Why should you balance your checkbook?  It’s so important, I’ve got several reasons.  Nearly as important as why you should balance your checkbook is how you balance your checkbook.  By using your hand with a pencil on paper, and calculator, you will better understand your statement.  I know it seems old fashioned, passe, or even a waste of time but there are some things in life that are better done the old-fashioned way and balancing your checkbook is one of those.  If you don’t, you’re missing an important opportunity to see where and how your money gets spent.

The goal in living frugally is to understand where you’re spending (or saving) your precious bucks and ensure it’s what is most important to you. The only way to achieve this is to take a hard look at what you are spending each month.

Looking at your account on-line doesn’t count as “balancing” your checkbook.  Yes, you can find out your balance but that doesn’t give you the entire picture.

Why you should balance your checkbook

1. Forces you to know and understand  the details.  You have to be able to see your statement, hold it and analyze it. Get a paper statement from your bank mailed to you.  They still mail statements.
2. Focus is kept on the pulse of what is happening in your household.  This is done relatively painlessly if you do it regularly.  Even if you don’t have an elaborate budget, when balancing your checkbook you get a clear picture of your finances.
3. Facilitates tracking and planning of your household budget.  Complete, accurate records allow for ease of planning going forward.  You’ll be provided with a consistent record of household spending which is useful in tracking for budgeting purposes.  If you don’t record everything, each month, you won’t have a complete record from which to summarize expenses into meaning categories (utilities, food, entertainment, etc.) to see where you are spending.
4. Fundamentally, you learn from the process.  You will gain knowledge and confidence as you go through it.  The smallest part is the actual balancing.

And because these little budgeting talks are so fun for me to write, I’ve got a few more points for you to consider.  Don’t forget about the errors that occur.  Banks (albeit infrequently) make mistakes and you want to know where you stand so you don’t bounce checks when those automatic deductions kick in.

Extra Credit

Get help.  If you don’t know how to balance your account, there are directions on the backside of your statement.  Also, your local banker would be thrilled to give you a lesson.  You can also check About.com for a step-by-step tutorial.

Simplify.  To make the whole process easier, limit the number of accounts you have as much as possible.  Are you a couple? Have one account, one statement, working and saving together.  It’s called teamwork, people!

Charge it!  I know it sounds counter-intuitive but don’t pay with cash.  Getting cash out with your ATM card is a black-hole of cash expenditures. Pay with something that gives you a paper trail.  Have only one credit card and pay it off every single month.  Or, if you know you don’t have the money to pay it off, don’t buy it.

Just get started.  Record things as they happen.  Find your method that works and stick to it.  If you haven’t been balancing your checkbook, you need to start somewhere.  Begin today by recording what left your bank account (ATM withdraws, auto deduction for utilities, etc.) or entered (paycheck deposits, etc.) your account.  This is the first step in making it so much easier when your next statement comes around.

Balancing your checkbook is an easy thing to skip.  It’s not the actual balancing that helps you.  Like most things in life it’s the learning through the process that is the biggest benefit.  All of the work, effort, and learning comes from the tracking of your expenses, not actually doing the balancing of your account.

So, balance that checkbook of yours and if you run into me on the street, don’t be embarrassed to tell me you do it regularly.  Be proud and shout it out, “I balance my checkbook!” I’ll high-five you or fist bump or whatever the latest expression of excitement is.  And, when you’re done, indulge in a few chocolate covered almonds…that’s how I like to celebrate this task being completed.

Go Gingham Related Links:

Frugal living is the key to saving
Money and your honey – relationships and money
Just get started – sometimes that’s the hardest part
The problem with budgeting
Living frugally by choice – yep, that’s me!
Don’t forget the big picture – how finances figure in frugality