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Plan Well, Retire Well

Saving and investing your money

Teaching money management: in with the new, out with the old

Should I still be teaching people how to write checks , use a checkbook register, and to balance their checkbook?

I recently attended an excellent presentation by Brenda Cude, Ph.D.,Professor, Department of Housing and Consumer Economics, University of Georgia, about the concept of financial literacy: what is it and how do we measure it. It was a thought-provoking look at just what it means to be financially literate, such as whether having access to financial products and services is actually a required in order to be financially literate.

Those ideas may help me wrestle with a question I have as a financial educator: what are the basic management skills that a person needs to function in today's world? In the past, critical skills included knowing how to write a check, how to keep an accurate checkbook register, and how to endorse a check. Now, I'm questioning whether those topics have any place in my basic financial management classes.

How do you keep track of the balance in your checking account? I'm betting the majority of you said "I check online." Or maybe you call your bank. But if you carry a smart phone, you may have said "There's an app for that." Maybe you use software or an online service to download all your transactions and keep track.

So, is the checkbook register out-dated? Most transactions are electronic and are processed within hours. Checks are converted into electronic transactions, reducing or eliminating the "float" – the lag of time between when you mail or give the check to the payee and when the amount is deducted from your account.

And what about writing checks? Do I still need to be teaching that? I remember how hard it was for many of us to learn to write numbers out, to translate "$14.25" into "fourteen dollars and twenty-five cents." It's a lot easier to swipe a debit card.

Then there's reconciling your account. (Did you read that sentence and say to yourself, What's she talking about?" If so, that just proves my point.) University of Illinois Extension's award-winning curriculum, All My Money, has always included a final activity about bank accounts that requires you have to do all these things: write checks to pay bills, endorse a check for deposit, use the ATM to deposit the check, keep a checkbook register, and reconcile the register with the bank statement at the end of the month. How many of you even look at your bank statement, much less have a checkbook register to balance it against? I'm a firm believer that we all need to verify all the transactions on the statement by checking it against debit card receipts, ATM deposit receipts, etc. But I'm ready to admit that you can do that without following these more rigid procedures.

We're in the process of revising All My Money, including the lesson on bank accounts. I'd be very interested in your thoughts on the skills that are needed in today's world to successfully manage a checking account. So weigh in by clicking below and submitting a comment.

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What I would think would be useful to know right away: the difference between types of accounts and what they are used for (checking accts, savings in a brick & mortar bank vs an online bank, retirement accts, cds, bonds, mutual funds); how the whole process of how a check works (from when it is written or submitted online to when it is cleared in your acct) to get an understanding that there is a time lag, etc; an overview of the different ways to monitoring accts (quicken, checkbook register, mint, etc).
by Anna M on Thursday 7/21/2011

Online banking/bill payment, checking balances by phone, etc. are becoming more common but some people are afraid to use the internet when their personal finances are concerned. Having a session on internet safety used by banks to protect the information (Reality: the personal information is on the internet whether or not we 'allow' it to be) and a simple online banking/bill paying demonstration may be helpful.
by Mary Ann Tiedemann on Thursday 7/21/2011

I am 27 years old. I have never needed to balance a check-book, although I know how and use checks on a regular basis. I view my online information regularly and have caught double charges or mistakes that took place. But balancing a check book, either on paper or online, should be pretty far down the list of things that make someone financially literate. If all Americans could get one thing right in regards to their finances, every family in America would be better off for it. That of course, it budgeting. Somewhere along the line the idea that it was ok to spend more than you make became the "norm". Everyone from credit card companies to furniture stores to my paypal account encourages me to buy now, and pay later. But people do not have the concept of how much debt they are racking up until they get to a point where they can no longer afford the minimum payments on all of that debt. Everyone with any income or any expenses should sit down and make a budget. Start with how much money you bring in for 1 month. Then start writing out all of the things you need to spend money on each month. If the "spend" category is higher than the "earn" category, there is a problem. Once this is done it is very easy to start finding areas to cut back in. American's think that we DESERVE cable TV, high speed internet, smart phones, eating out up to 7 times a week, traveling where we want, when we want, and anything else that our little hearts desire. This is the land of plenty, right? This attitude had led to people not even being able to afford their house payment. So for someone to be financially literate, they simply need to start by asking themselves what they are spending their money on. Without that step, we will continue the cycle of spending away our future for minimal gain today.
by Lucas Karr on Thursday 7/21/2011

I actually face this dilemma as well. I teach a personal finance course to high school seniors in Chicago. My students in particular needed more support in terms of the functions of banks in general and what makes a checking and savings account different. Later in the unit, I do teach them how to write deposit slips, checks and a register. I don't cover how to formally reconcile the statement and at that point we have a discussion about how many of us do our own banking online. The challenge with everything being web based is that I have yet to find resources for them to interact with that aren't directly linked to a person's bank account or statement. There is room to introduce both in a class because in theory the concept of reviewing your purchases and financial transactions is the same be it on a register, statement, or web page.
by Melissa Glassman on Thursday 7/21/2011

Not everyone in the world has a computer, including me, I use one at our Library. I write checks to pay my bills, and I think you should continue to teach it, it is still an alternate way of paying for things, should power be out for a long time.
by Carol Liermann on Friday 7/22/2011

Thanks to all of you for your comments. It's clear that "one size does not fit all" when it comes to strategies for managing a checking account. I'll keep all of your ideas in mind as we work on revising the All My Money curriculum.
by Karen Chan on Monday 7/25/2011