Personal Finance Challenge #1: Balancing Your Checkbook

I’m just going to say it…

I am absolutely amazed that more people don’t balance their checkbooks. It is, what I consider, the first and easiest step that you can do to set yourself up for a life of good finances.

Don’t underestimate the power of tracking your income and expenses. It can really be life changing, especially if you have never done it before.

I’ve watched people use their debit cards like they are credit cards and never enter any of their expenses in their checkbook. Guess what happens? They start getting hundreds of dollars of overdraft fees. It’s fine if you want to use your debit card like a credit card, but just track it!

People end up in the above scenario because they have heard that they should cut up their credit cards and pay cash for everything. While it is good in theory, this idea leads to bad practices like the one above.

So here is our first challenge in The Personal Finance Challenge Series

Balance Your Checkbook

1. Start today.
2. Don’t type it, write it. It is preferable to write it down then to type it on a computer. Something about physically writing it down tends to help you absorb the skill better.
3. Do it daily. Don’t let receipts pile up for any length of time. Make it a daily habit.

Originally posted 2011-08-27 14:28:33. Republished by Blog Post Promoter

Comments

  1. I’m confused…I read this quote from today’s post, “I’ve watched people use their debit cards like they are credit cards and never enter any of their expenses in their checkbook” and I understand your point, but then I clicked into your linked previous post and read what you wrote about debit cards, “For one, they are simply handy dandy and make my life oh so much easier. I don’t have to worry about carrying cash, or writing out checks, or even balancing my checking account when I make purchases with a debit card. I just buy!”

    This seems to be conflicting information. Have you changed your position on debit cards since 2008, or is there more to this than I understand?

  2. Hi Rachel,

    Thanks for the reply. You are right. I actually made an error in writing “debit” instead of “credit” in that previous article. I actually just changed it to read, “…or even balancing my checking account when I make purchases with a credit card.”

    I think the same thing now that I did then. Debit cards are fine to use if you actually keep track of what you are spending. The same goes with credit cards. I personally use a credit card, and never use a debit card, because all my transactions are recorded electronically and I have an easier time keeping track of them.

    In any case, thank you for catching my typo. And thank you for reading.

    Cheers,
    Jeremy

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