With the advancements of online payments, the introduction of debit cards, and access to your bank account information with a couple clicks of the mouse, the art of balancing one’s checkbook seems to be fading into obscurity. Why take the time to balance your checkbook when you can see all of your debits and credits on your online bank account? Why even have a checkbook if you pay all of your bills via online payment? The simple answer is this: it is always a great idea to have a system of “checks and balances” in place.
When you think of the term “checks and balances,” you probably think back to civics class and the belief that our government needs to have multiple checks and balances in place to make sure mistakes are eliminated. You can apply this same principal to your bank account. Do not just assume that your bank is infallible. In fact, many people have probably experienced a clerical error from their bank that either raised or lowered their account balance. Bank employees are humans and therefore make mistakes occasionally. You should have a system in place to catch any mistakes.
Balancing your checkbook can be a pain. It is not the most fun activity to complete. It is, however, extremely important to do, just in case there is some kind of error. Not only can you catch an error, but writing all of your debits and credits down is a good way to increase your financial literacy. Visualizing your spending and earning habits on paper can help you spot trends, whether good or bad. Writing your credit card payment down every month may make you realize it is too high. Seeing a very large balance on your ledger may prompt you to open a savings account. Checking your receipts monthly and seeing you spend $200 each month on cigarettes may prompt you to stop smoking. As efficient and quick as online transactions can be, it can replace our financial literacy with pointing and clicking.
By Ryan Laspina
Senior Specialist, Red Flags and External Reviews