When I was growing up, I remember my mother was an account reconciling ninja. She would sit at her old-fashioned, humongous roll-top desk with a pile of cancelled checks, her check register and her most recent checking account statement. She would methodically go through the register, crossing off the checks that had cleared, and then deducting the checks that didn’t clear to balance her check register for the month. I understand the process . . . too bad I could never do it.
My Spotty Checkbook Reconciling History
I had my own checking account throughout high school, but I didn’t use it too much–so reconciling every month was pretty simple. However, when I went to college it became a nightmare. Even though I understood how to balance my checkbook, I could never actually do it. The reasons I hated reconciling were that I felt:
- Incompetent. Maybe it was my lack of attention to detail, my subtraction skills or something else. I never fully understood what my issue was, but I felt like an idiot, even though I have always been an honor roll student. I just couldn’t complete a simple checkbook reconciling.
- Vulnerable. I turned to my parents for help, and they expressed disbelief and amazement that I was having so much difficulty with this (supposedly) simple task. I know that wasn’t the most supportive reaction they could have had, but at the time, they were the only people I could be that vulnerable with.
- Shame. If I couldn’t handle this easy “adult” task, where else was I lacking? Based on my parents’ reaction, I was afraid of telling anyone else I was having so much trouble, for fear of more exposure, judgment and criticism.
- Anxious. Whenever I would get my checking account statement in the mail, I’d turn into an irritable freak, snapping at loved ones, anticipating the nightmare of once again failing.
- Secretive. Of course, I felt so much shame, vulnerability and anxiety, I couldn’t possibility share with anyone what was wrong. I had to protect my horrible little secret: honor student, “normal” person by day, secret destroyer of checking accounts by night.
- Avoidant. I got to the point where I just didn’t even try anymore. I’d let a few months of statements pile up before I threw them away. I’d simply deduct my spending from the current paycheck so I never even had to deal with what was left over in my account.
- Dependent. I have seen couples where one person balances the checkbook and then tells the other how much money they can spend. That would drive me nuts. I felt ridiculous when my parents helped me, like I had to wait for their authorized reconciling before I was “allowed” to get on with my life.
- Fearful. When I couldn’t balance my checkbook, it messed up my entire week. I’d go for days trying not to spend money so that I wouldn’t further compound the problem (teen logic). Money issues became something to be feared and loathed.
This is why I have so much empathy for people who struggle with money issues!
My Turning Point
I finally figured that if I just had a “pad” in my account of about $100, Mindy Math was close enough to ensure I would never overdraft my account. But what really changed things for me was when I was able to access my checking account online. I finally identified a process that worked, and here are the steps that evolved:
- Maintain outstanding debits – Keep a pile or basket of all checks written, receipts and items paid (now an excel spreadsheet).
- Compare the items in Step 1 to your online account – If they have cleared your account you can chuck them (I throw away most receipts for personal stuff, but keep it for business. If you want more guidelines on that, check here).
- Deduct outstanding debits – Take the existing online balance and deduct everything that hasn’t cleared from Step 1. This gives you your actual balance.
- Deduct upcoming debits – Take your actual balance in Step 3 and deduct everything you’re planning on paying for before you get your next paycheck—this can be a list of bills coming due, “walking around” money for groceries, eating out, auto fuel, whatever. After deducting these things, ideally, you still have money in your account!
- Transfer surplus – Compare the remaining money in your account with your standard for account “padding.” If there is a surplus, transfer it to savings.
- Pay bills – Add any bills you pay to the pile in Step 1.
Some people need to build up to this. I have found some clients need to do this in small bursts, only spending 5-10 minutes per day gaining clarity over their current cash availability to map out usage for the next few days. Once you gain confidence in the process, it’s easier to go for longer periods, only checking in 1-2 times per month. There was a time when I checked my balance daily! But because it was only a few minutes to complete the task, it didn’t overwhelm me.
Where would I be with money, had I not realized so long ago that my problem was PROCESS-based and not just an inherent, defective character around money? And that’s what I have found for many people; with proper processes in place and paying attention to the right things, many money problems magically solve themselves. And as your confidence in yourself grows, so will your money.
Actions This Week
- Let yourself off the hook: As I graduated from college and got my first job, I started to see that I was actually pretty capable with money—I never bounced checks, I didn’t go crazy with spending and I was saving consistently. Forgiving myself for my checkbook myopia allowed me to build on the successes I already acknowledged and figure out my own way of doing things.
- Profile yourself: If you experience challenges with knowing how much money is available for spending at any given time, which part of the process is causing the lack of clarity? You can use my process to refine your own.
- Establish your process timeline: Are you a person who prefers executing a few small, quick steps a couple of times per week, or would you rather pay bills and check balances a few times per month? Factor in your personality and work with instead of against your natural leanings.
P.S. You might like my free workbook 10 Steps to Being A Money Boss, which helps you quickly and easily get started on the top ten quickest payoff actions to take with your money. You can download that free workbook here.