Checking accounts are an absolute necessity these days.
You can either have a checking account or run to the
bank or other outlet for money orders. Many people pay
for almost everything with a check including groceries,
gas, clothes and a long list of other things. When you
add an ATM card to this picture, your chances for a
potential problem is greatly enhanced.
Don't get me wrong. There are many people that can keep
their check book up to date, even deducting all of the
ATM advances and automatic withdrawals as they make them.
However, too many people that write checks for everything
wind up not entering a check when it is written or an ATM
advance when it is made. The result is a bounced check fee
of up to $25 for the bank and god only knows what the
store where you wrote the check could charge you.
It seems like carrying cash to pay for things isn't the
"IN" thing to do. When I'm in the check out line, most
people are paying with a credit card, debit card, or check.
I realize that carrying cash has it's risks. You could
lose it or have it stolen. What are the risks when paying
by check? There are absolutely none if you enter each check
and properly deduct the amount from your account. However,
I have counseled people that have as much as $100 per month
in overdraft fees. This isn't just for one month. This is
an average over a six month period. That is a lot of money
that these people couldn't afford.
What's the best way to handle my checking account?
If you don't have problems keeping up with your checking
account, keep doing what you are doing.
If you occasionally have bounced checks, I recommend that
you use your checking account only to pay your monthly bills
and use cash for everything else. If you have an ATM card,
With that said, I know you will probably not quit writing
checks or destroy your ATM card. So let's look at what
you need to do to keep up with your checking account.
Determine exactly how much money you have in your account
even if you have to go to the bank for help.
Enter that information on a new page in your check register.
Enter the date, your check number, payee and amount in
your check register when you write the check. Don't worry
about the people in line behind you. This will only take
a few seconds. If you like, you can deduct the amount of
the check when you get home.
Take your check book with you when you use the ATM and
enter your withdrawal while you are still at the machine.
Develop a system to deduct automatic withdrawals. It is
probably best to deduct these on the first of each month.
Add any deposits as you make them. You need to find out
how much and when direct deposits should be entered in
your check register.
When you receive your bank statement, reconcile it as
soon as possible. If you find any discrepancies check
them out immediately. Don't give up until you are sure
you have resolved the problem. The balance you show in
your check register should match the bank, less any bank
When you reconcile your bank statement be sure to clearly
mark the checks that have been returned to you. One of
the biggest problems people have with overdrafts is
missing a check that is taking a long time clearing the
bank. Go back at least a month to make sure all previous
check have cleared.
I really don't mean to insult anyone's intelligence with
this article. Having problems with your checking account,
as with all other money problems, isn't a matter of
intelligence anyway, it's a matter of discipline. It can
cost you a lot of money by not applying that discipline
to managing your checking account.
Terry Rigg is the author of Living Within Your Means - The Easy
Way http://www.homemoneyhelp.com/ebookadpage.html and editor
of The FREE Budget Stretcher Newsletter and Budget Stretcher
web site http://www.homemoneyhelp.com. He has 25 years of
experience counseling individuals and families concerning their