Paper checks vs digital pay

[Kittenpanzer]

First to establish, that I'm here because I'm horrendous with money, lost 8y of savings to a gambling addiction, and want to fix all that and build some kind of wealth.

I tried asking family for advice, and my mom is obsessed with me having a "paper checking account" - a paper ONLY checking account if possible. According to her, this is how all rich people manage their money, and how they got rich. She tells me that with apps, autopay, and online accounts, it's impossible to know how much you have at any given time, whereas if you balance a paper checkbook, you always know EXACTLY how much you have to the penny. Virtual payments will keep you poor.

I find it way too complicated. I can't even track spending because forgetting to log one purchase turns into forgetting a week of purchases, into no longer "logging" in any meaningful sense. I actually do have a paper checking account and send checks for some bills because I want to get rid of them; I don't even write them down in the register. If anything I want to get my smaller bills on autopay from an account maintained just for that

Who's right?

[disneysteve]

Welcome!

It's not a right or wrong thing. You need to find a system that makes sense and works best for you, and everybody is different. The system that works for your mom might not work for you.

It is critically important to keep track of your spending somehow, whether on paper or in some electronic way. If you don't know where your money is going, you can't take any steps to improve your situation.

I think paying bills electronically is fine as long as you are keeping track of those payments. I'd be cautious about doing autopay at this stage because it's way too easy to forget about those payments. For now, it's probably best for you to make every payment manually. That could be by writing a physical check or it could be by using your bank's online payment system or the vendor's own site. Just be sure to enter each of those payments in your checking account register so that you maintain an accurate current balance to prevent overdrawing the account.

Another decision is paper bills vs e-bills. Despite being super organized with my finances, I still prefer paper bills. I want to be able to sit down at my desk and review each bill to make sure everything is correct. When I just get an e-mail saying my bill is ready, it quickly gets lost in the dozens of e-mails I receive each day and I often end up never looking at it.

[riverwed070707]

Ditto on everything DS said and welcome to our little corner of the internet! Congrats on recognizing your desire to change your relationship with money. I think the good news is that technology has made tracking spending way easier than it used to be. The only "wrong" way in my opinion is to use cash for everything - though some people used to manage fine with an envelope system, this is really the only way I see to actually have no record of where your money went. If you're writing checks, most banks will show you a digital copy of the check so you can at least see who it was paid for and if you get in the habit of using the memo line, you can even note what its for. Highly recommend in this early stage setting aside an hour every week to categorize your transactions and track them against a budget. Over several months you can refine your budget against your actual spending and then eventually make adjustments to shape it toward your goals. Look into money tracking apps like You Need A Budget or Empower budget planner that link all your accounts in one place and allow you to categorize your spending.

I imagine you can find some valuable learnings scrolling back through old posts. Many of us came here with debt and have been posting along the way as we transitioned from learning how to budget to investing and financial independence. One thing we love to do is critique budgets to help people meet their goals! If you feel so inclined, once you get your arms around your income and spending, post it here and see if we can help you get there faster -- though take fast with a grain of salt, this is a long game and requires discipline.

[Fishindude77]

I'm old school and prefer to pay the majority of bills with hand written paper checks. One of those "if it aint broke, don't fix it" scenarios.
Also don't have or use a debit card.

Lots of people do most things electronically and that works too.
As has been said ..... Do what works best for you.

[ua_guy]

I think you should use whatever system works for you, but I'd echo the cautionary words around autopay. Part of becoming disciplined with money is paying things on time and tracking your spending - however works best for you - but autopay should only be used for routine bills with consistent charges while you get started, IMO. You also need to track those expenses, but if you're logging in just to pay the same amount on the same day every month for your trash bill, you can let automation do that work.

While your mom might have some good advice and can help champion good habits, this should be an inside job, something you're doing for yourself at this stage of life.

[disneysteve]

I think you should use whatever system works for you, but I'd echo the cautionary words around autopay. Part of becoming disciplined with money is paying things on time and tracking your spending - however works best for you - but autopay should only be used for routine bills with consistent charges while you get started, IMO. You also need to track those expenses, but if you're logging in just to pay the same amount on the same day every month for your trash bill, you can let automation do that work.

While your mom might have some good advice and can help champion good habits, this should be an inside job, something you're doing for yourself at this stage of life.

I would also add a note of caution for using paper checks. Mail service is not what it used to be. If you are going to pay a bill by mailing in a check, be sure to do so well in advance of the due date and set yourself a reminder to make sure the payment was received on time. I think paying online is FAR safer and more secure plus you get instant confirmation that the payment has gone through. If you mail a check and it arrives late or not at all, you are still responsible for that. You end up with late fees, interest charges, and dings on your credit report, all of which are easily avoided by paying electronically.

