I am in my late 20’s and I have never balanced a checkbook in my life even though I consider myself to be a fairly financially savvy person. I do scan all of the transactions coming through my account both on the web and in my printed statement (I have never found any errors). I can see why balancing a checkbook was necessary long ago when there was human intervention in compiling statements. However, it seemed that this day passed something like 20 years ago. My questions are: 1) Do people still “balance” their checkbook the traditional way? 2) Why? 3) If so, does anyone really believe that a bank computer cannot successfully subtract $314.01 from $1226? 4) If this is a dead practice, why do I still here references to it and I am fairly certain that I have even seen people doing within the last couple of years. I just don’t get it.
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Certainly.
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Because (1) not everyone has a computer; (2)some people like to keep a running account of what they have in the bank as they write checks and (3) Many people simply like to do it that way because it is a reasonable thing to do and they have caught the bank in mistakes. I certainly have.
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ABSOLUTELY! The person that keys that amount into the bank computer can make mistakes. That’s one of the reasons people balance their checkbooks, even if they confirm the results online.
If you don’t get it, you don’t get it. Just because you don’t do it doesn’t mean that it is irrational. Just the opposite if you don’t check the bank’s math.
The point of balancing a checkbook is to catch your own errors as well as the banks. It never really was to check for arithmetic errors ( such as 314.01 from 1226), but for omissions ( the bank didn’t credit my deposit or I wrote a check and forgot about it ) and other mistakes ( I wrote the check for $20, but somewhere along the way it was read as $70 {happened to me once})Your statement will almost never reflect the running balance kept in a checkbook ( or even your actual balance) with a traditional once a month statement, because of transactions that occured after the atatement date , or checks written and not cashed.
Never EVER trust the bank. EVER!
According to my personal accounts I have 400
According to the bank I have like 550.
Good deal no?
Well, you see, the bank is not completely up to date. Never trust the bank. I have bounced so many checks trusting the bank that it’s sick.
The only thing I trust the bank to tell me is that there is money in the account, but I never trust how much money is there.
I do not know what you mean by “balancing your checkbook” because it can have a wide range of meanings.
The bank and any other institution can and will make mistakes, not only charging you for things you should not be charged but in the amounts that you should be charged.
I keep track of everything and have detected many “mistakes, errors and omissions” to my detriment.
I do not do it with a pen and paper. I have a spreadheet where I keep track of all my accounts and I know exactly what is everything.
people who just have a quick look at the statement to see nothing looks unusual can be taken in many ways. The most common is the same charge appearing twice. yes, it will be familiar both times and you forget you already saw it. there are many cases. I am always astounded to see how poorly people keep track of their money. I know at every moment what checks I have written and are pending. I have never bounced a check in my life.
I can tell you it has been almost a couple of years since I bought a round trip air fare to europe and it still has not shown up for charge. But if it does (which I doubt by now) the money is there and ready. The travel agency probably had a book keeper with the same attitude as the OP and my check fell through the cracks. Some double checking and they would have some more dough in their coffers.
Balancing my checkbook (to accountants, it’s called reconciling your account) was drummed into me at a young age by mother.
She religiously balanced the family checkbook and as well as the checkbook for my father’s small business.
The best reason for doing this procedure is that it impresses upon you what your financial status is. You should know how much you have in your various accounts. You should know where your money is going.
And like the others said, banks often screw up. Also, those of us writing the checks screw up.
My mother recently sat me down for the “how to balance your checkbook” speach. After she explained that I should record every ATM transaction, I asked why the heck anyone balanced their checkbook. It was then and only then that she admitted that she never really did.
I think the discrempency between the pro-balance and the anti-balance people is of financial style. When you have a variety of accounts, lots of inflow and a variety of ways to pay for things, it becomes hard to keep track, especially if you have a household to do it for and can’t keep tabs on everyone’s spending at all times. Balancing your checkbook would be worthwhile.
