The Importance of Having a Check Register

For today’s entry, I want to write about the importance of having a check register.  In the days before computers, people would record transactions using the check register that comes with their checkbook.  This would include checks written, deposits, and withdraws.  Once the bank statement comes at the end of the month, balancing the checkbook would mean reconciling the bank statement to your own check register.  I remember when I was a kid, my dad would have me tick and tie the checks written and cleared on the bank statement to the check register.  I’m not sure why he wanted me to do it but it helped me lay the groundwork for my own finances.

Today, with multiple bank accounts, credit card accounts, and electronic payments the task to reconcile becomes more complicated.  Fortunately, multiple personal finance software is available to simplify this important process.  Below are the reasons why it is important to have your own check register as opposed to relying solely on logging into your bank account to check your balance.

1). Run the risk of overdraft fees: For those that write checks, recording a payment on your check register already treats the money as gone out.  This is important because outstanding checks won’t be reflected in the bank.  If you base your budget on the bank balance, you are in danger of assuming you have more or less money than you actually have.  Plus, it’s never a good feeling when you find out months later that a check that was written was cashed.  Even worse, you could run the risk of overdraft fees.

2). Helps monitor fraud: When you reconcile your check register to your bank statements you are actively monitoring the accuracy of the transactions in your bank statement.  If you find a fraudulent transaction that was not recorded in your check register, you have a greater chance of discovering why there is a variance and thereby take steps to address the issue promptly instead of discovering it months later.

3). Helps keep your budget in sync: The numbers you have in your budget are only as good as the information you put into it.  By making a practice of reconciling your bank balance to your check register, you ensure you have the most accurate and best data possible to work with.

With developments in technology, reconciling becomes much easier and quicker.  You can even do a reconciliation on your phone with certain apps.  In terms of frequency, I would suggest reconciling once a week.  This is what I normally do myself.  This way, it helps reduce the amount of work at the end of the month; this might encourage some who already have a tough time with their personal finances to continue this important practice.  For those that do it every day, more power to you 🙂     

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