Does Warren Buffet Check His Balance Daily?
June 12, 2011 6:06 AM Subscribe
Teaching personal finance to 17 year old daughter. How do you record/keep track of your transactions while using electronic banking?
Back in the day, everyone had a checkbook and register they carried around with them and wrote down each transaction. Today with debit cards and electronic bill paying, I think not so much. Where and how do you record your transaction information so you can reconcile. Do you use an external program like Quicken, or do you still write it down in a register, or (like me), do you just check your balance alot online and not write anything down?
Back in the day, everyone had a checkbook and register they carried around with them and wrote down each transaction. Today with debit cards and electronic bill paying, I think not so much. Where and how do you record your transaction information so you can reconcile. Do you use an external program like Quicken, or do you still write it down in a register, or (like me), do you just check your balance alot online and not write anything down?
I never write anything down — it's all online.
You Need a Budget allows you to import transactions from multiple accounts, credit cards, etc., and tag them by category (food, rent, car, etc).
posted by heatherann at 6:14 AM on June 12, 2011 [2 favorites]
You Need a Budget allows you to import transactions from multiple accounts, credit cards, etc., and tag them by category (food, rent, car, etc).
posted by heatherann at 6:14 AM on June 12, 2011 [2 favorites]
I save all my receipts and enter them into a register in Microsoft Money. I think I am one of about 5% of people who still do this.
posted by something something at 6:22 AM on June 12, 2011 [3 favorites]
posted by something something at 6:22 AM on June 12, 2011 [3 favorites]
I use my online banking and my register to reconcile.
I write everything down, and here's why: I still write checks. I write checks for medical co-pays, daycare, and rent because those places don't take credit or debit cards. Those checks can take as long as two weeks to clear sometimes, which means no matter how much I login into online banking, until it clears, my online banking balance will not match my own handwritten records.
Also, for my bank, transactions under $10 don't appear sometimes for 48- 72 hours, which can also throw my balance off. So for careful and close reconciliation, I use both.
I use Mint.com to track spending trends, but I don't find it helps for reconciling my checking account for the reasons noted above.
My husband chooses to only write down checks in his register for his checking account and to monitor everything else through online banking, which really wouldn't work for me.
I doubt a 17 year old would write many checks, but I would err on the side of teaching her a meticulous reconciliation method now that she can choose to change and alter later as she learns her own preference for accounting for her transactions.
posted by zizzle at 6:25 AM on June 12, 2011 [1 favorite]
I write everything down, and here's why: I still write checks. I write checks for medical co-pays, daycare, and rent because those places don't take credit or debit cards. Those checks can take as long as two weeks to clear sometimes, which means no matter how much I login into online banking, until it clears, my online banking balance will not match my own handwritten records.
Also, for my bank, transactions under $10 don't appear sometimes for 48- 72 hours, which can also throw my balance off. So for careful and close reconciliation, I use both.
I use Mint.com to track spending trends, but I don't find it helps for reconciling my checking account for the reasons noted above.
My husband chooses to only write down checks in his register for his checking account and to monitor everything else through online banking, which really wouldn't work for me.
I doubt a 17 year old would write many checks, but I would err on the side of teaching her a meticulous reconciliation method now that she can choose to change and alter later as she learns her own preference for accounting for her transactions.
posted by zizzle at 6:25 AM on June 12, 2011 [1 favorite]
Mint is good for this. You can link your bank accounts, credit cards, brokerage accounts, etc. It's good at giving you a wide snapshot and it can reconcile the minutest of details. You don't really have to write anything down anymore when you have an online resource like this available.
Can somebody clarify for me exactly what "reconcile" means in this context? If you haven't recorded the transactions yourself and entered them into some sort of register, what are you reconciling? Does 'reconcile' now mean just looking over information downloaded from various financial institutions and saying, "yeah, that seems right?"
posted by jon1270 at 6:31 AM on June 12, 2011
Can somebody clarify for me exactly what "reconcile" means in this context? If you haven't recorded the transactions yourself and entered them into some sort of register, what are you reconciling? Does 'reconcile' now mean just looking over information downloaded from various financial institutions and saying, "yeah, that seems right?"
posted by jon1270 at 6:31 AM on June 12, 2011
I just check online every few days (around 3-4). When I have to write a check (only a couple times per year), I keep a sticky note around until it clears. I only check for three things: How much money do I have, are all transactions ones that I've actually made, and am I getting any unexpected fees (happened once when my account was set up incorrectly). The whole adding up thing, though, the bank's computers are much better at that than I am.
(My bank has a "holds" page where credit card transactions show up before they clear, I always check that, too. Between that and a sticky note for checks that haven't cleared and I have a good enough idea of where my balance is as long as I'm not doing bank limbo.)
Oh, also, free low balance notifications. They're good stuff.
posted by anaelith at 6:32 AM on June 12, 2011 [2 favorites]
(My bank has a "holds" page where credit card transactions show up before they clear, I always check that, too. Between that and a sticky note for checks that haven't cleared and I have a good enough idea of where my balance is as long as I'm not doing bank limbo.)
Oh, also, free low balance notifications. They're good stuff.
posted by anaelith at 6:32 AM on June 12, 2011 [2 favorites]
Yeah, in that case I'm using "reconcile" as another word for "process" or "dissect." Perhaps I used the wrong word.
posted by litnerd at 6:36 AM on June 12, 2011
posted by litnerd at 6:36 AM on June 12, 2011
Thanks, litnerd. I've noticed 'reconcile' being used that way in several similar threads, and have been meaning to ask about it.
I use an old copy of Quicken primarily as an electronic register. I do a lot of budget planning with an excel sheet that I've developed over several years.
Probably more important than the particular tools is a good explanation of WHY you'd want to bother with all this fussy number-crunching.
posted by jon1270 at 6:43 AM on June 12, 2011
I use an old copy of Quicken primarily as an electronic register. I do a lot of budget planning with an excel sheet that I've developed over several years.
