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A Balancing Act

from "A Balancing Act" Kevin Risner, Advertiser-Tribune, 8/30/08

Maybe Seneca County is different. By Friday morning, 79 percent of people who responded to an online poll on The Advertiser-Tribune Web site said they reconcile their checkbooks weekly or monthly. National statistics are quite different.

Moebs Research Services reported recently nearly seven out of eight people-87 percent-do not balance their checking accounts. Moebs Services provides research and information to banks throughout the country.

"It emanates from the same percentage of people who like high school algebra," Economist Mike Moebs said. "Really, if you look at the people who do mathematics at all, it's probably roughly about the same. People do not like math, accounting, keeping track of things. It's a very common behavioral item. It really reflects within the management of their checking accounts too."

Moebs said of the 13 percent of people who do balance their checking accounts, half do so only once a year during tax season.

"While there are programs out there, and most banks will provide that to help you reconcile, it's just like taking the garbage out," Moebs said. "You just don't do it until the last minute, and if you can get somebody else to do it, great. That's what it really comes down to. It's unfortunate."

Why should people reconcile their checking accounts?

"It's important because you can think you've got $500 in your account and it could only be five dollars, or it could really be a couple thousand dollars," Michael Daniels said.

Daniels is chief financial officer for Old Fort Bank in Tiffin. He said he has heard most people do not even open the envelope when their checking account statement arrives in the mail. He said he does not know if that is true. He referred to the Moebs statistic saying 87 percent do not reconcile checking accounts.

"We really don't know how many of out customers balance their check books," Daniels said. "Whatever that national statistic is-if 87 percent-I'm sure in Tiffin, Ohio, more than 13 percent of people balance their check books. It doesn't seem to be a real problem with our customers."

Daniels said sometimes customers come to the bank and ask for help reconciling checking accounts, but otherwise the bank does not know how customers manage their accounts.

"There are people who, every time they write a check or use a debit card, if they have a transaction of $23.50, they write $24, because it's just easier for them," Daniels said. "Over time that extra adds up to something and they don't even know it's in there if you don't balance it."

Moebs said even though most people do not reconcile their checking accounts, most people probably know what their balance is within a range of $50 to $200.

"One of the things that has changed over the years is the technology with the ability to use Internet, and you have cell phone capabilities, Blackberries to go and check to see what your balance is," Moebs said. "Almost countering that has been the use of debit cards. That has made the task of reconciling an account more difficult. People forget to record a debit card transaction.

"When you combine all those, we are roughly at the same percentage as we have been for many years. Roughly seven out of eight people don't reconcile their accounts. The technology has aided it since they can get balances that used to be only the domain of the banker. Now they have the capability of getting that balance, so they have some more information they can deal with and manage the account. When it comes down to actually reconciling it and having a checkbook, whether it's electronic or paper, there's really only one out of eight who do it."

Moebs said some people may have interesting ways of balancing their checkbooks. About two years before his father died he learned his father had a novel approach to reconciling his personal checkbook. His dad was in his mid-eighties at the time.

"He was complaining to me about the bank branch manager who didn't know how he was reconciling his account," Moebs said. "He did it every month. It was giving him a hard time. He said, 'let me show you.' I had never asked him, he had never shown me. I learned how to reconcile an account on my own.

"My dad had this most convoluted ... way of reconciling an account. He got to the right number. When I did if for him in a more standard way we got the same number. I said, dad, your approach is different than any I've ever seen done. I can see why the branch manager is having a problem. It turned out my dad had made an error and he was claiming that the bank had made an error."

Moebs said women are probably more likely than men to reconcile checking accounts, though he has not researched that idea scientifically to know for sure.

"Numbers I've seen in Wealth management is that many more women will manage the overall household as far as investments, so it just comes down that they will do that," Moebs said. "Men are less prone to do it. I would definitely say that."

Businesses are far more likely to balance their checking accounts, Moebs said. He said balancing the checking account is a key part of managing their business because knowing the cash balance at any time is critical. Most business owners do not balance their own business checking accounts, though. They hire accountants or bookkeepers to do the task.

"They do reconcile, but they often leave that to their CPA," Moebs said. "I do. I reconcile my personal account, but I have had a CPA for 20 years. She reconciles the business account monthly. Part of it is that there is an internal control. There is a greater mandate to make sure things balance, that things are in control."

Moebs said there are 27 million businesses in the U.S. Knowing cash balances is essential. He said his bookkeeper has a sign over her desk: "Happiness is a positive cash flow."

Many people may not know how to balance their checking accounts. Schools have not always taught students how to reconcile accounts. Banks provide assistance and materials to help. Consumers can even obtain computer programs to make reconciling easier.

"Most bank statements have a form right on the back of them," Daniels said.

Daniels said the method is basically the same whether the account is for an individual of a business. In very simple terms, add the credits and deposits that have not yet cleared, and subtract the checks and credit card transactions that have not cleared. Subtract any bank fees or charges that have been applied.

"If you take the bank's balance and add and subtract those things it should match your check book," Daniels said.

For more detailed instructions on how to balance your checking account, you can contact your bank for help or search the internet. An example of a website with information on how to balance a checkbook can be found at

Written By: vhorizon
Date Posted: 9/2/2008
Number of Views: 7355