Also, with ever-rising postage rates, even if a vendor charges a fee to pay online, it can still be worth it. Our township charges $0.99 for online tax payments but a stamp is $0.78 so for a net cost of $0.21 I get immediate payment confirmation and don't need to write a check, use an envelope, or worry about it getting there on time. That's a no-brainer to me.

[Jluke]

Online payments all the way.

there are apps available for budgeting. YNAB and others that I have forgotten.

I use quicken.

Is your mother rich and that is why she thinks rich people get by doing the paper system?

[kork13]

Yeah, I would never have been so successful as I have been had I relied upon paper everything. I have most of my "money-smart" processes automated, which allows me to build my wealth in the background without even thinking about it. Stuff like automatic savings/investments (constantly growing & I don't have to remember or decide each month how much to save) ... Or automatic bill payments (I never miss a bill payment or have a late fee, because their own payment system is automatically withdrawing it from my account on the due date). Odd idea that you can't know how much you have at any time (even to the penny) ... I pull up my bank account daily & watch as items process. I know my finances so well that I'm projecting (quite accurately) my future bank account balance in my budget spreadsheet.

As others have said, most important is just settling on what works for you, whatever system & method of money management will best help you, individually, to grow wealthy. "There are many roads to Rome".

[Drake3287]

Ever since online Home Banking started with BofA years ago I've been paying all my bills and doing money transfers electronically. I also use a cash reward credit card to pay as many bills as possible just for the rewards. And yes, I pay it off in full each month. I do also have two checking accounts that I balance each month so I do agree with your mother regarding that, even with having well over a million dollars I know to the penny how much money I have spread out in all my many accounts once a month.

As for writing actual paper checks, I only write a few per year, property taxes and DMV and that's only because they charge a fee for using a credit card. Just the cost of postage alone is enough not to pay your bills by mail.

[myrdale]

My preference is paper checks but it is not full proof. Neither is online payment.

I paid everything (power, water, cable, phone, gas, insurance, mortgage, then later property tax by check) for two decades.

The mail service in Georgia got REALLY bad a year or two back. I would receive my power bill due on 1st, on the 3rd. I had a couple of bills that never showed up.

So I switched power, cable, & phone over to online payment through my bank. Easy enough.

I have made it a practice to log in every Friday and pay all new bills (not autopay). Again easy enough. Except for I saw I had a new power bill back around the 4th while i was out of town due on the 18th. I figured I'd wait until I got back to click pay. Then a week or two went by and I was busy. I then noticed it again on the 17th, and it takes a day to process. I don't know yet if I got hit with a late charge.

Either way you have to stay on top of it.

Similarly my local insurance agent has been having issues for a couple of years keeping his office open. So I went to another branch (different agent) to pay my bill two weeks ago. I signed to switch my account over to their branch. I received receipts for the payment of $1000 for auto and $1000 for home insurance. Two weeks later and the checks still have not cleared. I went to speak to him yesterday and he gave me a run around of how they took the checks to a different branch to process and they would be clear this week.

[LivingAlmostLarge]

My preference is paper checks but it is not full proof. Neither is online payment.

I paid everything (power, water, cable, phone, gas, insurance, mortgage, then later property tax by check) for two decades.

The mail service in Georgia got REALLY bad a year or two back. I would receive my power bill due on 1st, on the 3rd. I had a couple of bills that never showed up.

So I switched power, cable, & phone over to online payment through my bank. Easy enough.

I have made it a practice to log in every Friday and pay all new bills (not autopay). Again easy enough. Except for I saw I had a new power bill back around the 4th while i was out of town due on the 18th. I figured I'd wait until I got back to click pay. Then a week or two went by and I was busy. I then noticed it again on the 17th, and it takes a day to process. I don't know yet if I got hit with a late charge.

Either way you have to stay on top of it.

Similarly my local insurance agent has been having issues for a couple of years keeping his office open. So I went to another branch (different agent) to pay my bill two weeks ago. I signed to switch my account over to their branch. I received receipts for the payment of $1000 for auto and $1000 for home insurance. Two weeks later and the checks still have not cleared. I went to speak to him yesterday and he gave me a run around of how they took the checks to a different branch to process and they would be clear this week.

I put most stuff like utilties on autopay. I'm not sure that's smart but if it allows autopay for CC i do it.