Tuesday, July 15, 2014

Statement Checking

Although, like many people, I spend a good portion of my day on a computer, I am not someone who has trouble unplugging. On weekends, I often forget to check my email. If I go away and there is only spotty wifi, I can go for days without really noticing. Yes, it's nice to be able to connect whenever one wants, but it's also very relaxing to forget about the world one has left behind, and just experience what's happening right now.

Still, I'm no Luddite -- I do love what technology allows me to do, and I took no time to become completely reliant on internet based services. I stopped filling out a physical address book so many years ago that I've nearly forgotten how to use them. My wife and I use a joint calendar online, and if it were to disappear, I'd have no idea when or where I need to be later this week, let alone next month. No one memorizes phone numbers anymore.

But a few months ago I did one thing to pull back from the online world: I switched back from paperless bills to snail-mail statements for my most-used credit card.

Back when I moved to NYC and was quite broke, it was easy to keep an eye on my credit card charges. Every dollar counted, so my account balances were always on my mind. Without having to check, I knew exactly how much I had spent for each and every purchase pulling from my debit card or being charged to my credit card. It was second nature to sign into my account online each day and make sure there were no incorrect charges.

But as I became more financially stable, it became less of a necessity to know this information. It became less of a priority to double-check these charges. And eventually, it became something I no longer thought about. The money was there, so if I was over-charged a few dollars here or there, it no longer meant making my rent check bounce. It no longer mattered quite as much. Eventually, it occurred to me that I had absolutely no idea what I was being charged for, or what I was spending my money on. I had been looking at the total on my credit card bill, thinking nothing about it being correct or incorrect, and paying it. When I realized this, I thought I had better take a closer look, and eyed the list of charges… Only to realize I had no way of knowing if any were correct.

Interestingly, what I did notice was that the charges listed no longer felt as important as they did when I made each purchase. I remembered going to Pret a Manger thinking I really, really needed to treat myself to lunch that day, but looking at the $12 charge on my statement, I thought instead of where that money could have gone. I also remembered taking that cab home from a long meeting when I simply couldn't bear the subway. But looking at the $18 charge, I wondered if I hadn't just been lazy. Looking at line after line of charges, which in hindsight seemed so silly, made me realize I had been tossing away $10-$20 in so many unnecessary places, and those charges were adding up very quickly. Having separation from the charges allowed me to realize that my spending had gotten away from where I wanted it to be.

Thanks to so much of our lives being online, our generation can easily get by without ever having spent one moment balancing a checkbook, and so it becomes very easy to forget what we spend our money on. But this does us a disservice because we cannot be financially responsible if we don't know where our money is going.

I decided to force myself to check my statements each month. Not only for erroneous charges, but also to keep myself aware of my spending habits. As I started this new project, I realized three things: First, it is imperative that receipts are kept. Each and every receipt. Without something to compare the lines of charges to, checking the statement isn't terribly helpful.

Second, being able to find these receipts easily is necessary for a quick comparison. If the receipts are all over the house, it will be difficult to know if every charge lines up with a receipt. A small box or a file helps here, and there are two bonuses to keeping receipts in the same place -- if it becomes a daily habit to drop them in to the container, not only will they basically be organized by date, which makes checking the statement easier, but if one needs to make a return, she knows exactly where the receipt can be found.

Third, it only takes a few minutes to go through the monthly statement, but it is much faster with a hard copy than with an online version. Having a paper version of the statement means one can highlight each charge as she checks it against the corresponding receipt, and she can tell at a glance if something doesn't have a match.

With these things in mind, here are three simple steps that can be taken today to get ready to start checking statements next month:

One: Create a place to store receipts.
Two: If signed up for paperless billing, contact the bank to switch back to mailed statements.
Three: Start getting in the habit of taking receipts. So many places now ask if one even wants a receipt that it's easy to forget to take them. Start collecting them every time plastic is used.

Or, just go old-school and use cash for everything! Either way, knowing where the money is going is the first step in recognizing areas where money can be saved… And hopefully saved away instead.

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