Do I really need to balance accounts?
December 8, 2010 9:26 AM Subscribe
Do I really need to balance bank statements?
Mrs. RKS and I have a personal checking account, another which is used as a sinking fund for auto expenses, which are considerable for me, and yet another we're basically using as a savings account. And then there three more - both of our sons (minors, being used as savings accounts, mainly) and an account for a very small amount of timber property and its income and expenses, for which I am not the sole owner, but I am the defacto treasurer for the group of family members who own it.
So that's a lot of checking accounts. I keep them all in Quicken, and I have electronic access to them all, routinely downloading the transactions.
I correct errors and omissions as I find them, naturally. I used to dutifully run the reconcile function for all these statements, and it never finds a problem that I haven't already fixed "as I went." I also routinely check back on old items that haven't cleared, and eventually it gets resolved or taken off.
Is there any practical reason to keep reconciling these accounts to statements if I'm doing all this?
Mrs. RKS and I have a personal checking account, another which is used as a sinking fund for auto expenses, which are considerable for me, and yet another we're basically using as a savings account. And then there three more - both of our sons (minors, being used as savings accounts, mainly) and an account for a very small amount of timber property and its income and expenses, for which I am not the sole owner, but I am the defacto treasurer for the group of family members who own it.
So that's a lot of checking accounts. I keep them all in Quicken, and I have electronic access to them all, routinely downloading the transactions.
I correct errors and omissions as I find them, naturally. I used to dutifully run the reconcile function for all these statements, and it never finds a problem that I haven't already fixed "as I went." I also routinely check back on old items that haven't cleared, and eventually it gets resolved or taken off.
Is there any practical reason to keep reconciling these accounts to statements if I'm doing all this?
Yes. I just discovered an unauthorized withdraw in my checking account from six months ago. Had I been reconciling my accounts regularly as I used to, I would have found it immediately.
posted by youngergirl44 at 10:07 AM on December 8, 2010
posted by youngergirl44 at 10:07 AM on December 8, 2010
Well, if you think about the purpose of reconciliation, that should answer your question. You reconcile to find your mistakes, find the bank's mistakes, and make sure you and the bank agree about your balance. If you're doing something more often than monthly that effectively does these things, then there's probably no reason to reconcile accounts when you get a monthly statement.
FWIW, Jane Bryant Quinn, who is my financial management hero, says reconciling statements is a waste of time (it's not for me, because this is when I catch my mistakes, and I almost always make some. But I do see her point.)
posted by not that girl at 10:34 AM on December 8, 2010
FWIW, Jane Bryant Quinn, who is my financial management hero, says reconciling statements is a waste of time (it's not for me, because this is when I catch my mistakes, and I almost always make some. But I do see her point.)
posted by not that girl at 10:34 AM on December 8, 2010
I would only take the time to make sure that the timber account is balanced with the monthly statements. Given that you are reconciling all of the accounts on an ongoing and regular basis, I don't think it's necessary for your own accounts.
posted by Zophi at 10:41 AM on December 8, 2010
posted by Zophi at 10:41 AM on December 8, 2010
No, you don't.
My wife used to balance everything and was angry that I didn't. But we always had a general idea how much was in the account, and I eventually convinced her to drop it because it was a waste of time. We now check the online statement at least once a week to ensure there are no weird charges showing up, but really, aside from that if you aren't so low on funds that you are in danger of bouncing checks you really don't need to be so careful. Balancing the books was a lot more important when people were unable to instantly see what transactions were being processed, and when writing a check was the most common form of payment. Credit and check card transactions are posted almost immediately. You can do what you are already doing - regular checks of the statement - rather than trying to balance it out to the penny once every month.
posted by caution live frogs at 10:41 AM on December 8, 2010
My wife used to balance everything and was angry that I didn't. But we always had a general idea how much was in the account, and I eventually convinced her to drop it because it was a waste of time. We now check the online statement at least once a week to ensure there are no weird charges showing up, but really, aside from that if you aren't so low on funds that you are in danger of bouncing checks you really don't need to be so careful. Balancing the books was a lot more important when people were unable to instantly see what transactions were being processed, and when writing a check was the most common form of payment. Credit and check card transactions are posted almost immediately. You can do what you are already doing - regular checks of the statement - rather than trying to balance it out to the penny once every month.
