Your bank doesn't have a crystal ball.

Why you MUST maintain your check register (and how to do so)

I was faced with a problem recently I never anticipated. I had to write a check out of my business account.

I don’t have paper checks for my business....everything I purchase or pay for, when it comes to my coaching business, can be done online or with a debit card. Except for this one thing...through a clerical screw-up, I had to refund some money to somebody, who had originally written ME a check, shortly after I had deposited theirs. It was from an organization actually, not an individual, and they were pretty old school....they write checks and they receive checks. That’s it. No PayPal, no Zelle, no Venmo, no debit card.

So I had to transfer money from my business account into my personal account just so I could write out an old-fashioned paper check and snail mail it to them. My husband and I DO occasionally use paper checks in our personal life, but still nowhere near as many as we used to.

These days more and more people don’t even HAVE a checkbook with paper checks in it. Especially the millennial generation and younger. Like me in my business, they pay for everything in some digital fashion....debit cards, online bill payment, online purchases, and they Venmo, Zelle or PayPal each other if they owe a friend money.

I think the absence of paper checks is a main cause of an epidemic problem that I see in my clients’ finances....they don’t keep a “check register”, or perhaps a better term these days would be a “log of transactions” for their checking account. I often ask a client, at least certain ones, how much money will there be in your checking account on the last day of the month, before you get paid again? Mind you, I’m not asking them how much is there right now, but how much will be there at some day in the future.

The answer should be as easy as looking at their check register. Instead, they go online and check their balance. But that’s not the answer I am looking for. The current online balance today is the current balance today, not what it will be in a few days or a week or two.

Most people, sadly, can’t even show me their check register, because they don’t even have one or don’t know where it is. Or they won’t show me, because it’s too embarrassing to see that it’s just a jumbled mess and hopelessly out of date and useless.

Here’s the thing: Your bank doesn’t have a crystal ball.

Your bank doesn’t know what’s ABOUT to hit your checking account (income OR outgo). It can only tell you what has happened in the past, and what your balance TODAY is. But you need to have more control of your finances than that. You need to plan where your money goes (that would be called a budget), so you should know what is GOING to happen with your money in your checking account.

So many people fly by the seat of their pants. If they want to buy something, they’ll check online or at an ATM to see what their current balance is, and then decide whether to proceed with the purchase they had in mind, based on that current balance.

But then the next day their car payment (or something else) is automatically deducted.

And then they wonder why they are constantly overdrawn and paying NSF (nonsufficient funds) fees.

Look, folks, you MUST MUST MUST, as a responsible adult, maintain a “check register” or a “log of transactions” for your checking account, with all of your deposits and withdrawals of any type recorded. This does not change if you don’t actually use paper checks. You still need to record what goes into and out of your bank account. Guess what...banks make mistakes sometimes!! And they can’t predict the future.

And you also need to “reconcile” your check register with your bank statement once a month. Reconcile...another word that is foreign to too many people anymore. This is where you check that all the transactions you show for the past month match all the transactions that the bank shows for your account for the last month.

It used to be that your bank statement came in the mail, printed on paper that had a handy-dandy printed instruction sheet for how to reconcile your register with your statement. That way you could make sure that all of your transactions that you THOUGHT you had initiated actually occurred at the bank eventually as well.

Hardly anybody gets statements in the mail anymore. But they are pretty easy to print yourself from your online banking site. However, they often don’t include the instructions for how to reconcile your account.