The other day I’m watching television and I see this Chase commercial announcing that they now have a smart phone app that lets you know when your bank balance is getting low. They’ll “alert” you. The commercial shows a woman in the middle of a yoga class getting such an alert. She calmly extends her perfect yoga poise and uses her smart phone to transfer more money into her account. (From where, I wonder.) Thank goodness the bank let her know before she went into overdraft.
I’m not sure anyone has noticed this, so let me point something out: people’s handling of their personal finances have not improved since the advent of on-line banking. In fact, it’s gotten worse. The reality is that many people who used to balance their checkbook stopped balancing when on-line banking came out. There is this strange perception that the bank is somehow managing your account for you now that you can see your statement on-line. When you add to this the ability to put bills on auto-payment, many people have simply checked-out. Who needs to actively manage their personal finances? It’s all on autopilot…
Is this really how we want to run our finances? This is the definition of being reactive around money, as opposed to proactive. Here is how it is supposed to work: We are supposed to be in control of our money and know where it is going and how much we have. But many of us feel foggier now than ever before. So many are so frustrated and don’t know what to do.
I fear that the world of electronic banking has a very dark side. I worry that it allows us to abdicate our power to the gods of technology. Yes, we are all very busy. And we tell ourselves that we don’t have time to manage our money. (Besides, the bank is doing it for us.) We’ve stopped paying attention as much as we used to. (And some of us never paid that much attention to begin with, I know.) And if our balance goes too low, well, now the bank will just let us know! Like Pavlov’s dogs, we simply react to the sound of the bell. Now we can pay even less attention! We can be totally reactive and just wait until our phone tells us what to do….
So let me plead with you for a moment. Whether you like it or not, money is one of the most important substances in your life. You need it to eat and generally provide for yourself and your loved ones. It’s also likely that you work between 30 and 50 hours a week for money. Do you really believe that you don’t have time to spend 30 minutes a week managing it—tracking where you spent it or deciding where you want and need to put this form of life energy? Remember, money is simply a form of life energy. (See my previous post on three reasons that people stay in the money fog. As a money coach, I know that it is not as easy as simple deciding to get out. But I just had to rant about electronic banking for a moment!)
I worry for younger people growing up with on-line banking. Will they fall prey to the notion that technology can do everything for them and they don’t have to spend time deciding where they want this valuable resource to go? No one and no gadget can manage your money—only you can do that. Now, I am not opposed to technology. I use technology to help me plan my income, spending and savings, and to track where my money goes. And yes, I pay bills on line. But I am in control of it. I don’t hate on-line banking. I love being able to easily access my accounts. And paying my bills on-line beats licking stamps any day. But there is a right use of technology. Anything that beeps at you in Yoga class and causes you to react should be suspect. You are the driver of your financial life.
Your post begs an additional question: Why do so many people NOT ask for or accept a receipt when making a purchase? I see it all the time at Starbucks and even in department stores. How can they remember the purchase, much less the amount, a month later when the statement arrives? How can they be sure that the debit was posted correctly, that the account wasn’t “double dipped,” or received an erroneous charge?
Though I do consider myself quite techy, I simply can’t get into doing automatic payments. Talk about giving up control of one’s finances!!
Good post, as always!
Thanks for this post, Mikelann. As always, your perspective is insightful.
I don’t use automatic bill pay partially because I don’t completely trust that it will work (some bills often have mysterious fees attached that require further investigation). If I’m handling it, then I’m handling it. A friend of mine was using automatic bill pay, and the bank just didn’t pay a bill. The funds were there. It was a glitch. She spent tons of time trying to get the bank to pay for the late penalties and fees, and it was a major headache. I guess the lesson learned is that ultimately you are responsible, even if the bank claims that it has it all under control.
.-= Trelawney´s last blog ..Rave reviews =-.
I agree completely – I use the on-line to keep up with what I’ve spent and to make sure I’ve entered everything into my quicken account. I never download because I think it makes too much confusion for those who already have a fog. But I think there is one thing that you left out – this fog also means that you’re not checking if the bank made an error. I’ve been a bookkeeper off and on for over 30 years. I used to say that the banks rarely or ever made a mistake. I don’t any more because I find errors that require calling the bank several times in a year, dealing with many banks.
Great post.
I’ve had some of the same thoughts when watching that commercial!
