What's the best way to keep a checkbook?

http://www.clearcheckbook.com/

I use it, I love it, it’s AMAZING. And free.

I keep up with my spending on an Excel spreadsheet by using my online bank statement. I don’t ever write anything in a checkbook, I just log on to my bank’s online banking system every few days and add the transactions to my Excel sheet. I keep a list of my bills and the due dates, my salary and bonuses, and then a seperate list of my transactions. Excel makes it very simple to subtract one column total from another with some simple formulas. If you’re familiar with Excel and don’t trust yourself to write everthing down, try this method… just be sure to sign up for your bank’s online access.

I’ve used Quicken for more than a decade. I write checks on the computer and send them online. I almost never have to deal with paper. When I do, I tear out the carbon copy and put it on my desk to enter the next time I do my finances. I don’t know if you can synchronize it with a phone or a pda, but I bet you can. Then you always have it with you, and there’s no big deal keeping up with it.

…the best way to keep a checkbook?

My wife keeps it in her purse…
It rarely sees the light of day…

This is long, so I’m putting the topic of each paragraph right before it.

Hope this helps! Please note, I’m not a financial advisor, just a 20 year old who got paid to play with money for two years (I was a teller). I have a strange interest in this stuff, and like to share my thoughts.

General reminder systems
1) I use Google calendar. I have it send me a text/email/pop-up message with a description when I need to do something. If I make an appointment and I’m away from my computer, I send a text to my email account to remind me to put the appointment on my calendar. If you have internet on your phone, you could do it right then an there.
2) Having a routine. Can be difficult to maintain if your schedule fluctuates and over weekends. I recommend waking up a half hour early to grab breakfast and doing the boring crap then.
3) Dry-erase marker on the bathroom mirror, notepad by bedside, etc. There are lots of things. Google calendar works for me, and routines are probably the most reliable.

Transaction tracking/recording methods:
1) Use a regular old-fashioned checkbook register. Your bank should be able to give them to you for free, and you can just write down the date, description (place and what for), and price. At the end of the day, you can update your running total, and balance it with the bank. I like it because I’m not reliant on someone else (if a service goes down, I still know what is in my account).
2) Keep your receipts in your wallet, and at the end of the day record it all so you know how much you have for the next. You can use Excel, the site @lefteh suggested (thank you, btw! I’m liking it so far), or the old fashioned checkbook (or maybe there is an app somewhere. @lefteh‘s site seems to have a mobile application).
3) I’ve heard good things about mint.com, but you have to give them your bank usernames and passwords. Reputable sources seem to trust them, but mint.com also seems like a likely target for hackers.

Benefit of recording transactions
There are three major benefits.
1) You always know how much is supposed to be in your account.
2) You can write down what the purchase was for, which helps you budget accurately.
3) When you go to balance your checkbook with what the bank says, you’ll be able to easily spot transactions that aren’t supposed to be there. Having a buffer (next paragraph) is a good idea for back-up in case that happens.

Tip to prevent overdrafts
Its good to have your own ‘minimum balance’. For instance, when I was single, I wouldn’t let my account drop below $100 (I could if I needed to though, it wasn’t the bank’s idea, it was mine). I worked at a bank, and so I just wrote down everything as I spent it in my checkbook register, and when I went to work in the morning, I would balance it with my account. I always knew how much money I had available, and if I forgot something I had that $100 cushion. Now, I bank with Navy Federal, and should we ever spend too much, they just pull from the savings account, so my savings is my cushion now.

Sometimes the bank balance is wrong
The problem with just looking online or checking your balance at an ATM is that it isn’t always correct. A few things to keep in mind:
– Restaurants run your card and then you put the tip on the receipt. Because of this, when the transaction is pending, you only see the check total, not the total + tip. Your available balance* won’t reflect the tip.
– When buying gas, most stations put a pending amount of $1 until the transaction posts. This means you’re available balance* won’t reflect the rest of the gas purchase.
– This might not happen to everyone, and I don’t know whether its dependent upon the merchant or the bank, but sometimes transactions that have been pending for a day or so will disappear the day before they post. While they’re disappeared, your available balance* won’t reflect those disappeared transactions. Keep in mind that just because it disappears doesn’t mean it won’t post.
*available balance according to the bank

Bills
If you’re old enough to have bills to pay, I recommend opening another checking account for them. Sometimes they take a while to go though (especially if you use checks) and often they’re for a large amount, so you don’t want to forget to record them and be screwed over. Every time you get paid, put money for the bills in there, so you never spend money that is meant for your bills (and thus you are always able to pay bills). My husband gets paid on the 15th and the 30th of each month, so half the total for our monthly bills goes into that account each time he gets paid, and I pay all of them on the 1st of the month. All I have to remember is one date to pay bills, and the online transfer each time he is paid (or you can make it an automatic transfer, but I don’t recommend it unless you’re financially stable. I never recommend having bills paid automatically). Its good to have a cushion (or personal ‘minimum balance’) for this account too.

