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Everyday Cheapskate: Who Needs Balance?

Mary Hunt on

Dear Mary: What does it mean to "balance" my bank account? How do I do that? Why should I? I really appreciate you answering my question. I'm sure I should know this, but honestly, I don't. -- Josey

Dear Josey: This is a great question, and I'm sure you'd be surprised to know just how many of your fellow readers want to know the same thing!

To balance, or "reconcile," your account means you agree with the amount of money the bank says you have in your account at any given time -- that it is exactly the same amount that your records say you have. If the amount you show you have in the account does not match what the bank says you have, you're out of balance. Someone has made a mistake, and you need to find it.

There are four reasons you need to balance your account at least once a month:

No. 1: To catch the bank's mistakes (they make 'em!).

No. 2: To catch your mistakes (so do you).


No. 3: To avoid really expensive bounce fees.

No. 4: To feel like a genius.

When you go for long periods of time without settling up to make sure the bank and you agree on how much you have in your account, you're handing over your power to whatever the bank says you have. They're not perfect. Banks are run by humans, and humans make errors.

You make errors, too -- not only with math but also with things like forgetting to write down an ATM withdrawal, a forgotten debit card swipe or other transaction.


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