Balancing Your Accounts in the Digital Age
It used to be that if you wanted to find out where your money was going, you had to sit down and go through a paper bank statement line by line. These days, online banking and personal finance apps have made tracking your spending much easier.
Of course, technology can't do it all for you—you still need to keep an eye on what's happening in your accounts each month. Balancing your accounts can help you spot unfamiliar or unusual payments. The sooner you notice something's not as you expected, the easier it'll be to take action.
Why should you balance your accounts?
It's common for fraudsters to test the waters by making a few small transactions before they attempt a bigger fraudulent purchase. If you don't flag these transactions, they'll figure you're not paying attention, and they may make larger withdrawals or empty your account. Balancing your accounts regularly will make it easier to stop them before they disappear with your money.
This practice can also help you spot purely unintentional discrepancies. Although banks process hundreds of thousands of transactions a day without a glitch, mistakes can happen. Generally, you have 60 days to tell your bank about a transaction you don't recognize. If you don't balance your accounts at least once a month, there's a good chance you'll miss this window, and the bank may not be able to provide full restitution.
Although it's unlikely that your bank would make this kind of mistake, you might make one yourself. You could accidentally overdraw your account, for instance, which means your payments might bounce and your bank may charge fees.
If something goes wrong and you've never balanced your accounts, you may have to wade through several months' worth of transactions to get to the bottom of it. If you balance your accounts each month, you'll only have to go through your most recent transactions to find out what went wrong if a problem arises.
How do you balance your accounts in a digital world?
Technology has made balancing your accounts an easier task than ever before. You don't have to wait for your bank to mail you a statement. With online banking, you can see your latest transactions at any time.
Even better, there are many personal financial management apps available, and some banks provide their own tools that connect directly with your accounts. You can also set spending limits or savings goals and glean useful insights into your spending.
The tricky part is comparing the transactions in your personal financial management app to your bank statements. You'll need to make sure they match and that you recognize them all. If a transaction looks unfamiliar, don't panic. There may be a perfectly reasonable explanation. Call your bank as soon as possible, so they can check it out for you.
Don't forget your pending transactions
Did you write a check to make a payment on your credit card? Are you expecting to receive money? These can take several business days to show up in your account. Because they affect your balance, it's a good idea to account for them manually.
Make a list, including a description of the transaction and the amount. Then, subtract outgoing payments from your available balance and add incoming payments to it. This will show you your actual balance.
Make it a habit
Online banking and money management apps have made it easier to balance your accounts, but they haven't made it unnecessary. If you want to catch fraud on your account, spot mistakes in time, avoid unexpected charges and take control of your finances, balancing accounts is a crucial skill to have.
The key is to commit to doing it regularly. The more often you balance your accounts, the more likely you'll be to spot any issues and get them fixed in a timely manner.
A few financial insights for your life
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.