Probably more important than the particular tools is a good explanation of WHY you'd want to bother with all this fussy number-crunching.
posted by jon1270 at 6:43 AM on June 12, 2011
How do you record/keep track of your transactions while using electronic banking?I haven't written a cheque for 5 years so, at the risk of being glib, I do this using electronic banking. Everything is there for me and, unless your 17 year old has some very old-fashioned spending habits, it's almost certainly all there for her too. Attempting to manually keep another copies of this data, rather than going straight to the source, is error prone and a waste of time.
posted by caek at 6:49 AM on June 12, 2011 [6 favorites]
Like Zizzle, I too still have to write out checks for things like rent and still use the checkbook register to reconcile things old school with my online banking. While, I might make an error, so might the bank, so I like to keep my own record. Plus, I don't like to have to log into my bank account all the time just to check a balance, for me, it's easier sometimes just to grab my checkbook and take a peek.
It's also a good skill to know how to actually reconcile an account and not have to rely on computers.
posted by NoraCharles at 6:57 AM on June 12, 2011
It's also a good skill to know how to actually reconcile an account and not have to rely on computers.
posted by NoraCharles at 6:57 AM on June 12, 2011
To caek's comment: I shop at a grocery store that accepts checks but not plastic, a couple of small-town local stores that have minimum purchase amounts for using plastic, and a large urban market with multiple vendors where cash is much easier to deal with. Granted that errors in bank records are very rare, but the information the bank can provide about specific transactions is far from complete.
posted by jon1270 at 6:58 AM on June 12, 2011
posted by jon1270 at 6:58 AM on June 12, 2011
No, I do not record transactions, and I don't check my balance every day. My checking account has a mean balance of about 1.5 times my monthly salary, and my credit card has a credit limit of about the same. Unless I go on a trip or do something else expensive, I should never hit those limits in a month. I guess keeping track of that balance is why people use check registers? I don't really know, but I certainly haven't found any cases where I wish I had a paper copy of every $3 transaction at a coffee shop. I've never actually written a check.
posted by kiltedtaco at 6:59 AM on June 12, 2011
posted by kiltedtaco at 6:59 AM on June 12, 2011
I don't write anything down because everything is online - and I have accounts in two countries, a mortgage, a loan as well as several credit cards although only 4 (2 in each country) I ever use.
I write maybe 1-2 cheques per year. Everything else is online and clears instantly. So the only complexity is to make sure I have enough funds in the right account for my direct debits to clear and to allow for any upcoming infrequent payments. Even the international transfer clears in 3 days.
So for somebody learning how to manage their finances in this day and age I'd teach her about good fianncial management in general and reinforce:
- checking your balance frequently
- how to keep track of and budget for infrequent payments
- how to keep track of things like credit card spending and budget for paying off your balance each month
- funds for any emergencies
- saving
If you wanted to become particular you could build a reconciliation exercise around the credit card payments those being in effect payments that clear your current account when you pay off your credit card - hopefully monthly - and thus not money you have available in your current account to spend. A bit like cheques until they clear.
posted by koahiatamadl at 6:59 AM on June 12, 2011
I write maybe 1-2 cheques per year. Everything else is online and clears instantly. So the only complexity is to make sure I have enough funds in the right account for my direct debits to clear and to allow for any upcoming infrequent payments. Even the international transfer clears in 3 days.
So for somebody learning how to manage their finances in this day and age I'd teach her about good fianncial management in general and reinforce:
- checking your balance frequently
- how to keep track of and budget for infrequent payments
- how to keep track of things like credit card spending and budget for paying off your balance each month
- funds for any emergencies
- saving
If you wanted to become particular you could build a reconciliation exercise around the credit card payments those being in effect payments that clear your current account when you pay off your credit card - hopefully monthly - and thus not money you have available in your current account to spend. A bit like cheques until they clear.
posted by koahiatamadl at 6:59 AM on June 12, 2011
Reconcile means ensuring that your own records of your transactions match your bank's statements.
posted by John Cohen at 6:59 AM on June 12, 2011 [5 favorites]
posted by John Cohen at 6:59 AM on June 12, 2011 [5 favorites]
sorry - forgot to add that all my suggestions assume that she does understand budgeting as a concept and that she is aware of income needing to be higher or equal than outgoings.
posted by koahiatamadl at 7:02 AM on June 12, 2011
posted by koahiatamadl at 7:02 AM on June 12, 2011
I just use electronic banking. My bank has a pretty good iPhone app, as well, so I can pretty much keep track of how much money I have any time, any where. I almost never write checks, and when I do I just keep a mental note that I have $x less than it says I do until the check clears.
This is a little off topic, but for me, the challenge is keeping track of where the money goes, not how much I have left. I don't pay rent or have any major recurring bills, and my income is really variable over the year since I earn most of it during the summer, and it's also really low. This means a lot of budget advice that I read doesn't really apply, because I also don't have any major things I'm saving up for, a regular paycheck, retirement accounts, etc. In retrospect, I wish I had gotten into the habit of tracking my spending in a really granular way and made some goals for saving. Now, when I pay my taxes I see how much I actually earned and feel like I don't have much to show for it. Talking to your daughter about financial goals she has, even if they're years off, making sure she knows how to use her online banking, teaching her about the dangers of credit cards and how to use them responsibly- these are much more important personal finance lessons than balancing her checkbook.
posted by MadamM at 7:06 AM on June 12, 2011
This is a little off topic, but for me, the challenge is keeping track of where the money goes, not how much I have left. I don't pay rent or have any major recurring bills, and my income is really variable over the year since I earn most of it during the summer, and it's also really low. This means a lot of budget advice that I read doesn't really apply, because I also don't have any major things I'm saving up for, a regular paycheck, retirement accounts, etc. In retrospect, I wish I had gotten into the habit of tracking my spending in a really granular way and made some goals for saving. Now, when I pay my taxes I see how much I actually earned and feel like I don't have much to show for it. Talking to your daughter about financial goals she has, even if they're years off, making sure she knows how to use her online banking, teaching her about the dangers of credit cards and how to use them responsibly- these are much more important personal finance lessons than balancing her checkbook.
posted by MadamM at 7:06 AM on June 12, 2011
I have a slick excel spreadsheet budget (created by a friend) that's broken out by category (food, healthcare, luxuries, misc house) and fill it in most days using my online banking. This works well because I do most transactions with my debit card and they show up in the online account broken down for me. I write few enough checks that I just remember them and put them in "pending" (which will also then show me my pending balance).
