When was the last time you balanced your checkbook? If you can't remember, don't feel bad. You're not alone. An online consumer poll reports that only 21% of respondents balance their checkbook regularly. Heck, you may not even KNOW how to balance a checkbook. With debit cards and mobile banking, many people have abandoned the one sacrosanct monthly statement review. In theory, there's nothing wrong with that. In reality, there are several reasons why you should balance your bank statement regularly.
Note: For purposes of this idea, I consider credit card bills just like a bank account. They should be reviewed monthly and, in most cases, you should be keeping track of where you are spending money.
Catch Fraud and Unauthorized Charges
Don't let someone else have your money! Regular review of your credit card and bank statements will help you notice unauthorized charges. In many cases, these items can be disputed, but there is a time limit. It's usually 30 or 60 days, so a monthly check should reveal issues with plenty of time.
Forgotten Services
You might also discover some expenses that you did authorize, but had forgotten. Many services renew automatically once a year. If you don't remember that you're paying them, you can't remember to cancel things that you aren't using.
Overdraft Fees
It's no fun to pay a huge fee because you accidentally overdrew your checking account. Regular checkbook reconciliation decreases the chances of that happening.
Other Bank Fees
Do you know what you're paying to have a bank account? How about to use an ATM? What if you go over your credit card limit? If you read your statements every month, you'll be aware of (and inspired to reduce) fees that you're paying to your bank.
Situational Awareness
Being aware of your finances has a surprising impact on your spending. It's easy to rationalize, and then conveniently forget, money that you hadn't planned to spend. If you balance your accounts each month, you'll be looking at every expense days or weeks later. This can positively influence your behavior.
Mental Clarity
Knowing exactly what is going on in your bank account helps you feel more peaceful about your finances. Even if things are tight, knowing exactly where you stand is much better than guessing that you're broke.
Bank Errors
It's less common now that banking is done by machines instead of men, but errors still happen. Account numbers can be transposed, or extra digits can be added to amounts, direct deposits can be delayed, or automatic payments can be drafted on the wrong days. Any of these things can create chaos in your checking or savings account.
If you haven't been balancing your checkbook lately, join me in the "bank account balancing" club. I've been back on the bandwagon for a month and I already feel significantly more in control, and we are definitely spending less. I'm going to stick with it because the benefits are so big compared to the small amount of time spent.