We do rely on the bank to keep things straight – probably more than we should. We don’t use automatic payments on more than a few things though. Online bill pay is one of my favorite features – but with Trelawney’s post, above, I guess we’d better keep closer track of those, too!
Thank you for all the great information and motivation!
Mikelann – Great post. The other problem with ignoring what’s going on with your account is that you lose track of all those “automatic” payments (i.e. gym membership). If you haven’t looked in a while, you might be surprised at just how many you have and how much money is going out each month.
Here Here Mikelann.
I have a slightly different rant on this topic, related to healthy living, which is in essence what you teach related to finances. Not only are those alerts ‘reactive’, the real way to Peace of mind and living in a yoga lifestyle is to live under our means.
So, needing to transfer money because I am not cognizant of my balances or spending habits is so UN-yoga.
There are numerous studies (one highlighted on NPR in early 2010) that consistently conclude that the universal factor to ‘being happy’ are the people who live under their means – no matter what the income. This was consistent from retired folk to multi-millionaires. The happy people lived under their means. Those alerts set a pattern of unawareness of ‘our means’.
Granted, I do have them set for myself, but I know what it is when it pings my inbox or phone, because I already know where I am in my balances…
There is a blog post Mikelann, how people can achieve financial yogic living with your assistance. The yoga of money.
To easier living with clarity,
Kathleen
Hi, Mikelann,
Thanks for your post/rant. I LOVE my electronic banking capability. And I USE it, as opposed to abdicating to it. I check it every day. I created an Excel spreadsheet in which I enter any purchases I make with my debit card and any checks I write. I enter automatic debits/payments BEFORE they hit my account – so I am always sure there is money in the account to cover them. The top of the Excel sheet is for “cleared” items, so that my bank balance always matches – to the penny – the bank’s balance. The items which have not hit my account yet (checks written, upcoming automatic debits) are entered a few lines down and then moved up as they clear my account.
I also fastidiously write down every penny I spend. I put those expenditures, along with the payment items from my checking acocunt (as opposed to cash withdrawals) and any savings into a spreadsheet for each month. This means that at any time I know exactly how much I have spent and how much I make.
I did this before electronic banking and I do it now. It is a commitment to solvency and prosperity.
So, as you said, it is not the electronic banking that is the problem. It is out lack of commitment to attend to our finances. And in my experience, even in the world of paper checks and no atm’s, there were, percentage wise, just as many unbalanced checkbooks and just as many people uncommitted to attending to their finances.
wasn’t there a quote long ago about power corrupting, and absolute power corrupting absolutely? I always watch the numbers because
it’s in my best interest to be alert. My bank (and many other
organizations/institutions I’ve had traffic with) has added fees to my account again and again, which, when contested by me, are removed. Not too many errors are made in my favor. I did once get a nice fat check from the IRS in error, but they quickly sent a note following it that warned that cashing the check could put me
at risk for federal charges. Let the buyer BEWARE!
Hi Mikelann,
Such a thought-provoking article. Thanks for sharing your thoughts about this. It made me think of the Proverbial Wallets Project….think you might get a kick out of this:
http://www.financiallysmitten.com/2011/02/14/video-proverbial-wallets/
Warmest,
Lora
Thank you Mikelann!
You absolutely validated my fears and experience since online banking and debit cards and online bill-pay has become the thing to do. I used to balance my accounts (badly, but at least I did it and was always aware of what’s what more or less). Now, never. Every so often, I go online and pay a bill or check my balances, but the whole thing is out of control. I keep intending to get organized with this and I know I have to. It’s gotten worse, not better.
I appreciate your reminder and prompt and general rant because as I said, this validates my worst fear and I want to turn this around immediately.
Thank you so much.
Would like to offer a different point of view.
My ATM card was skimmed recently, and unbeknownst to me, the crooks withdrew two large sums of money. Fortunately my bank made good on the theft and the cops caught the bad guys. But as someone who keeps her checkbook up-to-date, I never considered using alerts before. Now I’ve got
’em set up for transaction amounts for both my bank and credit card accounts.
In terms of people thinking alerts will help them manage their balances, they probably weren’t keeping track of their account using the checkbook method anyway. The best thing is for people to understand what you are teaching Mikelann — that $ is life energy and it’s important to keep track of it. (And it doesn’t have to be life consuming track!)