I had never balanced my checkbook back in the day, but this budget system has helped me catch at least one double-charge that I wouldn't have noticed in the past. It's helped me see exactly how the money keeps "disappearing".
posted by ldthomps at 7:11 AM on June 12, 2011
I had never balanced my checkbook back in the day, but this budget system has helped me catch at least one double-charge that I wouldn't have noticed in the past. It's helped me see exactly how the money keeps "disappearing".
posted by ldthomps at 7:11 AM on June 12, 2011
I still use a register. The act of writing out transactions and making sure everything matches up makes me a little more aware of where my money is going.
You could probably do something similar with a spreadsheet, though.
posted by andrewcilento at 7:18 AM on June 12, 2011
You could probably do something similar with a spreadsheet, though.
posted by andrewcilento at 7:18 AM on June 12, 2011
Is she spending a lot of money daily? For my own personal low balance funmoney checking account (not my joint checking/savings with the hubs), I save my receipts and enter my spending into a google doc. It's a very simple doc; has total monthly account income (how much I've put into the account) at the top, and then a few categories underneath, like food/drinks, personal care, clothes, etc where I add my spending. I don't list every transaction (although I do enter every transaction), but I still have a proper account balance at the bottom and a good idea of what I'm spending my money on. For our joint checking account, my husband and I use mint and a more complex google doc because we have a lot of bills to pay, therefore a lot of balls in the air at once. I doubt your daughter needs a complex system like that.
posted by your mom's a sock puppet at 7:19 AM on June 12, 2011
posted by your mom's a sock puppet at 7:19 AM on June 12, 2011
I use my phone. There are several free Android apps for this kind of thing, and I'm sure the iPhone has them too.
posted by tomboko at 7:20 AM on June 12, 2011
posted by tomboko at 7:20 AM on June 12, 2011
Also, using a register to track your spending is pretty embarrassing at a teen, and I say that from experience. If she has a smart phone, there are better, more teen-friendly options!
posted by your mom's a sock puppet at 7:21 AM on June 12, 2011 [1 favorite]
posted by your mom's a sock puppet at 7:21 AM on June 12, 2011 [1 favorite]
There are loads of ways to reconcile your checking account these days, and you're going to get a lot of answers (already have) about using Mint, checking your balance, using low-balance alerts -- all of these things are very very helpful.
However. Financial literacy goes well beyond balancing your checking account. I would put way, way up there, for example, what is the difference between credit and debit (this is a question she will be asked at the cash register, clearly). Does she know that "credit" simply refers to the way that the merchant processes the transaction, not to a mystery line of credit that doesn't pull from her checking account? (This is a pretty common misunderstanding, oddly enough.) This is a really old explanation of Credit vs Debit, maybe someone else will find a newer and better one, but it's a pretty crucial thing that she needs to understand before she uses her card.
Beyond that, if she has a smart phone, a bank with a good iphone app (Regions is what I use and ETrade -- Regions has a great App, ETrade's website on my mobile browser has never let me down). At the least, she needs to be able to call and check her balance (ie, have the bank's phone number in whatever mobile phone she has). Some banks (again, Regions, maybe Chase?) will let you text in to get updates about your account, which may be more her speed.
Now, the next bit, I have no idea about how you have presented or plan to present this. Please take the "you" as "editorial you" and not "literally YOU."
My mom worked in banking for 40 years, and I was in the game for about six before I gave it up. People have a lot of emotional baggage around money, starting with refusing to balance their checkbooks and ending with refusing to engage in estate planning. "Responsible good people never bounce a check or make a mistake or get any fees or have less than $100 in their checking account," sort of haranguing is only going to make her feel ashamed when she makes a mistake, and probably she will freak out about asking you to help her figure out what happened. Framing these skills more as tools for her own well-being and peace of mind will probably get you farther. Getting in the habit of knowing what you've got and where it's gone, and having that not be a source of stress or shame is a great idea. I cannot tell you how many people I know who have gotten into deeper holes than they started off with because they could not bear the shame and self-recriminations of just LOOKING AT THEIR BANK BALANCE. If there is any way to avoid having her end up there when she's more or less inevitably broke at 24, it would be a mitzvah.
posted by Medieval Maven at 7:22 AM on June 12, 2011
However. Financial literacy goes well beyond balancing your checking account. I would put way, way up there, for example, what is the difference between credit and debit (this is a question she will be asked at the cash register, clearly). Does she know that "credit" simply refers to the way that the merchant processes the transaction, not to a mystery line of credit that doesn't pull from her checking account? (This is a pretty common misunderstanding, oddly enough.) This is a really old explanation of Credit vs Debit, maybe someone else will find a newer and better one, but it's a pretty crucial thing that she needs to understand before she uses her card.
Beyond that, if she has a smart phone, a bank with a good iphone app (Regions is what I use and ETrade -- Regions has a great App, ETrade's website on my mobile browser has never let me down). At the least, she needs to be able to call and check her balance (ie, have the bank's phone number in whatever mobile phone she has). Some banks (again, Regions, maybe Chase?) will let you text in to get updates about your account, which may be more her speed.
Now, the next bit, I have no idea about how you have presented or plan to present this. Please take the "you" as "editorial you" and not "literally YOU."
My mom worked in banking for 40 years, and I was in the game for about six before I gave it up. People have a lot of emotional baggage around money, starting with refusing to balance their checkbooks and ending with refusing to engage in estate planning. "Responsible good people never bounce a check or make a mistake or get any fees or have less than $100 in their checking account," sort of haranguing is only going to make her feel ashamed when she makes a mistake, and probably she will freak out about asking you to help her figure out what happened. Framing these skills more as tools for her own well-being and peace of mind will probably get you farther. Getting in the habit of knowing what you've got and where it's gone, and having that not be a source of stress or shame is a great idea. I cannot tell you how many people I know who have gotten into deeper holes than they started off with because they could not bear the shame and self-recriminations of just LOOKING AT THEIR BANK BALANCE. If there is any way to avoid having her end up there when she's more or less inevitably broke at 24, it would be a mitzvah.
posted by Medieval Maven at 7:22 AM on June 12, 2011
i write about 2 checks per year, if that. my bank allows me to send electronic checks, so i use that feature for rent and utilities. the electronic check shows up online in my checking account so no need for a check register. i login at least 3 times a week to double check my balances, make sure there are no fraudulent charges and that everything is as it should be. as a back up, i use pageonce on my android phone, which i find preferable to mint.com. if pageonce reports match my visual inspection of my online banking info, im all set. both mint and pageonce offer budgeting tips and budget creation, so this can be a valuable tool. i cant imagine that your 17 yr old will be writing many checks, but written check registers are a thing of the past imo. online banking, billpay and phone apps will offer you much more efficiency in managing your funds.
posted by ps_im_awesome at 7:55 AM on June 12, 2011
posted by ps_im_awesome at 7:55 AM on June 12, 2011
When I make a purchase online I have only an electronic receipt I never pay attention to after the transaction.
