Is It Still Important to Know How to Balance a Checkbook?

Even in the digital age, knowing how to balance your checkbook is still relevant

People used to learn to balance a checkbook with a registrar log of all their daily transactions to better keep track of their money. The digital age, and the immediate access we now have to our bank accounts online, has made this skill less necessary. Yet it’s still important for several reasons.

To start, it’s still a tried-and-true method for verifying your financial institution’s statements, reports an October 2016 article on financial resource website The Balance by contributor Deborah Fowles. Although it’s rare, financial institutions can still make mistakes; they typically allow a maximum of 60 days to inform them of an error, so it’s important to stay up to date on your transactions.

Keeping a written record of all your daily transactions, as with balancing your checkbook, is also a helpful way to ensure you don’t overdraw on your account’s funds, reports an article in Investopedia by contributor Amy Fontinelle.

“In the age of electronic banking, checkbook balancing is not as straightforward as it once was – most people have money entering and leaving their accounts through methods other than writing and depositing traditional paper checks, such as direct deposits from an employer and ACH transfers to pay your bills online,” says Fontinelle. Keeping a written log will ensure you don’t forget about any transactions that haven’t yet posted to the account.

An example, adds Fontinelle, is a check you’ve written and sent to someone for his or her birthday. Sometimes, people hold on to checks for a while before depositing them, and if you’ve forgotten about the check you’ve written, you may not have sufficient funds in your account when the check is finally processed. Not only will you incur an overdraft fee from your financial institution, but the person depositing the check could also incur a fee, and may ask you to pay it.

“Because we have the electronic means, we don’t feel compelled to balance our checkbook. But by not looking at what you’re doing on a monthly basis, you’re not keeping good track of what’s going on with your finances,” says owner of Boucher Financial Planning Services Frank Boucher in a January 2013 article on Bankrate.com. And if you’re not keeping track of your finances, you’re bound to overspend and will end up paying fees you could have avoided.

There have also been cases when a financial institution has moved extra money into an individual’s account, reports Fontinelle. Although it is the financial institution’s error, you will be billed a theft fee if you spend this money and can’t maintain funds to cover the extra money. It’s important to monitor your balance so you can notify the institution immediately if such an error occurs.

According to a January 2013 article on Bankrate.com by contributor Marcie Geffner, reconciling or comparing your written checkbook registrar to the financial institution’s monthly statement is also a good way to detect fraud or unauthorized transactions made to your account. In addition, having a written record of your daily transactions can help protect you from identity theft, especially in an age rife with cybercriminals.