Who Needs Balance?

Dear Mary: What does it mean to “balance” my bank account? How do I do that? Why should I? I really appreciate you answering my question. I’m sure I should know this, but honestly, I don’t. — Josey

Dear Josey: This is a great question, and I’m sure you’d be surprised to know just how many of your fellow readers want to know the same thing!

To balance, or “reconcile,” your account means you agree with the amount of money the bank says you have in your account at any given time — that it is exactly the same amount that your records say you have. If the amount you show you have in the account does not match what the bank says you have, you’re out of balance. Someone has made a mistake, and you need to find it.

There are four reasons you need to balance your account at least once a month:

No. 1: To catch the bank’s mistakes (they make ’em!).

No. 2: To catch your mistakes (so do you).

No. 3: To avoid really expensive bounce fees.

No. 4: To feel like a genius.

When you go for long periods of time without settling up to make sure the bank and you agree on how much you have in your account, you’re handing over your power to whatever the bank says you have. They’re not perfect. Banks are run by humans, and humans make errors.

You make errors, too — not only with math but also with things like forgetting to write down an ATM withdrawal, a forgotten debit card swipe or other transaction.

OK, enough with the lecture. The next time you get your statement, allow that to be your new starting point. Accept the balance the bank says you have, and then reconcile your account every month going forward. You’ll find simple fill-in-the-blank instructions with a form on the back of your statement, or you can find something similar online.

Another option is to download an app that will effectively balance your account for you. There are some great apps out there for balancing your checkbook, such as Mint, WalletWhiz, PocketMoney, QuickBank Checkbook and ClearCheckbook.

Dear Mary: I hardly ever carry cash and rarely use credit. I use only a debit card. But still, there are times I feel out of control. How can I get some control over my spending? — Cindy

Dear Cindy: Merchant research groups have proven it over and again: Customers who shop with plastic spend about 30% more than those paying with cash.

I believe that’s because credit and debit cards (paper checks as well) are stand-ins for our money. They’re not the real thing, but more like “play money.”

I know for myself that swiping a card or writing a check for a purchase doesn’t require the same kind of mental consideration as paying with cash.

I suggest you put yourself on a cash-only diet for the next 30 days. Don’t carry a checkbook or plastic. Except for payments you must send through the mail, force yourself to pay with cash. Then determine to keep a written record of how you spend the cash.

While making the switch to cash will be quite an adjustment in the beginning, I predict your mindless spending will disappear.

Tip: If you are concerned about being caught short in case of an emergency, keep a large denomination ($50 or $100) prepaid debit card, such as a MasterCard or Visa gift card, tucked away in the back of your wallet. I’ll bet you’ll have a tough time cashing them, but you’ll know you are prepared if you get stuck.