Using cash
If you’re bad at keeping track of things, using cash might help you, and can help you with budgeting too. You can’t go negative if you only pay with cash, but keep in mind that the only record of that transaction will be your receipt. If you want to keep track of where you money is going (to help you budget), you can put those little bank envelopes in your wallet with your budgeted amount of cash and label them ‘fast food,’ ‘dining out,’ etc. When you spend that money, you can put the receipt in that envelope, so you can see how much cash is being used and where its going to. Doing things like this can help you budget realistically, and help you realize just how much money you’re spending on coffee or whatnot. The link @lefteh provided would also help you budget if you use it. Having a stash of cash for dining out is a good idea anyway because when you hand your card to a server, you’re basically giving your server your card number and the code on the back. That means he can write it down (restaurants are the only place I can think of where they take your card out of your view) and use it to purchase things online or whatnot.

Joint accounts
I’ve found the hardest situation to keep track of your money in is when you’re sharing an account with someone. With my husband, I’ve been making him give me his receipts when he gets home, or send me a text when he makes a purchase (with the total and merchant name). I recommend you have only one person keeping track of your accounts, paying the bills, etc. If the other person wants to be in on the action, just keep them informed. My husband doesn’t give a shit, so I just tell him what money he has to spend). It might be easier to have the person that doesn’t keep track of the money to use cash. My husband likes that because then I’m not hounding him with, “Why did you spend $13 at the gas station?!” I like it because it keeps him down to earth because he can look in his wallet and realize he only has, for example, $12 out of the $50 budgeted for this pay period. He’s also really bad about giving me receipts or whatnot.

You asked. :P

I have one account for automatic payments only—mortgage, utilities, insurance, etc. The things that are constant each month. I round up an estimated amount each month, and deposit. No physical checks exist for this account; the only way to access is by online banking or transferring. Because of the round-up I usually end up with about $1000 extra in the account at the end of the year for household purchases, like washer, stove, new TV, etc.

The second checking account has checks, but I do online bill paying through the bank for things like medical bills, cell phone, etc. because the money comes out right away.
I have a money machine card for this account that is not linked to the other account. No debit cards because you are more likely to overspend with a debit card.

@dee1313 I though I was scary, but you make me look like a lamb shivering in the face of your wolf!

One year, me and my wife (yeah, yeah, my wife and I, I know) kept little notebooks with us and we recorded every cash expenditure we made. After that, I entered the percents in the spreadsheet, and made estimates of how much we were spending on various things we spent cash on.

I now think that was a pretty useless exercise. It’s interesting to know where the cash goes, but not really important. All I really need to know is how much I’m spending. These days, I use cash less and less. It’s just credit cards of one sort or another. My transactions get downloaded to my computer, and my bills are paid automatically. So all I have to do is tell the computer to pay the few bills that aren’t automated—electric and gas and water, wouldn’t you know!

I check it once or twice a month to make sure things aren’t getting weird, but we always keep a cushion of about two to three times our average monthly expenditures in the checking account, so there’s not much to worry about as long as income exceeds expenses. We had to do a little planning last year, because we’d run down our savings paying for the kids’ education, and we had to generate a greater cash flow. That meant cutting back on what we were saving for retirement.

But that’s all the budgeting we need. Otherwise we roll along, saving as much as we can, planning to send one child to public school next year (which frees up a lot of money to put into savings for college).

I like to use Quicken because it also has a retirement planning function, and it’s so nice to see that green light indicating all is copacetic. Of course, two years ago, we were on track to be able to retire a few years early. Then the stock market collapsed, and to tell the truth, I’ve been afraid to look at our retirement planning now, because I’m sure it’ll show us we have to work until we’re 80 or something. In fact, this is the first time I’ve thought about that in a year or so.

I know all about rebalancing portfolios in order to keep allocations in the right proportions, but we never do that. It’s really a lot of bother. Occasionally we’ll make a half-hearted effort to do a little rebalancing, but it’s just crazy and there are far too many retirement accounts to look at since we’ve both worked for several employers, not to mention setting up several different kinds of IRAs (traditional, Roth, Coverdell) for all four of us. Shit, that makes 12 accounts right there! I’ve worked for three companies; my wife two, and each retirement account has between two and five different mutual fund investments. All I can do is look at Quicken; hit the update button, and hope the market went up that day. I used to look every day during the internet boom (but I found out that playing with money is a real good way of pissing it away, so now I look at it once or twice a month at most.

I wonder if you’ll still keep track so closely when you are another ten or fifteen years older and money is not so tight. Can you imagine letting it go a bit looser?