When I make a purchase in person, I have a receipt that I have a headache keeping a track of.
So my solution is to keep my checkbook register with me at all times. As a girl, you can carry one around in your purse or in a thick wallet.
As a guy, backpocket carrying checkbook register ain't an issue.
I keep my checkbook due to writing checks for the rent every month (for example).
Every transaction goes into the checkbook register for my check card.
---
Regardless of what people do, the question is, is your daughter learning to live under a budget with no money coming in to rescue her? If so, then time to use a register for her in order to keep a running total. If they have a smartphone, then moneydance has an iphone app that can be used for free and moneydance is cross platform (windows, mac, linux).
If you want awareness of money, then there has to be a writing down or a taking down because it helps to forecast how much money you have if you write a check today for tomorrow.
posted by iNfo.Pump at 7:57 AM on June 12, 2011
When I make a purchase in person, I have a receipt that I have a headache keeping a track of.
So my solution is to keep my checkbook register with me at all times. As a girl, you can carry one around in your purse or in a thick wallet.
As a guy, backpocket carrying checkbook register ain't an issue.
I keep my checkbook due to writing checks for the rent every month (for example).
Every transaction goes into the checkbook register for my check card.
---
Regardless of what people do, the question is, is your daughter learning to live under a budget with no money coming in to rescue her? If so, then time to use a register for her in order to keep a running total. If they have a smartphone, then moneydance has an iphone app that can be used for free and moneydance is cross platform (windows, mac, linux).
If you want awareness of money, then there has to be a writing down or a taking down because it helps to forecast how much money you have if you write a check today for tomorrow.
posted by iNfo.Pump at 7:57 AM on June 12, 2011
I used to try to use Quicken, but it had problems synching with the online accounts, and things would get duplicated, and it was a pain in the ass. (Maybe I just didn't know how to use it well)
I have a Google Spreadsheet. I have a tab that is my budget. This lists all the bills that I have to pay every month, and the amount. I also have listed the amount I put into savings every month, and the budgeted amount for gas and groceries. Those two numbers are comfortably over-estimated. In another tab is my 'register' for my checking account. After I pay bills twice a month, I put those in, and also enter the 'budgeted amount' for groceries and gas (e.g. gas-$50) I usually do this in a different font color. This lets me know how much I have to spend until next paycheck. Once I actually gas up, I'll go back and put in the exact amount ($42.75) ( This is where spreadsheets are more awesome than paper. )Every couple days I sit down with the random receipts from the bottom my receipts from the bottom of my purse and put them in. It keeps a running balance for me. And since it's a google doc, I can look at it at home, or at work. (And I plan on getting a smart phone one of these days, then I can look at it wherever.)
posted by Green Eyed Monster at 7:58 AM on June 12, 2011 [1 favorite]
I have a Google Spreadsheet. I have a tab that is my budget. This lists all the bills that I have to pay every month, and the amount. I also have listed the amount I put into savings every month, and the budgeted amount for gas and groceries. Those two numbers are comfortably over-estimated. In another tab is my 'register' for my checking account. After I pay bills twice a month, I put those in, and also enter the 'budgeted amount' for groceries and gas (e.g. gas-$50) I usually do this in a different font color. This lets me know how much I have to spend until next paycheck. Once I actually gas up, I'll go back and put in the exact amount ($42.75) ( This is where spreadsheets are more awesome than paper. )Every couple days I sit down with the random receipts from the bottom my receipts from the bottom of my purse and put them in. It keeps a running balance for me. And since it's a google doc, I can look at it at home, or at work. (And I plan on getting a smart phone one of these days, then I can look at it wherever.)
posted by Green Eyed Monster at 7:58 AM on June 12, 2011 [1 favorite]
Reconciling for debit card/plastic purchases by hand (I agree with caek) may be less an issue than tracking CASH purchases. How much is your daughter using cash vs. plastic? And what exactly are you trying to get her to learn in the process? Tracking petty cash (which I do by having a small ziploc or other bag in my bag, or by noting quickly on my PDA/phone) helps to track what you're spending money on--how your values around money are being manifested in the real world. Reconciling helps you learn...math....and whether the bank is attaching fees, and whether you really have enough to spend on a movie if your check for rent hasn't cleared yet. That's a level that I usually have in my head or from checking balances daily at an ATM or, lately, on my phone. Let her know what tolerances she can work within (i.e., can she overspend by X amount without being penalized, either by you or the bank, depending on how you and your bank work?) until she develops that sixth sense that creates the itch in the back of her brain when she reaches for her debit card that's saying, "Oh, wait, has rent cleared? Do I actually have enough for this?"
I generally recommend Raising Financially Fit Kids for finding strategies for teaching kids, broken out by age and skill-set.
posted by cocoagirl at 8:01 AM on June 12, 2011
I generally recommend Raising Financially Fit Kids for finding strategies for teaching kids, broken out by age and skill-set.
posted by cocoagirl at 8:01 AM on June 12, 2011
(Oh, and when I enter the receipts a few times a week, I check it against the online banking transactions to make sure everything cleared and I didn't miss anything. I also hardly ever spend cash. If I keep cash in my wallet, I spend it. So the less I have in there, the better. I tried doing the different envelopes, etc. It just didn't work for me.)
posted by Green Eyed Monster at 8:31 AM on June 12, 2011
posted by Green Eyed Monster at 8:31 AM on June 12, 2011
What do you guys right down in your check register? My bank lets me see an image of the actual check, and my check register was apparently designed in days when paper was very expensive and must be conserved, so I don't think I could fit more information into my register than my bank already gives me online.
The one thing I should do more often but don't is keep track of how much the total will be before I get to the checkout counter. I've caught a few errors there when they were obvious--sometimes something stupid on my part, like I read the price upside down and interpreted an unreasonable price as a reasonable price... like $51.13 as $13.51 (when they read me my bill I went "ack!"). You can avoid this by shopping online, though. Subscribe and Save is pretty great.
