When I was young
– and a bit more carefree – I had a foolproof method of money
management. I put my paycheck into the bank. Then I went shopping.
And when the bank called to tell me I was overdrawn, I stopped
shopping.
When I was young – and a bit more carefree – I had a foolproof method of money management. I put my paycheck into the bank. Then I went shopping. And when the bank called to tell me I was overdrawn, I stopped shopping.
Unfortunately, Harry’s money management method was a bit different from mine. He would actually put money in the bank at the beginning of the month, and at the end of the month he still had some in there. Who knew you could do that? I’m telling you, it was a big revelation for me.
Harry passed on some of skills to me, more than likely out of some sense of self- preservation and a strong desire to retire before he’s 80. And that’s why I’ve taken Harry’s money-management skills and mine and turned them into an absolutely foolproof – or maybe foolish – method of check balancing.
Step One: Prepare yourself for balancing. Normally, I would recommend that you have a little glass of wine to settle your nerves before you attempt such a difficult task, but I’ve learned the hard way that drinking and balancing don’t mix. So, sit down at a table or a desk and set a pencil, calculator and a pillow in front of you.
Step Two: Take your statement out of the envelope. I know this is hard. There are some people – myself included – who will take the statement out of the mailbox, place it on the kitchen counter and avoid opening it for at least a week. The problem is, you’ve eventually got to face the truth: You’re not a millionaire, but you probably spend like one. Get it over with. Rip open that envelope.
Once the envelope is opened, ease the statement out slowly. Don’t bother to read it now. Just allow yourself a moment to feel good about what you’ve been able to accomplish so far. When you are ready, unfold the statement and lay it flat on your desk. Go ahead and allow yourself the very first scream into that pillow.
Step Three: Take your check register, and use the statement to make sure all the checks you wrote are on the statement. This is called reconciling. I don’t why. If you don’t know what a check register is, it’s probably time for that little glass of wine and another scream into the pillow.
Step Four: Take all your ATM receipts and reconcile them. If you can’t find your ATM receipts, feel free to enjoy a break from checkbook balancing while you rip apart the entire house to find every single receipt for every single withdrawal and purchase you made through the entire month.
Step Five: Use the same methods above to make sure all your deposits are reconciled. Take a moment to grumble about taxes, and daydream about what you’d buy if taxes didn’t exist.
Step Six: When you have reconciled everything, there will be a pile of ATM receipts and several register entries that do not appear in your statement. DO NOT PANIC. This is perfectly normal. You can stop screaming into the pillow now.
Step Seven: Turn your statement over. On the back will be a handy form the bank prints out to help you balance your checkbook. In the field labeled “balance,” enter the very last balance from your statement. If you don’t like this number, I highly recommend making up one of your own. Just try to keep it reasonable, OK? I mean, unless your last name is Gates, you probably shouldn’t add a billion dollars to this figure.
Step Eight: Add all outstanding deposits and subtract all outstanding checks and ATM receipts. This is your actual checkbook balance, give or take a few billion.
If you have a negative balance, it’s obviously the bank’s fault. After all, you’ve just spent precious hours of your time balancing your checkbook and screaming into a pillow, so it can’t be your fault, can it? Feel free to call the bank and explain their mistake. They will either: a) laugh at you and invite you to move your account to another bank, or b) admit their mistake. Usually, it’s “a.”
In any event, congratulations! You’ve just balanced your checkbook – or at least you’ve made the attempt, which is just as good. Join me here next week, where we’ll discuss my foolproof investment method that I like to call a “shoe sale” and Harry likes to call “Good Lord, how much did you spend?”
