Do you believe that balancing your checkbook is a dead exercise? Marcie Geffner, a reporter with BankRate, asked if I ever recommend clients balance their checkbook. I told her that I do recommend it, although the process has certainly changed in the last few years thanks to technology. When discussing the benefits of looking at each expenses, line by line, I brought up fraud detection, as well as the benefits of knowing your spending habits.
Other reasons to go through the exercise of balancing, reconciling and reviewing an account are to spot financial management mistakes and fraudulent activity, says Alan Moore, a Certified Financial Planner professional with Serenity Financial Consulting LLC in Milwaukee.
Look for unfamiliar transactions, forgotten expenditures, recurring deductions for unwanted products or services, and bank fees. Moore says most people aren’t naturally wired to want to examine their spending habits. The hunt might be painful, but it’s worth the effort.
Moore points to bank fees as an example of an expense that might well go unnoticed without close examination of a checking account.
“People will pull $20 out of an ATM and get hit with a $3 fee. A lot of banks report that as a $23 withdrawal, so that fee can get kind of hidden,” he says. “Spend this much every time you take cash out, and it can add up.”
I remember my mother sitting in her bedroom on the phone, listening to an automated voice read off her bank transactions so that she could reconcile her account. Although technology has brought us a long way from that time, it is still important for you to verify that your expenses are legitimate. You might be surprised to find fees and unknown transactions, and also may benefit from being reminded how you spent your money over the last month. Tracking your spending is probably the most important step to financial success.
Click here to read the full article.