Cash: All cash withdrawals go into "money I spent on junk" in the budget, even if the money is still sitting in my purse.
posted by anaelith at 8:37 AM on June 12, 2011
The one thing I should do more often but don't is keep track of how much the total will be before I get to the checkout counter. I've caught a few errors there when they were obvious--sometimes something stupid on my part, like I read the price upside down and interpreted an unreasonable price as a reasonable price... like $51.13 as $13.51 (when they read me my bill I went "ack!"). You can avoid this by shopping online, though. Subscribe and Save is pretty great.
Cash: All cash withdrawals go into "money I spent on junk" in the budget, even if the money is still sitting in my purse.
posted by anaelith at 8:37 AM on June 12, 2011
I write about one check per year. I check my online balances a few times a week. (It's actually useful for when you need to take a quick 3 minute break, rather then surf MeFi, I surf my accounts.)
Some sort of paper register is excellent for knowing "do I have enough money to buy this"? However, it is horrible at showing you how much you've spent per month over the past year on eating out. (Far too much in my case, something I'm trying to cut back on.) And while a register may tell you "sure, you can afford this now, that check you wrote two days ago didn't clear yet, but once it does, you'll have $892 left, so you can spend $300 on this new BBQ" it cannot tell you "sure, you can afford this now, but in 5 more days, your car payment is due ($400) and your car insurance two days after that ($200) thus putting you in the red if you were to purchase this new BBQ". A paper register made sense when people wrote checks all the time, groceries, utilities, etc.
I (and almost everyone I know) find it to be a rare occasion to write a check. The entire concept is hysterical. Wait, I'm going to write your name and some numbers on this piece of paper and then sign it and now it's worth money? Hahahaha. That's funny.
Anyhow, since I want to keep track of how I spend my money (spend less on eating out and I can spend more on vacation, etc.) and I want to be aware of future expenses, a paper register is woefully inadequate. Plus, it's super nice at tax time, running a small business on the side, to get all the numbers I need in a matter of seconds. I've used financial software to keep track of expenses regardless of the method of payment (if you're just using a register with your checkbook, you'll need a second register for cash and another still for each credit card, another shortcoming, and I haven't even gotten to the time spent balancing it and making sure you carried all your ones) for years. It syncs with my iPhone so if I'm out and just bought something, a few taps and it's recorded. Transactions download from all of my financial institutions. However, this is probably overkill for your teenage daughter. A spreadsheet might be more than enough for her, though it would require manual entry.
When I was her age, I had a part time job and my expenses were gas, car insurance and a cell phone bill. Anything else I wanted, I could purchase with whatever I had left over. That will make for probably less than a dozen transactions a month, pretty easy to keep track of in your head, but maybe writing it down will help. You haven't exactly explained a problem (is she chronically short money?) to help with though.
I'd start with check your account balance once or twice a week, review all past transactions to make sure there's nothing fraudulent, set up cell phone and car insurance to auto-pay (or not, if she'd rather do it manually) and make a mental note of the amount left. If she's out and about, she'll have to remember how much money she has before laying down the debit (or pay cash, so you can never overspend, a tip many adults find helpful) or she'll have to have a smart phone where she can check her balance (either online or on some sort of app).
posted by Brian Puccio at 8:42 AM on June 12, 2011
Some sort of paper register is excellent for knowing "do I have enough money to buy this"? However, it is horrible at showing you how much you've spent per month over the past year on eating out. (Far too much in my case, something I'm trying to cut back on.) And while a register may tell you "sure, you can afford this now, that check you wrote two days ago didn't clear yet, but once it does, you'll have $892 left, so you can spend $300 on this new BBQ" it cannot tell you "sure, you can afford this now, but in 5 more days, your car payment is due ($400) and your car insurance two days after that ($200) thus putting you in the red if you were to purchase this new BBQ". A paper register made sense when people wrote checks all the time, groceries, utilities, etc.
I (and almost everyone I know) find it to be a rare occasion to write a check. The entire concept is hysterical. Wait, I'm going to write your name and some numbers on this piece of paper and then sign it and now it's worth money? Hahahaha. That's funny.
Anyhow, since I want to keep track of how I spend my money (spend less on eating out and I can spend more on vacation, etc.) and I want to be aware of future expenses, a paper register is woefully inadequate. Plus, it's super nice at tax time, running a small business on the side, to get all the numbers I need in a matter of seconds. I've used financial software to keep track of expenses regardless of the method of payment (if you're just using a register with your checkbook, you'll need a second register for cash and another still for each credit card, another shortcoming, and I haven't even gotten to the time spent balancing it and making sure you carried all your ones) for years. It syncs with my iPhone so if I'm out and just bought something, a few taps and it's recorded. Transactions download from all of my financial institutions. However, this is probably overkill for your teenage daughter. A spreadsheet might be more than enough for her, though it would require manual entry.
When I was her age, I had a part time job and my expenses were gas, car insurance and a cell phone bill. Anything else I wanted, I could purchase with whatever I had left over. That will make for probably less than a dozen transactions a month, pretty easy to keep track of in your head, but maybe writing it down will help. You haven't exactly explained a problem (is she chronically short money?) to help with though.
I'd start with check your account balance once or twice a week, review all past transactions to make sure there's nothing fraudulent, set up cell phone and car insurance to auto-pay (or not, if she'd rather do it manually) and make a mental note of the amount left. If she's out and about, she'll have to remember how much money she has before laying down the debit (or pay cash, so you can never overspend, a tip many adults find helpful) or she'll have to have a smart phone where she can check her balance (either online or on some sort of app).
posted by Brian Puccio at 8:42 AM on June 12, 2011
I use a spreadsheet developed by Vertex:
http://www.vertex42.com/ExcelTemplates/excel-checkbook.html
posted by yclipse at 9:03 AM on June 12, 2011
http://www.vertex42.com/ExcelTemplates/excel-checkbook.html
posted by yclipse at 9:03 AM on June 12, 2011
I have a ledger--the kind you buy in office supply stores. I have my checking balance and my savings balance at the top to the right. I save my receipts and write down what I spend and what I withdraw on the lines. I also write in deposits on the lines. At the end of the two weeks between paychecks or page (whichever happens first), I add the spending/withdrawals and subtract them from the balance at the top, as well as add up the deposits and add them to the balances at the top. Back when I followed a budget, I reconciled this against my budget and made adjustments accordingly. Then I carry the balances over to the next page and start again. At the end of the month, I check this against my credit card and checking account statements to make sure there were no errors (sometimes, there are!)
