Balancing your household budget might be difficult to do, but it’s not complex. You just make sure that the money you have going out is the same amount that is coming in. (In this way, Charles Dickens’ Micawber was only half-right, though we agree in spirit.)
In this way, the money you have in your bank account at the beginning of the month should (if everything is done right) be the same at the end on the month. (I call this amount of money “float“.)
Now, as I’ve talked about before, certain activities might post in one month but happen in another month, so you can’t just open your account on the first of the month and see what your float is. Luckily, there’s a way to figure out your account balance even in this case.
But what happens when you do all this and there’s a discrepancy? What happens when you expect your balance to be more (or less) than what it turns out to be?
I mean, $25 dollars here and there are just rounding errors. But what if you’re a few hundred dollars off?
I encountered this situation recently with someone I was working with, and I have some thoughts.