How To Balance Your Checkbook In The Era Of The Debit Card

This weekend, my mother, who is still firmly in the era of the handwritten check, marveled several times at my methods for paying for many things. I showed her how I had online bill payments set up, used my credit card for a number of purchases that she would have used a check for, and so on. After a few days of this, she basically shook her head and said that she would be completely lost without her system for balancing her checkbook.

Not really understanding why it was so important or what exactly balancing a checkbook means, I asked her how she does her checkbook. She showed me a nice neat ledger of each deposit and withdrawal from the account that she keeps in the back of her checkbook that reflects what she calls the “real balance” of the checkbook. Then, whenever a statement comes in from the bank, she compares that list of checks and deposits with her own to make sure that the bank’s records match her own.

I realized pretty quickly that I do basically the same thing, just with online accounts and receipts. Here’s how I effectively “balance the checkbook” each Sunday when I do my weekly financial review (where I also calculate my net worth).

Throughout the week before, I save every single credit card (and check card) receipt in my wallet. These serve as a reminder of what I’ve spent over the last few days. I usually jot down what it was on the receipt if it’s not clear.

On most Sundays, I take that pile of receipts and itemize them in Excel. I usually like to keep track of my spending in various categories so I know what areas I’m doing well in and also doing poorly in. So, for example, a receipt from the gas station goes in the pile for automobile expenses and so on.

I also check the balances of each of my credit cards and my checking accounts. I look through the new things posted to the accounts in the last week and make sure I understand what they all are – and also make sure that anything I’ve spent has posted to the account. I usually then go ahead and pay off the credit card balances immediately using online bill pay. I then get rid of all receipts that have posted to the account and have no chance for tax write-offs via the paper shredder. This usually leaves one or two receipts that I leave on my desk to check next week.

On the rare occasion that I write a check, I use the carbon copy of the check as a receipt and do the same things as I describe above. I also know, by using my online account balance and subtracting any outstanding receipts and any automatic bill payments that will happen in the next week, how much cash I have on hand.

This little procedure, which takes about ten minutes, does a fantastic job of ensuring that I don’t ever come close to overdrafting my checking account. It also helps me to process my receipts, something which used to be a big problem for me. It has the same effect as the old-school checkbook balancing without the huge time consumption of managing one of those old-fashioned ledgers in the back of the checkbook.

Of course, the older system does work – my mother claims to have never had an overdraft in thirty years using her system. That’s a pretty good track record of success, I’d say. I simply prefer my system because it has the same effect and works better with my lifestyle.

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