It really does help you understand what you're doing with your money and how you could handle it better. My spending is less frivolous and my balances much more stable and comfortable than before. Not only that, it helps with that irrationality that Med. Maven talks about.
posted by crush-onastick at 9:36 AM on June 12, 2011
It really does help you understand what you're doing with your money and how you could handle it better. My spending is less frivolous and my balances much more stable and comfortable than before. Not only that, it helps with that irrationality that Med. Maven talks about.
posted by crush-onastick at 9:36 AM on June 12, 2011
I think the budget part of it is more important than the reconciling your spending against your accounts. I hated learning how to make a budget. I hated looking at the budget every week. And I only stuck with it long enough to develop reasonably good habits, long enough to figure out how I was spending and when I was spending irrationally, and long enough to build up good cushions in all my accounts.
My budget looked vaguely like this: fourteen categories of expenses I have every month (mortgage, student loan, utilities, cell phone, groceries, insurance, eating out, liquor, clothing, Netflix, entertainment, savings, IRA, house expenses fund). At the start of each month, each category had an amount I was allowed (or in the case of the fixed costs, required) to spend in the month, allotted to each week. I was permitted to overspend in a week, but not in a month. At the end of each week, I glance over the budget; at the end of the month, I reconcile it and carry over credits or debits to the next month's budget.
So, say my mortgage is $1000. Each week of the budget has "$250" allotted to the mortgage, but I pay it in full in the first week. So for the first three weeks of the month, my mortgage line in the monthly budget is overspent, but by the last week/final reconciliation, it's back on budget. This was most helpful (for me) for the clothing expenses. If I wanted that $400 pair of boots, it meant carrying over balances in that column for a couple months before buying them--or it meant having an overspent budget line for a couple months. Some categories (house expenses fund, for instance) rarely had entries, but always had money available when necessary.
I hated hated hated hated living like this and having to confront money like this every single goddamn week. I stopped doing it after a couple years and my habits have back-slid some, but my financial habits and my money situation are so much the better for it.
posted by crush-onastick at 9:55 AM on June 12, 2011 [1 favorite]
My budget looked vaguely like this: fourteen categories of expenses I have every month (mortgage, student loan, utilities, cell phone, groceries, insurance, eating out, liquor, clothing, Netflix, entertainment, savings, IRA, house expenses fund). At the start of each month, each category had an amount I was allowed (or in the case of the fixed costs, required) to spend in the month, allotted to each week. I was permitted to overspend in a week, but not in a month. At the end of each week, I glance over the budget; at the end of the month, I reconcile it and carry over credits or debits to the next month's budget.
So, say my mortgage is $1000. Each week of the budget has "$250" allotted to the mortgage, but I pay it in full in the first week. So for the first three weeks of the month, my mortgage line in the monthly budget is overspent, but by the last week/final reconciliation, it's back on budget. This was most helpful (for me) for the clothing expenses. If I wanted that $400 pair of boots, it meant carrying over balances in that column for a couple months before buying them--or it meant having an overspent budget line for a couple months. Some categories (house expenses fund, for instance) rarely had entries, but always had money available when necessary.
I hated hated hated hated living like this and having to confront money like this every single goddamn week. I stopped doing it after a couple years and my habits have back-slid some, but my financial habits and my money situation are so much the better for it.
posted by crush-onastick at 9:55 AM on June 12, 2011 [1 favorite]
What do you guys right down in your check register? My bank lets me see an image of the actual check, and my check register was apparently designed in days when paper was very expensive and must be conserved, so I don't think I could fit more information into my register than my bank already gives me online.
The name of the person I wrote the check to, the date I wrote the check, the amount, and the check number.
I can see the image of the check, too, in my online banking ---- after it clears. Before it clears, there is absolutely no record other than my own that that money is gone. My rent check usually clears in about three days, daycare in two weeks, and medical co-pays can take as long as six weeks depending on their billing practices, etc. In that two to six week period, my online banking balance will be off by as much as $1500, which is no small matter. Not writing the checks down creates a huge risk of overdrawing without meaning to, especially coupled with my smaller debit card transactions.
So, that's why I write everything down. A 17 year old who is not paying rent or daycare will likely never have need to write a check at least until she is out on her own. A lot of landlords in my area accept only check, money order, or cash for rent payments, and our daycare is an in-home daycare provider who only accept cash, money order, or checks for payment as they have no way to process debit or credit transactions.
People who make more money than I do, and people who are able to keep a substantial amount of untouched money in their checking accounts may not have to go to the same lengths that I do to make sure I don't suddenly owe a few hundred in overdraft fees, but I still think when starting out and learning how to reconcile a checkbook, it's best to start with as conservative and careful a process as possible and then to adapt that to something looser later on.
posted by zizzle at 10:07 AM on June 12, 2011
The name of the person I wrote the check to, the date I wrote the check, the amount, and the check number.
I can see the image of the check, too, in my online banking ---- after it clears. Before it clears, there is absolutely no record other than my own that that money is gone. My rent check usually clears in about three days, daycare in two weeks, and medical co-pays can take as long as six weeks depending on their billing practices, etc. In that two to six week period, my online banking balance will be off by as much as $1500, which is no small matter. Not writing the checks down creates a huge risk of overdrawing without meaning to, especially coupled with my smaller debit card transactions.
So, that's why I write everything down. A 17 year old who is not paying rent or daycare will likely never have need to write a check at least until she is out on her own. A lot of landlords in my area accept only check, money order, or cash for rent payments, and our daycare is an in-home daycare provider who only accept cash, money order, or checks for payment as they have no way to process debit or credit transactions.
People who make more money than I do, and people who are able to keep a substantial amount of untouched money in their checking accounts may not have to go to the same lengths that I do to make sure I don't suddenly owe a few hundred in overdraft fees, but I still think when starting out and learning how to reconcile a checkbook, it's best to start with as conservative and careful a process as possible and then to adapt that to something looser later on.
posted by zizzle at 10:07 AM on June 12, 2011
I have a slick excel spreadsheet budget (created by a friend) that's broken out by category (food, healthcare, luxuries, misc house) and fill it in most days using my online banking. This works well because I do most transactions with my debit card and they show up in the online account broken down for me. I write few enough checks that I just remember them and put them in "pending" (which will also then show me my pending balance).
