Confession time : I use a checkbook register and balance my checkbook every month šÆĀ . Ā I know, I know, Iām totally behind the times, but I like my old pen and paper method and it works well for me.
So, call me old fashioned, call me over the hill, call me whatever you want, but my system has prevented overdrafts, late bills and given me a crystal clear picture of where my monthly finances stand at all times.
Keeping a checkbook register is something I remember being taught in school and, when I was a teen, my mom taught me how to meticulously keep track of the money coming into and going out of my checkbook. She taught me how to take out future expenses, so I wouldnāt spend too much and not be able to pay my bills, and she also taught me how to balance my checkbook (each and every month).
As I think we all do from time to time, Iāve went through life assuming other people used a checkbook register the way I do (though I realize this is a bit naive). Duh. When I go to the bank and they ask if I want my balance (āNo, no I donātā), or when they look at me funny when I ask for a checkbook register – Ā maybe this should have alerted me that I’m a bit odd.
Recently, one particular incident came to my attention (though I canāt in good conscience share details, sorry), waking me up to the reality that some (most?) people never balance their checkbook and donāt use a checkbook register. And thatās okay. As long as you have a method for avoiding overdrafts, one that enables you to pay your bills on time (every time) and gives you an accurate report of your finances, I say go for it (and Iād love to hear what systems you all use).
How I do it
I sit down once a week and record all incoming and outgoing money in the checkbook register.
I even take it a step further – and this is where the budgeting part comes in – I take future bills (most of my bills are autopay) out of the checkbook via the register at least two weeks before they are due. I have even estimated the non-autopay bills and subtract those out, correcting for accuracy when I get the final bill amount. I simply write down the due date and subtract the amount from my balance.
Rather than relying on the checking balance the bank provides, I go by the balance in my register.
Today, my checkbook register says I have $217 (oh my!), but my bank says I have $2220! Thatās quite a discrepancy!
Using my checkbook register to record upcoming bills even before they get debited from our account is one of the main ways I ensure we donāt overspend each month.
The bankās balance is a lie
Hereās the deal, you should know your balance before your bank does. If you track your balance at all, you know the bank balance is almost always higher than the actual balance. The bank balance is misleading and can easily lead to perpetual overspending and overdrafts, resulting in a life of living paycheck to paycheck and even spending more than you earn.
When you use the balance the bank provides, hereās what can fool you:
- Uncleared checks
- Online payments that havenāt cleared the bank yet
- Automatic withdrawals that are taken out early/late
- Transfers that havenāt cleared the bank yet
- Bills due in the next few weeks (that you will need the money to pay)
Keeping a register (or having a similar system) allows you to completely control and track your monthly finances, which is paramount to paying off debt and building wealth.
Simplify
Tracking your checking account is not a complicated process (just some simple math) and doesnāt have to take a ton of time.
Multiple checking accounts can complicate this process though. If you have multiple accounts that you are paying a variety of bills from, I highly recommend you pare down and simplify your finances.
I have only one checking account that I pay all personal bills from, simplifying the process and keeping me up to date on exactly where I stand.
If you need some guidance, Paula Pant of Afford Anything wrote a great post on simplifying your accounts, saving you both time and money.
A (non) Budget Solution?
Personally, I donāt like having a set amount for every budget category each month (though I tend to spend about the same in each category), but keeping an accurate checkbook register keeps me from overspending and, at the same time, helps track my expenses.
If I had to choose just one solution to gaining control of monthly finances, I would recommend keeping a checkbook register (or similar option) and subtracting upcoming bills ahead of their due date. Trusting the bank balance can mean treading on thin financial ice.
I may be old
I realize I could keep track of my checking balance and create a similar system with technology*, such as YNAB, Mint.com, or I could even create an Excel or Google sheet. And I canāt ignore the fact that there are smartphone apps for that, such as checkbook or checkbook pro. Ā For those that prefer a more technological approach, there are a ton of options out there. But, for me, old habits die hard.
Please share how you keep track of your account balances! If you donāt have any system set up, how do you track it?
*I do use some technology. I track spending in a Google sheet and I use Personal Capital, a free online tool that allows me to see all of my accounts in one place, and also tracks my spending and net worth.
Here is a tutorial on how to balance checkbook.
Need a paper register? Typically your bank will provide one for free if you ask, they are available for purchase, or you can print one for free online.
This post contains affiliate links, which means that if you click on one of the product links, at no additional cost to you, Iāll receive a commission if you buy products through these links. See the full disclosure here.
Amanda, your posts are great because they really take me back! I used to balance my checkbook religiously, but now that I think about it, I can’t remember the last time I did!
Currently, I have a system of two accounts at an online bank (Capital One 360). One is called Deposits – all deposits from any source go there, including my paycheck. The other is called Monthly Bills. I have an auto-transfer take a standard amount each month from Deposits to Monthly Bills. Every weekend I sit down to pay bills and update Quicken electronically with all of my latest transactions and balances.
If I ever overdraw, which is very rare, the bank just pulls the money from my Deposits account, so there is no problem (or charge). I always have extra money in Deposits to cover overages.
I actually like your “old-school” system – whatever works for you, stick with it!
It’s funny you say that, Jon! I think I tend to do many things old school (in fact, my family says I’m just like my great grandmother!).
One of the reasons I wrote the post was to find out how others handled the bills/checkbook, as I know I’m a little stubborn and set in my ways. I like your method and could see it working for me. I have Quicken for business and don’t use a checkbook for my business account, so it may just work for me.
