Monitoring Your Checking Account Balance Is NOT a Method of Budgeting

tracking your checking account balance

You walk up to the ATM and put in your bank card.

After entering your PIN number, you hit the “Balance Inquiry” button.

The receipt spits out, you grab it and read that there’s $925 left in your checking account.

You say to yourself, “OK, I have $925 left in my account and that needs to last me for another 8 days. I think I can make that work and still go out to eat tonight”.

Well my friend, you’re walking a fine line. Checking your account balance each day as a budgeting tool just doesn’t cut it.

Focus on Your Budget, Not Your Balance

That $925 in your account should have a job. It should already be accounted for. You need to be aware of the required expenses that are coming up and that $925 should be allocated for in a budget. So create a budget and stick to it!

Monitoring your balance can also give you a false sense of security.

If you see that you have a good chunk of change in the bank, you may be more likely to spend it frivolously. You might say, “you know what, I deserve this”.

But you may be spending money on discretionary things when your mandatory expenses haven’t all been paid yet. That’s just bad planning. However, a good budget can keep you on track.

When It’s OK to Monitor Your Balance

As I mentioned already, checking your account balance as your primary budgeting tool is a no-no. However, there are certainly some instances where it’s OK to check your account balances frequently.

If you’re in the early stages of The 9 Steps to Financial Freedom, you may still be living paycheck to paycheck

If that’s the case, you’re going to have a budget but you also want to closely monitor your account balance to make sure you’re not going below a $0 balance in your account. You have to avoid those nasty bank fees!

It may take you a few months to get out of that paycheck to paycheck cycle. When you finally break free, monitoring your account balances won’t be as necessary as before.

As you move through the steps and things start looking up, you also want to monitor your balances to watch them grow.

Whether you’re saving a little cash or funding your retirement accounts, watching the accounts swell with money always feels good!


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I’ve had a lot people come to me with money problems. Some of those people even thought that budgeting was just monitoring an account balance. I’ve helped them break through that myth, focus on their goals and get on a path to financial freedom. Are you heading down the right path?



  1. Meaghan on September 19, 2013 at 7:46 PM

    The first several paragraphs of this article describe us exactly, and we keep getting stung! Imagine that! I know the money has a job, but it’s so easy to spend it when it looks like a lot is in there. We are learning.

    • Adam Hagerman on September 19, 2013 at 8:54 PM

      Hey Meaghan!

      You’re right. It’s a learning process!

      Try and implement small changes in your financial life to help break some of those habits that seem to hurt the most. Small steps can lead to BIG results!

  2. nicoleandmaggie on September 19, 2013 at 9:34 PM

    Meh, I disagree. If you have a big fat savings account and earn more than you spend, then not putting a name to every dollar works just fine as a budget. When checking gets low, you can ease up on luxury spending. When checking gets high, you can move large chunks out to savings or an IRA or even to a big item purchase.

    Different types of budgeting are helpful at different points in one’s fiscal life (and for different personalities).

    • Adam Hagerman on September 19, 2013 at 9:57 PM

      Nicole (or is it Maggie? :-)),

      I certainly agree with you that different types of budgeting are helpful to different personalities. It’s all about finding what works for you and sticking with it.

      For this article, I was drawing from my experience in working with my clients.

      I had a lot of clients who would just monitor their account balance and take it straight to $0 every month. Unfortunately, they never got to that point where there was a “large chunk” left over to move around. They could never seem to meet any of their financial goals. Sometimes they even ran out of money before the essential expenses were paid.

      I try and have them take step back from that “It’s OK, I have money in the bank” attitude and focus more on their budget and the goals they wish to achieve. It’s helped a lot of people get out of a rut.

      Thanks for commenting!