You Still Need to Reconcile

Paulette and her husband are at the beginning of their debt snowball for the third time. He doesn't see the need to balance the checkbook. Is there a need to balance it?

QUESTION: Paulette in Louisville is blind, and she and her husband are at the beginning of their debt snowball for the third time. He doesn’t see the need to balance the checkbook. Paulette pays their bills and calls the bank every day for their balance. Is there a need to balance it? Dave suggests reconciling the checkbook because she may still have outstanding transactions.

ANSWER: In the old sense of what we would call reconciling a checkbook, yes, there is a need to do that because you could have outstanding checks. For instance, let’s say that you had done a debit card transaction and it was $500 and hadn’t cleared your account. Based on you looking at the current balance in the bank, you think you’ve got $500 that you don’t have just because it hasn’t cleared yet—an outstanding check or an outstanding charge. What you’ve got to do is once a month—not once a day—you need to balance. Most banks now have online processes that will help you do that very easily. I don’t know, with your sight issue, how that works. I don’t know how to tell you how to do that. If it’s a pretty decent, sophisticated bank, then their software will help you do that, it sounds like.

The bottom line is that it’s a lot easier than the old days when we used to get the checks in the mail with the statement, and you would check them off. You’d go down through the checkbook register and match it. You literally balanced and did a reconciliation of your bank account. Now you can do it with software or online software with your bank, and it only takes about 10 minutes a month to do it. There’s not that much to it, but to reconcile it is very wise because you don’t know what’s outstanding. What if you wrote a check to someone and it never cleared? What if you authorized a charge and it never cleared? I’ve actually used my debit card, and five months later, the organization has never run it. The only way you find that is if you reconcile. The mathematics works like the old days when we used to balance a checkbook, but with the aid of software and the aid of your bank web connectivity, it’s literally just moments you can do it. I highly recommend it, but don’t check it every day and don’t never do it. The answer to your question is you’re both wrong.