Learning to balance the checkbook is an essential aspect of personal finance that so many people tend to ignore. Consumer statistics taken recently on the aspect of check balancing shows that only 2 out of every 10 persons balance their checkbooks dutifully, to the last penny. One of the great habits for learning to be a better money manager is balancing of checkbooks. Unfortunately, a larger part of the American population does not care to keep a record of the amount on the checks they issue. While some will try to do it at one time and give up along the way, a larger number of people don’t even try at all.
In fact, when it comes to balancing of check, different categories of people exist. In addition to the cases mentioned above, you will find other cases such as those that only balance their checks for the purpose of taxes. However, there was an era where people rarely forget to balance their checks. Does it mean that check balancing has become old-fashioned?
What it Means to Balance Your Checkbook
When you adopt a regular practice in checking your checkbook records to see if it corresponds with bank’s record (in your monthly bank statement), this is known as checkbook balancing. This task is as essential as other aspects of personal finance. Although different methods of balancing checkbooks may be available in this electronic era, the practice still remains the same.
Why Do You Need to Balance Your Checkbooks
No doubts, banks process thousands of transactions and barely record any error in doing so. However, it is possible for mistakes to occur. Regardless of the sophisticated electronic gadgets employed by banks in processing transactions, it is possible for errors to occur due to human input (when entering the information). Typically, any discrepancy in your bank statement should be reported to the bank within 60 days, after which there may be no further remedy. So, how can you dictate an error and send a report within 60 days when you don’t even balance your checkbook on a monthly basis?
Also, balancing your checkbook will help you spot any calculation error while making entries in your checkbook register. If you have to scout through several months of transaction to sort out transaction problems at a any point, it would be an uphill task because of piled up unbalanced checks. But, spotting a transaction issue is easier when your checks are being balanced every other month. By not embarking on regular check balancing, a lot of people end up in making huge mess of their checkbooks. Some even had to open new accounts and close up old ones due to the magnitude of the mess resulting from not balancing their checkbooks.
It is sad that basic personal financial management such as check balancing is no longer taught in school. We hope that the recent campaign on financial literacy will incorporate this essential aspect of personal finance in the curriculum.