I will be the first to admit it. I used my bank as an expensive line of credit. I would walk into a store knowing that I probably didn’t have enough in my bank account to purchase the item I wanted, but I purchased it anyway. I felt ashamed yet I knew that my bank would pay the retailer and I would get charged a fee later for insufficient funds. I told myself that the item was worth the additional fee I would pay. Then there were other times when I really thought I had enough money in my bank account and was shocked when I received a notice of insufficient funds in the mail from my bank and was charged the NSF fee for the three or four days I wasn’t aware of my actual cash balance.
I learned the hard way that knowledge is power and that if I took at least 30 minutes each month (or 10-15 minutes a week) to reconcile my checkbook to the bank statement or online banking detail, I could have saved over $500 in bank fees! In addition to bank fees I’ve sometimes found bank errors where the bank either didn’t credit me for the correct amount of my deposit or a merchant charged me twice through a debit purchase. I would not have recovered the money from these erroneous charges to my account if I hadn’t taken the time to reconcile my checkbook.
Now I make it a point to never walk into a store until I’ve reconciled my bank account and am confident I know how much money I have available to spend. If it’s something I want and don’t necessarily need, I will take a picture of it or write it down and add it to my “rewards” list. If it’s something I need, I will research on the internet to find a way to get it at a discount or a price I can afford. I may also consider checking with my bank to see if I can obtain a personal line of credit. I use my “rewards list” when I have the funds, as a way of rewarding myself for managing my money wisely or reaching another important professional or personal goal.
Stop guessing and stressing about the money in your bank account and invest time in yourself and your peace of mind and take these six simple steps to reconciling your checkbook. The Foundation for Financial Literacy has provided a valuable step by step illustration and worksheet that can be used for yourself as well as your teenager or college student.
Take a few minutes to move towards personal financial freedom. You may find a fortune in savings!