March Security Tip
7 Reasons to Balance Your Bank Accounts Each Month
It is essential to track your expenses each month, so you know what you have spent and where. It is just as important to balance your checking account and credit cards to your bank statement each month, so you can spot potential problems with your account or prevent overdrafts. The following tips can help:
Catch Mistakes You Made
One of the biggest reasons you should balance your checking account to your statement is to catch any mistakes with your record keeping. Even if you are using software, you may make mistakes in entering your deposits or transactions. These may be minor mistakes, but transposing numbers can throw your ending balance off. Balancing to your bank statement will help catch those and prevent you from accidentally overdrawing.
Track Your Spending
When you balance your checking account, you can also track your expenses. There are many types of personal finance apps that will automatically track your spending so you know if you’re staying within your budget. You can also review your spending for the year and budget for annual expenses you may have overlooked.
Catch Mistakes Your Bank Has Made
Banks have been known to make mistakes. However, if you are not balancing to your account, you may not realize that a deposit is missing or withdrawal is unauthorized. If you review your account and suspect an error has been made, contact your bank as soon as possible to rectify the situation.
Catch Fraudulent Changes
Banks and credit card companies have a period of time in which you can report fraudulent charges, usually between thirty and ninety days from the date of the statement. It is important to balance your account each month so you catch small discrepencies, like a transaction accidentally being run twice at a store, or larger issues, like possible identity theft.
Be Aware of Where You Are Financially
You should always carefully track your spending to make sure you do not accidentally overdraw your account. It is important to balance your account so that you know where you are and how much money you have left to spend until your next paycheck. You can also avoid this by building in a cushion of at least $100 into your budget. This can prevent you from overdrawing because of a simple math mistake.
Catch Automatic Payments That Have Not Gone Through
You may have an automatic payment set up to pay club dues, pay medical bills, insurance, or other small monthly payments. These payments should go through without a hitch, but sometimes if the company has switched over to a new system or you get a new credit card number, the payments may not go through. In some cases, it may not be a big deal, but if it ends up with your insurance being canceled, or late fees, it may end up costing you more than you realize. When you balance your statement each month, it allows you to catch these mistakes and contact the company to make sure that everything is okay.
Stop Small Things From Becoming Large Things
When you balance your account, you may catch small fees or mistakes that do not seem like a lot on the surface. You may remember to record the ATM withdrawal, but not the additional fee that your bank charges for using a different bank’s ATM. These fees may be small, but if you do not catch them and add them into your balance, you may end up overdrawing your account. When you overdraw your account, fees can add up quickly and send you into the overdraft cycle.