Thanks for sharing! š
Do you use a fountain pen and a bottle of ink to write it all down? š
My budget consists of me breaking my recurring expenses into bills that are paid with the 1st or 2nd check of the month. I track those bigger exoenses in my spreadsheet, but that’s it. I don’t budget for smaller or random expenses.
Oh my, no. I use a hammer and chisel with a stone tablet, of course! š
Thanks for sharing, Ty! That’s pretty much what I do with the paycheck too – and stay about on paycheck ahead or so. Bigger, annual expenses are broken down into a monthly amount that’s sent to savings (which is automated).
Well I’m going to show my age (and ignorance..) but I don’t think I’ve ever even seen a check book register.
Sounds like an interesting method, possibly slightly more time consuming but I understand having a physical representation – we always write out our meal plans and food shopping on actual paper whilst everyone else is walking around the supermarket with their phone list. Whatever option works is something I support, if it gets the job done and gives you the best result then that’s what you should do!
Interesting how you mention tracking to prevent overdrafts though – we’ve never had this problem, we do have a general yearly budget on Excel and we track our monthly expenses/saving rate after each month (also in Excel, and we blog about them) but during the month we tend to just make sure our balance in our general account is generous enough to accommodate a large unexpected automatic payment.
We also pay our rent as soon as the pay-check comes through (sometimes paying rent 2 weeks early). One last thing we do is have a “middle-man” savings account – we have a buffer amount in there and if a large yearly payment comes up we take it from that account and then slowly top it back up with our monthly savings. – when I write all this out it seems complicated and messy! but really it’s so simple.
Jasmin
Thanks for sharing how you guys do things, Jasmin! I make a paper list for the store too š ! My husband is always asking me why I don’t put it in my phone. I don’t know, I just like to mark things off when I get them!?
I like your system! I do think it could work for me too, if I just made sure I had a generous amount in my checking account to cover anything large or unexpected. I always make it a game to see how little I can get by on, which is one of the reasons I have to track so diligently (I like to “pretend” I don’t have any more than is in my checking account). We have a buffer account too, but it takes a few days to get those funds transferred over.
That’s so old school ;)!
I am not criticizing though, I used to balance my checkbook and I know the benefits it provides. You have something that works so keep on keeping on!
I transitioned from my checkbook record keeping to online and excel tracking so I had more fields you work with and I could adapt it more to my needs. I made this transition when I began using a credit card more often, and so less individual expenses actually flowing through my checkbook.
Yes – I’m finding it’s more old school than I originally thought š !
Thanks for sharing your system! Like you, I don’t have a lot of transactions going through the checking account, since we use credit cards for most expenses. Maybe I should at least transitions to a spreadsheet though!
If you’re old school, I guess I’m old school as well. I’ve been using a checkbook register as long as I can remember. I haven’t had an overdraft in years. I use mint as well, but for me, nothing beats this method.
Ahh, Jason! Welcome to the old school club! It’s great to hear that I’m not alone out there! I’ll have to check out mint. I’ve used Personal Capital for net worth tracking but, being the control freak I am, I can’t seem to let go of my old paper/pen methods. Thanks for stopping by!
In the days when I kept my head in the financial sands, I would see our bank balance and wonder what my husband was worried about. Of course, what you have said is true: a bank balance can be very misleading. This is such an elementary concept – but unfortunately, it’s one that many have never grasped. Thanks for spelling it out. (And I’m all for pen and paper!)
I think it’s an important aspect of personal finance and, you’re right, Ruth, it’s often overlooked. A person certainly wouldn’t have to use my paper and pen method š , but having a system in place to ensure the bills get paid (without overdrafts) is necessary.
If it works, don’t fix it, right? I see my friends using google calendar to schedule all of their busy lives but I like using good ol’ pen and paper to write my schedule out and it helps me remember it better than typing it out. My friends also look at me weird when I take out a pen and pencil to write out what I have to do after I get home but if it works, I usually don’t change my behavior, no matter how weird it looks to the public eye. However, I do use software like you to track my finances and expenses!
Though I do all of my banking online and use spreadsheets and Personal Capital, my system of pen/paper checking account tracking does work for me. Like you, my to-do list is always pen/paper as well. My husband will attest to the many lists I always have going, but I get things done! š You’re right, if it works, don’t fix it!
Capital one checking has a spot where it asks ‘wrote a check?’ And I can enter the info, almost like a check book register. I only opened an account recently but I like that feature.
My main way of keeping things balanced is lying to myself about the minimum needed in my checking account. That prevents me from being overdrawn. I have an excel sheet, put in my current balance and expected bills, and paychecks for the month to next few weeks.
The other way is I put pretty much everything on my credit card. That gives me time for (a) paychecks to be deposited or (b) to move money from savings for the occasional large expense. I carefully looked at my expenses and put what I didn’t need for rent (one paycheck), or the typical credit card bill into savings. It then feels like I’m living paycheck to paycheck waiting for it to arrive, but I can cover it with savings if I needed to. It makes it a lot less tempting to spend the ‘extra ‘ when I can’t see it, and the savings account earns interest.
Most of what I pay from checking is due to stupid fees to use a credit card.
I think we all find the system that works for us.
Thanks for sharing your method, Jacq! I may have to look into Capital One checking – I like the checkbook register feature.
And I love your method of tricking yourself into living paycheck to paycheck. I do the exact same thing – which is why I have to track it pretty closely. I have savings as a back up, but it’s not easy to access either, so it forces me to just do without some things until the next paycheck arrives.