posted by caution live frogs at 10:41 AM on December 8, 2010
Reconciling is not meant to correct your errors (although that is one good use of it). Its prime purpose is to assure you that what the bank thinks is in your account is the same as what you think. If someone has printed checks with your account number on them and started using them, the only way you would know is to reconcile the bank's statement with your accounting. I have had any number of checks clear with a "nine" posted instead of the intended "four." I caught these errors in reconciliation. Lastly, have you ever had the bank impose a fee that you were not aware of? How would you discover it without reconciliation?
posted by Old Geezer at 10:44 AM on December 8, 2010
posted by Old Geezer at 10:44 AM on December 8, 2010
Lastly, have you ever had the bank impose a fee that you were not aware of? How would you discover it without reconciliation?
I look at the fees when I check my online transactions, which I do every few days to make sure there's nothing unauthorized going on. Also, Mint sends me email when I'm assessed an unusual fee.
posted by JenMarie at 10:54 AM on December 8, 2010 [1 favorite]
I look at the fees when I check my online transactions, which I do every few days to make sure there's nothing unauthorized going on. Also, Mint sends me email when I'm assessed an unusual fee.
posted by JenMarie at 10:54 AM on December 8, 2010 [1 favorite]
I spent two years in retail banking and (despite the fact that few bankers actually knew how to do it) customers often came in to us because they had trouble balancing their accounts. It happened often enough that we had the ability to charge customers hourly for this service. It was mostly there to keep customers from asking us to do it for them on a routine basis and never actually charged for it but it was there.
Every single problem I ever found (and I was one of the few who really did know what I was doing) was always either a math error or they wrote down the wrong amount (or ommited a transaction entirely). I quickly came to the conclusion that balancing your statement is a waste of time.
Make sure the amounts of all the transactions are correct using online banking or the statements (but you really should be using online banking, less paper is always safer and you'll catch and stop any fraud faster).
posted by VTX at 10:59 AM on December 8, 2010
Every single problem I ever found (and I was one of the few who really did know what I was doing) was always either a math error or they wrote down the wrong amount (or ommited a transaction entirely). I quickly came to the conclusion that balancing your statement is a waste of time.
Make sure the amounts of all the transactions are correct using online banking or the statements (but you really should be using online banking, less paper is always safer and you'll catch and stop any fraud faster).
posted by VTX at 10:59 AM on December 8, 2010
Response by poster: VTX, I feel your pain, at least 2nd hand - my mom was in customer service for a bank in the late '70s. In those days, most of the customer service calls revolved around customers not being able to balance checking accounts. Sounds like nothing's changed. Long ago, I've cancelled any paper statements that I could, relying on pdfs that I'm pulling out of my online banking service. I have one bank in the mix that has succeeded in screwing up online statement delivery so badly that I get those statements by mail (no real choice), but they promise they have a new system coming next month. I do internet security as a piece of my job and don't like any more paper flowing via the mail regarding my financial accounts than necessary.
To fill in anyone who isn't familiar with online banking, I do get any charges by online banking. I periodically download a file from the bank which has all the transactions. When I apply this file to quicken, it automatically brings them to a screen where I review them all before either matching them with existing transactions I already put down (the vast majority) or allowing Quicken to add them (anything I already didn't put down, either because I forgot, because I'm behind in posting, or because Mrs. RKS did the transaction and hasn't given me the receipt.) If I don't recognize the charge, obviously I ask questions, for which there's almost always a reasonable answer.
About the only weakness I can see to this is that for an active account which almost always has transactions in transit, it's theoretically possible to fail to download something somewhere along the way, and then if you hadn't recorded the transaction, months could go by where you didn't notice, until your funds get low, and then >boom,<>
I'm just OCD enough that I ask the question to see if there's anything ELSE I could possibly be missing.
JenMarie, what is Mint?
