Balancing your checkbook in the digital banking era can make some forget how it used to be back in the day with the papers spread out on the table. Bank statements, checkbook, and checkbook register- everything was on the table so a person could check if everything in a bank statement and their checkbook matched.
But what does balancing a checkbook mean? People wanted to make sure they knew all the expenses coming out of their checking account and that the bank had received all the checks.
Today, many people do banking business a bit differently. Banking in the digital era is mostly done through online banking, credit cards, and debit cards.
There are many good practices for balancing a checkbook that we can take from the old method and apply it to the present-day digital era.
The reason for balancing a checkbook
The reason for balancing one’s checkbook has remained the same today. Everyone tries to avoid over-drafting a checking account, and the best way to do it is to balance it. The new techniques may be different today, but it is still an excellent habit.
Another reason for balancing a checking account is because it’s an excellent way to protect yourself and your money against identity theft. While you are carefully checking all the transactions, it will be much easier to spot any fraudulent transactions.
Additionally, this is a great way to check your spending. You can make sure that you are not spending more than you would like to on unimportant purchases.
How to get started?
First, gather everything you need: a laptop, mobile device, pen, and paper. You can use your laptop or your mobile device, whichever you prefer.
You should log in to your online banking service if you use it. Also, you should log in to any online credit card accounts you have. In case you do not use online banking services, you can still use paper statements.
Also, search for any paper bank statements or credit card statements from the previous month and any checks you have written.
Besides that, you will want to have all the receipts from the last month. You probably will not have all of them but gather as many as you can find.
Once you have gathered everything you need, you can get started. First, go line by line through your bank statement and make sure you know what each refers to. All the lines in your bank statement should be known expenses.
By doing this, you can identify any unnecessary expenses and act differently in the future. It is also possible to identify any potential fraudulent expenses. Therefore, keeping all the receipts is a great habit.
If you still write paper checks, you should have carbon copies with you or your checkbook register. They should all appear in your bank statement with the amount that you wrote them for.
While reviewing your bank statements, make sure you somehow highlight expenses that you are not sure about or the ones you regret. Moreover, if you notice a pattern in these kinds of expenses, then it is a red flag. These types of expenses are usually unnecessary, and you should try to avoid them in the future.
Now, repeat all the steps mentioned above for each of your credit card statements and pay attention to the same details.
Transactions you did not make
You may eventually come across a transaction you do not recognize. If this happens, contact the bank or credit card issuer immediately. Try to find out details concerning the expense and make sure it was truly unauthorized. If the expense is indeed false, you should follow the procedure your bank or credit card issuer recommends.
Have enough money in your checking account
Once you have gone through all the steps, make sure that you will be able to pay everything you need for next month. Think about all the automatic bill payments and other bills you must pay. You need to make sure you are not going to overdraft your checking account in the coming month.
An excellent strategy to avoid an overdraft is to have a buffer in your account. A good idea may be to have a month’s worth of all bills and living expenses.
Switch to online banking
If you’re not using it already, it may be a good idea to consider online banking. It is convenient when you try to balance your checking account because you do not need to wait a month to do it. You can do it weekly or at your convenience, and most of the process is completed digitally.
Reviewing your accounts regularly can help you save money. You can eliminate all the unnecessary expenses you have and avoid over-drafting the account. If you want to balance your checkbook in the digital banking era in an easy and fast way, try online banking. For any other information regarding finances, feel free to call our experts at Prudential Bank at 215-755-1500.