This.
Online banking allows so much fine control of transactions. I try and avoid paying cash for anything these days in order that I can see it going through my account. My bank (in UK) allows a download of transactions since previous download. Add it to my transaction log each time, and select the appropriate income/expenditure type and hey-presto, a month-by-month budget.
Amazing seeing exactly where your money goes...
posted by saintsguy at 10:15 AM on June 12, 2011
This.
Online banking allows so much fine control of transactions. I try and avoid paying cash for anything these days in order that I can see it going through my account. My bank (in UK) allows a download of transactions since previous download. Add it to my transaction log each time, and select the appropriate income/expenditure type and hey-presto, a month-by-month budget.
Amazing seeing exactly where your money goes...
posted by saintsguy at 10:15 AM on June 12, 2011
I bought the kind of checks that have some kind of carbon-paper on the back that make a copy so I have a record of the check number, amount, and payee. I keep receipts from ATMs and purchases. So for each expense I have, I've got a receipt.
I use a plain spreadsheet as a register and verify it against my bank account online.
Previous balance and income go at the top, expenses go below, and I gray out the cells for expenses when the bank shows them as cleared. I take what my spreadsheet thinks is the balance, add the white cells (non-cleared transactions) back, and that should match what the bank shows the balance as.
I also do a little bit of voodoo where I put stuff I charge to a credit card in my expenses, but not gray it out so that I'll know that money has been spent and is out of my budget, but is still in my account.
posted by Several Unnamed Sources at 10:19 AM on June 12, 2011
I use a plain spreadsheet as a register and verify it against my bank account online.
Previous balance and income go at the top, expenses go below, and I gray out the cells for expenses when the bank shows them as cleared. I take what my spreadsheet thinks is the balance, add the white cells (non-cleared transactions) back, and that should match what the bank shows the balance as.
I also do a little bit of voodoo where I put stuff I charge to a credit card in my expenses, but not gray it out so that I'll know that money has been spent and is out of my budget, but is still in my account.
posted by Several Unnamed Sources at 10:19 AM on June 12, 2011
I (31) don't even have a register. Or a checkbook apart from the starter one that came with the account. I use mint to track everything in one place and toss receipts once a) they match or b) I'm sure I'm not returning Item X. Living in NYC, I can't imagine a place where you can't use plastic and that tells me where all my $$ goes vs. cash here and there. Mint is awesome, as are the various smark phone apps. Depending on your bank, they may even have an app.
I did learn the concept of balancing my checkbook but it's basically moot for me as I don't use a debit card so only transactions are auto pay: rent, insurance, utilities, student loan and ones I initiate: credit card payments. I withdraw cash MAYBE once/month so there's nothing to track.
posted by TravellingCari at 10:31 AM on June 12, 2011
I did learn the concept of balancing my checkbook but it's basically moot for me as I don't use a debit card so only transactions are auto pay: rent, insurance, utilities, student loan and ones I initiate: credit card payments. I withdraw cash MAYBE once/month so there's nothing to track.
posted by TravellingCari at 10:31 AM on June 12, 2011
I use Mint to keep a record of just about everything. I rarely, if ever, use cash, if I do, I generally know where it goes. It's the equivalent of having a spreadsheet that is automatically populated, that can track your spending habits in different categories.
Just like Green Eyed Monster I have a Google Doc. Every two weeks I sit down and update my budget. I enter all my expenditures into the spreadsheet, to make sure nothing is wonky, and to make sure I'm not spending too much in any given category, like eating out too much, or buying frivolous stuff. I plan my future weeks on this spreadsheet, so if I have any known large expenditures coming up in the next couple of months, I can adjust my spending habits between now and then accordingly. I know exactly how much I can throw at credit card debt, I know exactly how much I have in savings. Sure, since I don't write everything down, or religiously save receipts, I can't be certain if that Target charge is exactly correct, but I can make sure there aren't expenses in there that shouldn't be there.
posted by Tooty McTootsalot at 10:33 AM on June 12, 2011
Just like Green Eyed Monster I have a Google Doc. Every two weeks I sit down and update my budget. I enter all my expenditures into the spreadsheet, to make sure nothing is wonky, and to make sure I'm not spending too much in any given category, like eating out too much, or buying frivolous stuff. I plan my future weeks on this spreadsheet, so if I have any known large expenditures coming up in the next couple of months, I can adjust my spending habits between now and then accordingly. I know exactly how much I can throw at credit card debt, I know exactly how much I have in savings. Sure, since I don't write everything down, or religiously save receipts, I can't be certain if that Target charge is exactly correct, but I can make sure there aren't expenses in there that shouldn't be there.
posted by Tooty McTootsalot at 10:33 AM on June 12, 2011
I don't do any sort of register thing. I write checks super, super rarely (people that only take checks but are consistent costs I pay via online banking who will mail a check to anyone who doesn't take online payments. Rent, etc. I can pay via this). If I do write a paper check, I note it in a (on my computer) desktop sticky note until it clears.
I use cash as rarely as possible. If I use credit card I have a real record of each transaction and mint will sort it without me worrying about it, cash purchases just disappear with no accountability.
I also was taught by my parents to keep a baseline amount in my checking account that doesn't really exist. When I got my account they gave me $100 for it. It was understood that this was not my money, and that the $100 balance was actually a $0 balance. Now that I'm on my own it's $1000 of my money, and I never go below it except for in very few discrete emergencies.
But yeah, for me, paying with credit card or online banking as often as possible has been the best way for me to stay on my budget and know where my money is going (I've payed my balance off every month since I was 16 -- I actually didn't know until later that it was an option not too -- my parents have also paid their balance off every month since they got credit cards, and I thought that was just how it worked)
posted by brainmouse at 11:23 AM on June 12, 2011
I use cash as rarely as possible. If I use credit card I have a real record of each transaction and mint will sort it without me worrying about it, cash purchases just disappear with no accountability.
I also was taught by my parents to keep a baseline amount in my checking account that doesn't really exist. When I got my account they gave me $100 for it. It was understood that this was not my money, and that the $100 balance was actually a $0 balance. Now that I'm on my own it's $1000 of my money, and I never go below it except for in very few discrete emergencies.
