If you do something long enough, then you usually learn a valuable lesson from it. For instance, I have learned via years of playing pickup basketball games that you should never choose the guy that is wearing a watch. What my experience has told me is that any dude that wears a watch to play pickup basketball – sucks. No seriously. He will be terrible. He will cause you to lose the game, and you will be back on the sideline waiting for the next game to end so that you can play again. Some secondary lessons from pickup basketball are: never pick the guy wearing jeans, khakis, coaches shorts, or a guy with more than two wristbands.
But I’m guessing you didn’t click on this blog to read about my pickup basketball musings. I have learned a tremendous lesson from using online banking over the years. The lesson is pretty simple – online banking is destructive. It’s a crutch. It’s a spending tool, not a financial tool. Okay, that was three things.
I have found that people that login to their online banking account on a daily basis are actually less aware than those that don’t. Think about this for a moment: what did people do to get a daily account balance update prior to online banking? Nothing. They did absolutely nothing. Were they any worse off for it? No. Online banking allows people to balance irresponsible spending habits with increased access to information. But that doesn’t mean that the user is any more aware of their financial reality. Here is why.
Something happens when you click the button just after entering your user name and password. As you are waiting for the balance to appear on your screen, you play a dangerous little game. It’s called: If My Balance Is ___. It works as you might expect. You set some random goal for what you hope that your bank account balance is, and if the account is higher, then you celebrate.
Click
“Okay, if my balance is above $400 , then I can exhale. I don’t really know what’s in my account (despite the fact that I look every day), but if $400 is in there, then I’ll be comfortable until I check the balance again tomorrow.”
Balance appears: $700
“WOOHOO!! Sweet, I just found $300. Well, I guess I can go out to eat tonight, and probably even swing by the mall on the way home. I freakin love online banking.”
And scene. Did you see what happened there? Your guessing the balance game just turned ugly. I have found that when people try to guess their balance and are wrong, than they then spend down their money to reach their original projected balance. And they either do this purposefully, which is very stupid. Or they do this subconsciously, which is to be expected.
Stop using online banking as a crutch. And stop using it as a spending tool. And stop picking the dude that’s wearing a watch. He sucks.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.
Unless the guy wearing the watch is Shaq, as shown above. In this case, the guy with the watch will keep you on the court all afternoon!
Shaq could play bball in granny panties as far as I’m concerned.
Anyway, I play this game a little different than you or your acquaintances, Pete. When I open my bank account and I see the extra $300 of found money, I think, ‘Sweet! I can put that in savings.’
The key difference though: I don’t go to my bank’s site, I use Mint instead. That gives me a full picture of my spending. I know that right now I have $80 left in my restaurant budget, so I can go out to eat. However, I’ve overspent by $20 on my alcohol/bars budget, so really I only have $60. And it has to last till Feb 28th.
That full picture of where you stand is priceless.
Not everyone who uses online banking uses it in the manner you speak of. Some of us log in only a few times a month to update the bills that need to be paid in X amount by Y dates.
Anyone using online banking as you describe probably also overspends using their debit card too. (We don’t use debit cards.)