The question is, “Why keep a checkbook?” Sounds simple, doesn’t it? But this is a question that can be taken three different ways. If you are totally “into” the digital age you may think that a checkbook is obsolete. You may think with online banking, direct deposits, bank apps, credit cards, and debit cards that having checks and a checkbook is not needed. “I can just PayPal” is what someone may think if they need to pay for something or pay someone.
I understand someone thinking that way, but I don’t agree with that point of view. I think a checks and a checkbook are important to have. Getting your checks from your bank may be fine, but I prefer to getting mine from a printer/supplier like Deluxe. Find out more about them by clicking here.
The other side of the “Why keep it?” checkbook question is really a two-part question. The first part is along the lines of is it necessary to keep my checkbook after I have filled it up and gotten a new one. In other words, “Do I need to keep the checkbook for my records?”
The second part of that question is, “If I need to keep my old checkbook, for how long do I need to keep it?” This question has to do with the duration of financial record keeping.
The way the question could be taken is, “Why should I fill in the check register or check stubs?” So “keep” refers to actually keeping records and balancing your checkbook.
Answering Checkbook Questions
Let’s answer the two-parter part of the question first.
If you have a checking account, you should be filling in the check stubs or the check register. These are part of your “checkbook” and once they are all filled in, they are a record of your financial transactions. As such, they come in real handy at tax time. So you should hold on to and store both your personal and business checkbook fill with either a completed check register or check stubs.
For tax purposes, you should keep your financial records (this includes your checkbook) for seven years. You want to keep your checkbook as part of the current tax year documents. Plus, since the IRS can contest your tax returns up to six years in the past, you want to keep your older checkbooks in case the IRS comes calling. That’s the current year plus six additional years for a total of seven years.
Next up. Why not go totally electronic with my banking? That’s not as easy as it sounds. There are still places that will not take credit cards. Yeah, they only accept cash or a check. Having a paper checkbook can in some ways make life easier. You can access your checks and all your checking account information 24-hours a day. You can always see where you stand. You don’t have to rely on technology. Also, physically writing things down helps many people to better understand their financial situation.
Finally, when using a checkbook you should absolutely keep it balanced and up to date. Fill in all the information and update your total with each and every transaction. This can save you money by being able to look at any time and see what your balance is. If you know your balance, you will not accidentally write a check that would overdraw your account. This means you avoid fees and overdraft charges.
Your written record checkbook can also help you see mistakes, avoid any fraud, and examine your spending habits to make changes to meet your savings goals.