But yeah, for me, paying with credit card or online banking as often as possible has been the best way for me to stay on my budget and know where my money is going (I've payed my balance off every month since I was 16 -- I actually didn't know until later that it was an option not too -- my parents have also paid their balance off every month since they got credit cards, and I thought that was just how it worked)
posted by brainmouse at 11:23 AM on June 12, 2011
Xurando: " Do you use an external program like Quicken, or do you still write it down in a register, or (like me), do you just check your balance alot online and not write anything down?"
I use GNUCash (like Quickbooks but free) to track everything, because I'm a huge linux nerd, with income and assets. Most younger people I know check their balance online from the bank's website and don't bother reconciling. I just trust the banks to get the information right; between carbon copy checks, online check scans, and maintaining a minimum balance required for checking interest, I don't see the purpose. Ten times out of ten, the reconciliation is a typo on my part, so I use online transaction history fetching to do the bulk of the work.
What's far more important here is budgeting, collecting data, and reading financial contracts. Credit card companies make it very easy to not budget and get into trouble, and very hard to figure out what's going on. Same for mortgages, car loans, student loans, and rental contracts. Sitting down and attempting to explain your own loan contracts might be a good way to impart some knowledge and remove some of the anxiety about these huge contracts.
Really, budgeting / planning is king. The rest is just paperwork.
posted by pwnguin at 11:44 AM on June 12, 2011 [2 favorites]
I use GNUCash (like Quickbooks but free) to track everything, because I'm a huge linux nerd, with income and assets. Most younger people I know check their balance online from the bank's website and don't bother reconciling. I just trust the banks to get the information right; between carbon copy checks, online check scans, and maintaining a minimum balance required for checking interest, I don't see the purpose. Ten times out of ten, the reconciliation is a typo on my part, so I use online transaction history fetching to do the bulk of the work.
What's far more important here is budgeting, collecting data, and reading financial contracts. Credit card companies make it very easy to not budget and get into trouble, and very hard to figure out what's going on. Same for mortgages, car loans, student loans, and rental contracts. Sitting down and attempting to explain your own loan contracts might be a good way to impart some knowledge and remove some of the anxiety about these huge contracts.
Really, budgeting / planning is king. The rest is just paperwork.
posted by pwnguin at 11:44 AM on June 12, 2011 [2 favorites]
I use a combination of Mint for budgeting and my bank's web site and iPhone app for checking balances and making transactions. Mint is sometimes slow to receive the most recent transactions from my bank, so I don' t always trust it for up-to-the-minute balance totals. However, Mint is wonderful for budgeting purposes.
posted by emelenjr at 12:13 PM on June 12, 2011
posted by emelenjr at 12:13 PM on June 12, 2011
If it hasn't been mentioned yet, you may want your teen to track not her "revenue/expense" but her "net worth". Interest earned and gain/loss on investments are exciting ideas whose monitoring helps financial literacy, goal-setting, insulation against guilt over "the latte tax", etc..
I use Excel, but only out of habit.
posted by mahorn at 8:57 PM on June 12, 2011
I use Excel, but only out of habit.
posted by mahorn at 8:57 PM on June 12, 2011
I was using google docs, and every pay period, would map out the budget & different categories. Then I would enter receipts weekly or so.
Now, I use an iphone app called "Checkbook", and I have one "main" checking account, and then have broken my budget categories down into separate sub checking accounts on there. That way, I can easily track what I've spent for the pay period for groceries, etc, and what I have left.
This also allows me to break down monthly bills by paycheck - I can transfer $43/paycheck to my "car insurance" checking account, for example.
I reconcile weekly or more often, using the online banking and actually reconciling in the program.
posted by needlegrrl at 10:16 AM on June 13, 2011
Now, I use an iphone app called "Checkbook", and I have one "main" checking account, and then have broken my budget categories down into separate sub checking accounts on there. That way, I can easily track what I've spent for the pay period for groceries, etc, and what I have left.
This also allows me to break down monthly bills by paycheck - I can transfer $43/paycheck to my "car insurance" checking account, for example.
I reconcile weekly or more often, using the online banking and actually reconciling in the program.
posted by needlegrrl at 10:16 AM on June 13, 2011
I was taught to balance my checkbook as a teen, and stopped immediately as soon as I got out of my parents' house/financial control. I *hated* the fussiness and receipt-saving. My mother has done this religiously her entire life, and has, I believe, caught about $75 worth of mistakes in 40-45 years. I will take the $1.50 a year estimated penalty for the freedom of not carrying around those damn receipts.
Personally, I have a Google Doc for the monthly budget (it's extremely simple, and I fill it in as I go - pending items are highlighted), don't track cash spending at all (other than how much I took out initially), and check my bank account every day or two to make sure it's right. And I guess I must have one of those "spectacularly good" memories, because I can remember the dollar amounts of purchases I've made the same day or within a few days. Maybe I just don't spend enough money.
I would say understanding the basic principles of budgeting, saving, and maybe using an app to record debit card purchases would all be more useful financial skills than balancing a checkbook. Even understanding the *principle* of reconciling (that you want to make sure no one overcharges you, all charges eventually clear, and keeping tabs that the bank isn't making mistakes) is more useful than knowing how to keep a written check register for a teen. Everyone understands the importance of the concept "you don't want them to cheat you."
posted by wending my way at 6:10 PM on June 13, 2011
Personally, I have a Google Doc for the monthly budget (it's extremely simple, and I fill it in as I go - pending items are highlighted), don't track cash spending at all (other than how much I took out initially), and check my bank account every day or two to make sure it's right. And I guess I must have one of those "spectacularly good" memories, because I can remember the dollar amounts of purchases I've made the same day or within a few days. Maybe I just don't spend enough money.
I would say understanding the basic principles of budgeting, saving, and maybe using an app to record debit card purchases would all be more useful financial skills than balancing a checkbook. Even understanding the *principle* of reconciling (that you want to make sure no one overcharges you, all charges eventually clear, and keeping tabs that the bank isn't making mistakes) is more useful than knowing how to keep a written check register for a teen. Everyone understands the importance of the concept "you don't want them to cheat you."
posted by wending my way at 6:10 PM on June 13, 2011
This thread is closed to new comments.
posted by litnerd at 6:09 AM on June 12, 2011 [3 favorites]