m totally behind the times, but I like my old pen and paper method and it works well for me.
So, call me old fashioned, call me over the hill, call me whatever you want, but my system has prevented overdrafts, late bills and given me a crystal clear picture of where my monthly finances stand at all times.
Keeping a checkbook register is something I remember being taught in school and, when I was a teen, my mom taught me how to meticulously keep track of the money coming into and going out of my checkbook. She taught me how to take out future expenses, so I wouldn’t spend too much and not be able to pay my bills, and she also taught me how to balance my checkbook (each and every month).
As I think we all do from time to time, I’ve went through life assuming other people used a checkbook register the way I do (though I realize this is a bit naive). Duh. When I go to the bank and they ask if I want my balance (“No, no I don’t”), or when they look at me funny when I ask for a checkbook register – maybe this should have alerted me that I’m a bit odd.
Recently, one particular incident came to my attention (though I can’t in good conscience share details, sorry), waking me up to the reality that some (most?) people never balance their checkbook and don’t use a checkbook register. And that’s okay. As long as you have a method for avoiding overdrafts, one that enables you to pay your bills on time (every time) and gives you an accurate report of your finances, I say go for it (and I’d love to hear what systems you all use).
How I do it
I sit down once a week and record all incoming and outgoing money in the checkbook register.
I even take it a step further – and this is where the budgeting part comes in – I take future bills (most of my bills are autopay) out of the checkbook via the register at least two weeks before they are due. I have even estimated the non-autopay bills and subtract those out, correcting for accuracy when I get the final bill amount. I simply write down the due date and subtract the amount from my balance.
Rather than relying on the checking balance the bank provides, I go by the balance in my register.
Today, my checkbook register says I have $217 (oh my!), but my bank says I have $2220! That’s quite a discrepancy!
Using my checkbook register to record upcoming bills even before they get debited from our account is one of the main ways I ensure we don’t overspend each month.
The bank’s balance is a lie
Here’s the deal, you should know your balance before your bank does. If you track your balance at all, you know the bank balance is almost always higher than the actual balance. The bank balance is misleading and can easily lead to perpetual overspending and overdrafts, resulting in a life of living paycheck to paycheck and even spending more than you earn.
When you use the balance the bank provides, here’s what can fool you:
- Uncleared checks
- Online payments that haven’t cleared the bank yet
- Automatic withdrawals that are taken out early/late
- Transfers that haven’t cleared the bank yet
- Bills due in the next few weeks (that you will need the money to pay)
Keeping a register (or having a similar system) allows you to completely control and track your monthly finances, which is paramount to paying off debt and building wealth.
Tracking your checking account is not a complicated process (just some simple math) and doesn’t have to take a ton of time.
Multiple checking accounts can complicate this process though. If you have multiple accounts that you are paying a variety of bills from, I highly recommend you pare down and simplify your finances.
I have only one checking account that I pay all personal bills from, simplifying the process and keeping me up to date on exactly where I stand.
A (non) Budget Solution?
Personally, I don’t like having a set amount for every budget category each month (though I tend to spend about the same in each category), but keeping an accurate checkbook register keeps me from overspending and, at the same time, helps track my expenses.
If I had to choose just one solution to gaining control of monthly finances, I would recommend keeping a checkbook register (or similar option) and subtracting upcoming bills ahead of their due date. Trusting the bank balance can mean treading on thin financial ice.
I may be old
I realize I could keep track of my checking balance and create a similar system with technology*, such as YNAB, Mint.com, or I could even create an Excel or Google sheet. And I can’t ignore the fact that there are smartphone apps for that, such as checkbook or checkbook pro. For those that prefer a more technological approach, there are a ton of options out there. But, for me, old habits die hard.
Please share how you keep track of your account balances! If you don’t have any system set up, how do you track it?
*I do use some technology. I track spending in a Google sheet and I use Personal Capital, a free online tool that allows me to see all of my accounts in one place, and also tracks my spending and net worth.
Here is a tutorial on how to balance checkbook.
Need a paper register? Typically your bank will provide one for free if you ask, they are available for purchase, or you can print one for free online.
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