It seems to be a sign of good financial habits if you balance your checkbook every month - but what does that really mean?
I'm from Europe and I haven't written out a check in almost 20 years. I don't even know whether they still exist. Everything is by wire transfer here. And while I know what it means to write or cash a check, I don't know what "balancing a checkbook" refers to. What is it you are supposed to do?
E
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'Balancing a checkbook' refers literally to the book whick contains the checks, because when the bank issues a checkbook to the user, it often also contains a small, neatly-lined book for writing in check transactions. We also use the term 'balance' to refer to the total amount the account contains.
When using checks it is advised that the user keep a written record of transactions. This written record is then used to calculate the total amount an account should have. Accurately subtracting each purchase and adding each deposit should give the user a correct total amount. As a very simple example: I have $100 in my checking account when I write a check for $30. I then keep a record of the transaction. If I know my transaction record is correct, I can be sure I definitely have $70 remaining in the account. If the bank tells me I have $70, and my record says I have $70, the account could then be said to be "balanced".
Keeping an account balanced is considered fiscally mature because it is tidy and organized, and a person with a balanced account is always quite sure how much money they actually have, and cannot 'bounce' checks. That is when a person writes a check they cannot afford. When the payee tries to cash the check, the bank cannot allow the transaction due to insufficient funds. Landlords, you may imagine, particularly dislike that.
I definitely still use checks, personally, but generally only for payments sent through the mail, or rent. Otherwise I think most people use debit cards instead.
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bohlken
How To Balance A Checkbook
Anonymous
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RE:
What does it mean if you "balance your checkbook"?
It seems to be a sign of good financial habits if you balance your checkbook every month - but what does that really mean?
I'm from Europe and I haven't written out a check in almost 20 years. I don't even know whether they still exist. Everything is by wire transfer here. And while...
Jill
If you've actually had a checking account for that long, there's no way in hell you don't know what balancing a checkbook means.