If you are like a lot of Americans, you don’t balance your checkbook. You don’t know how, no one ever taught you, and you seem to be doing fine. I offer to teach my clients how to balance their checkbook, but no one has taken me up on the offer. The main reason is because technology has made balancing a checkbook dumb.
Online banking is becoming ubiquitous and more households continue to connect to the Internet. Smartphones are everywhere, and some families buy smartphones before they buy a computer. These days, knowing exactly how much is in your bank account takes only a moment.
Writing Checks is Becoming Obsolete
The need to even write a check is going away, too. I love using my bank’s free bill pay service. The bank prints a check, mails it, and deducts the amount from my available balance. Electronic card readers from Square and PayPal allow more businesses to accept debit and credit cards. Cardless payment systems like Apple Pay or Android Pay are becoming popular. Plus, many banks reimburse ATM fees, so cash is still a great option.
Before telling you why you never have to balance your checkbook, I want to review why it used to be a great habit. Balancing your checkbook every month had three main benefits.
Why Balancing a Checkbook Was Useful
The first was to check for errors and fraudulent transactions. Mistakes happen in banking. Balancing your checkbook made you look for errors on your bank statements. You might have found bank fees you weren’t expecting or charges you didn’t make. You could have found some errors in your transaction register (the little book you kept with your checkbook).
The second benefit was to track undeposited checks. Your bank doesn’t instantly know what is going on in your life. There is an amount of time between when you write a check and when it gets cashed. As you write checks, you should pretend the money is already gone. When you balanced your checkbook, you filled the gaps of what your bank didn’t know.
The third benefit was you didn’t have to work through months of statements at one time. Balancing your checkbook on a regular basis usually took fifteen minutes a month. If you waited too long, you could have missed errors. Banks are good at helping you fix mistakes, but there’s only a certain amount of time.
Why Balancing Your Checkbook is Dumb
Below are the reasons why balancing your checkbook is dumb and how technology has replaced the practice.
1. Online banking tells you how much money you have.
Most banks have an app for your smartphone that can tell you how much is in your bank account at any moment. This means you don’t need your checkbook or transaction register to tell you how much money you have. If you have a lot of bank accounts, you can use apps to gather your account in one spot. Some good ones are You Need a Budget (YNAB), Mvelopes, EveryDollar, and Quicken.
2. You can keep track of undeposited checks with budgeting apps.
When I write a check, I use my Mint app to add a transaction. Let’s say I write a check for $30 to buy some Girl Scout cookies. I add a new transaction to my Mint account and it is marked as pending. The money I have left (my available balance) goes down, and it’s as though I already spent the money. When the check gets cashed, Mint changes the transaction from pending to confirmed. I barely notice the difference.
3. Budgeting apps find errors faster.
The apps and software I’ve mentioned do all the math for you. Checking your accounts every couple of days is a faster way to find errors and fraudulent transactions. I have the habit of checking my Mint account every Monday, Wednesday, and Friday. It only takes five to ten minutes each time. I catch mistakes and fraudulent transactions much faster than waiting for a monthly statement.
Balancing your checkbook used to be a good habit to have. Now, you can manage your money more efficiently by using the latest money apps.
I want to know of the best apps out there. If I haven’t mentioned your favorite app, please let me know.