Thanks to everyone for their answers.
posted by randomkeystrike at 11:47 AM on December 8, 2010
To fill in anyone who isn't familiar with online banking, I do get any charges by online banking. I periodically download a file from the bank which has all the transactions. When I apply this file to quicken, it automatically brings them to a screen where I review them all before either matching them with existing transactions I already put down (the vast majority) or allowing Quicken to add them (anything I already didn't put down, either because I forgot, because I'm behind in posting, or because Mrs. RKS did the transaction and hasn't given me the receipt.) If I don't recognize the charge, obviously I ask questions, for which there's almost always a reasonable answer.
About the only weakness I can see to this is that for an active account which almost always has transactions in transit, it's theoretically possible to fail to download something somewhere along the way, and then if you hadn't recorded the transaction, months could go by where you didn't notice, until your funds get low, and then >boom,<>
I'm just OCD enough that I ask the question to see if there's anything ELSE I could possibly be missing.
JenMarie, what is Mint?
Thanks to everyone for their answers.
posted by randomkeystrike at 11:47 AM on December 8, 2010
Response by poster: clarification - the file I download from the bank has all the transactions since my last download.
posted by randomkeystrike at 11:52 AM on December 8, 2010
posted by randomkeystrike at 11:52 AM on December 8, 2010
To fill in anyone who isn't familiar with online banking, I do get any charges by online banking. I periodically download a file from the bank which has all the transactions. When I apply this file to quicken, it automatically brings them to a screen where I review them all before either matching them with existing transactions I already put down (the vast majority) or allowing Quicken to add them (anything I already didn't put down, either because I forgot, because I'm behind in posting, or because Mrs. RKS did the transaction and hasn't given me the receipt.)
This is reconciliation. You're just doing it every time you download transactions instead of every time you get a new statement. When you accept a downloaded transaction, Quicken puts a "c" in the reconciliation field, marking it is cleared for reconciliation.
You do miss one thing if you don't periodically check the reconcile window as well—transactions you entered into the ledger that the bank doesn't have. I find it useful to know what they are.
posted by grouse at 11:55 AM on December 8, 2010
This is reconciliation. You're just doing it every time you download transactions instead of every time you get a new statement. When you accept a downloaded transaction, Quicken puts a "c" in the reconciliation field, marking it is cleared for reconciliation.
You do miss one thing if you don't periodically check the reconcile window as well—transactions you entered into the ledger that the bank doesn't have. I find it useful to know what they are.
posted by grouse at 11:55 AM on December 8, 2010
Response by poster: grouse, this is one use for the reconcile window, even if you don't really "balance" the account to a statement - I do use it sometimes to check uncleared transactions (aka "transactions you entered into the ledger that the bank doesn't have". There may be another tool in Quicken for this...
posted by randomkeystrike at 12:03 PM on December 8, 2010
posted by randomkeystrike at 12:03 PM on December 8, 2010
JenMarie, what is Mint?
Oh, sorry, Mint is a web-based personal financial management service (see here). Since you already use Quicken I think it would be redundant.
posted by JenMarie at 1:27 PM on December 8, 2010
Oh, sorry, Mint is a web-based personal financial management service (see here). Since you already use Quicken I think it would be redundant.
posted by JenMarie at 1:27 PM on December 8, 2010
I check everything over online at least twice a week to make sure there are no unexpected charges, fees, or (God forbid) fraud.
However, it's been so long since I've written a paper check that I don't do what my mom did, going through cancelled checks and keeping a handwritten balance, because I've gone completely paperless - no checks, no dead-tree statements, no snail mail from the bank, it's all online.
But if you mean "reconcile" as "keep abreast of all charges and be sure to know what is in your account and what is going where," then yes. Mint.com is a great help.
posted by Rosie M. Banks at 6:59 AM on December 10, 2010 [1 favorite]
However, it's been so long since I've written a paper check that I don't do what my mom did, going through cancelled checks and keeping a handwritten balance, because I've gone completely paperless - no checks, no dead-tree statements, no snail mail from the bank, it's all online.
But if you mean "reconcile" as "keep abreast of all charges and be sure to know what is in your account and what is going where," then yes. Mint.com is a great help.
posted by Rosie M. Banks at 6:59 AM on December 10, 2010 [1 favorite]
This thread is closed to new comments.
posted by dfriedman at 9:40 AM on December 8, 2010 [1 favorite]