Part 1, You Can't Afford Not to
One of the most fundamentally responsible ways of managing your daily financial affairs is to know how much money you have available in your checking account. Sounds simple, doesn’t it? Actually, it is simple. It’s so simple that the number of people that miss it is absolutely astounding. How do you know what’s in your account? It’s as simple as balancing your checkbook regularly.
In addition to taking accountability for ones’ own money, keeping a balanced checkbook also provides economic advantages. The overdraft fees that can be saved are substantial. When you consider that banks make a large portion of their profits from the fees that they charge, as much as $25 to $35 per occurrence for a bounced check, you can see how that “free” checking account is not really free. Add that to the fee that the merchant charges for a “bad” check (anywhere from $20 to $40 is normal) and you’ve already paid $50 or more, and you still have to pay the original purchase amount.
Other disadvantages of overdrawing your account can be even more severe. You may lose your check-writing privileges at the store where you made the purchase, as well as numerous other stores that you didn’t even shop in. Many merchants are members of one or more check verification services, such as TeleCheck or SCAN, for instance. A bad check or debit card purchase at one member store can get you barred from using anything but cash at literally thousands of other shopping locations. And if you fail to cover the bad debt, you could find yourself in collections, which might lead to a lower credit score and the numerous drawbacks associated with it.
To top it off, if you bounce several purchases, the bank could close your account and enter your information into ChexSystems, making it next to impossible for you to open another checking account anywhere else. Not to mention the embarrassment that each of these events is likely to cause.
So, how do you avoid all of these unfortunate circumstances? Keep your checkbook balance current. All it takes is a few minutes every evening. If you don’t take the time to write the amount of your check or debit card purchase in your register at the time of the transaction, simply fold up the receipt and put it in your checkbook register. Don’t put it in your pocket, your wallet, or your handbag. It only takes a moment. Then, when you get home at the end of the day, all of your receipts are in one place, waiting to be transcribed. You want to make it as easy and convenient for yourself as possible. You can even invest a few dollars in a checkbook and register cover that has room for a calculator in it.
Don’t trust that you can “keep it in your head”. You won’t be able to. Have you ever purchased gas at the pump with your debit card, and then driven away without getting the printed receipt? Just how long did you keep that purchase in your head? It’s simply a matter of applying a small amount of self-discipline and responsibility to your daily financial affairs. It takes so little time and can save you so very much money.
In Part 2 of this series, we’ll learn the “nuts and bolts” of balancing, and keeping current, your checking account.