For people with simple lives, however, it seems unnecisary. I only get ncome form one source (student financial aid) and I only spend it one way (cash from ATMs, with the occasional check for books). I keep tabs on my balance with my ATM receipts. For me, balanceing a checkbook would be pointless.
I’ve balanced my checkbook for many, many years. Most of the errors I’ve found (and there have usually been one a year) have been trivial – off by a penny or a dime, obviously caused by someone typing in the wrong number. Not worth the phone call to correct.
Until about two years ago, when the bank error was over $200 (overcharging me.) I took it in to the bank, they compared to the check, and apologized and corrected it.
But that one error on their part made all those hours of balancing well worthwhile.
My short answer: YES, I trust that the bank’s computers can add and subtract correctly … IF the checks have been entered correctly.
It’s at the entry point where a human being has to read the check and enter the amount. And thus, human error comes into the game. I no longer bother to check the addition on my bank statements, but I do check the amounts that are entered against my own records (or the cancelled check). And it’s paid off.
But I do it. Actually, pretty often now that I can do it online. It has kept me from bouncing checks (that is, when I don’t try to play “Beat The Clock” and write checks I hope don’t get cashed before next payday). Mrs. O and I don’t make a whole lotta money so we tend to want to keep an eye on it and make sure it’s covering all our expenses. Plus we can breathe easier when the next batch of checks clears.
Finally, by checking the bank’s balance against the balance I have in the little blue book plus all outstanding items, I can check my math to see if I’ve been adding and subtracting correctly. That of itself is a big help. Then there’s the time I found an ATM withdrawal hadn’t cleared for two months so I just put it back in. Still keeping an eye peeled for it but I’m beginning to think it’ll be like sailor’s airline ticket. It certainly helped when things got a little tighter than was comfortable.
The best reasons I, as a banker, can give you to balance your checkbook monthly are:
1)Humans ‘encode’ checks.
Look at the bottom front of one of your cancelled checks. The line of black numbers is called the MICR (Magnetic Ink Character Recognition) line. The MICR line includes such information as your account number, the bank’s routing number, the check number, and the check amount. Most of the information is pre-printed, but the amount must be keyed by hand. If you use a counter check, all of the information must be keyed by hand. Once the MICR line is complete the check is machine read for the rest of it’s life cycle. A mistake in keying the MICR line will follow the check all the way through the banking system. Who keys the information? Most times it’s the BOFD (bank of first deposit). Say you, a customer of Bank A write a check to me, a customer of Bank B. I deposit your check into my Bank B account. Bank B employees encode your check and send it to Bank A to debit from your account. So not only do you have to trust your bank to do an accurate job, but also all banks who your payees may use. Also, some merchants “pre-encode” checks written to them so that they get a discount on their banking services. That check you write to the grocery store may be encoded by an entry level clerk on site before being deposited in the grocer’s bank. That’s a lot of random people to trust to get it right. Personally, I check.
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By law, mistakes in the bank’s favor do not have to be corrected after 90 days. Good customer service dictates that the bank correct errors regardless of the timeframe, but legally it doesn’t have to happen. BTW, a bank has years to collect on an error in your favor. I don’t write the laws, I just read 'em. Check your statements or risk losing the money forever.
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Fees change. I always like to know what I’m paying for a service.
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Fraud. All someone needs is your account number and some counter checks to commit fraud. The money is gone from your account until you recognize the problem and fill out forgery affadavits. The sooner you do do, the less chance that you lose the money forever.
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Errant charges. There is always a chance that your account may be charged an incorrect amount or for a service you did not receive.
If those reasons aren’t enough, more won’t help.
I don’t bother doing anything more than writing down any checks that I write. I can get an idea of my balance by checking at an ATM and knowing the checks that I wrote.
If you ever lose any checks, keep close eye on your account. The newpaper had an article on the subject where the local bank said they don’t check signatures on checks less than $500. If it’s on your check it comes out of your account. They count on the customer to monitor their own account.
Quit saving the money, spend it. Checks are generally considered invalid six months after the issue date. If this travel agency tried to deposit the check, the bank would return it.
Here is a joke on this subject.
