Online Banking: Are You Really Aware?

Advice & Stories
on November 18, 2013

If you’re old enough, think back to 1985. If you’re not old enough to remember 1985, allow me paint a picture for you. It’s 1985, and you’ve just woken up to start your 80s day. Do you run over to your denim purse or your velcro wallet and grab your check register? Do you throw it open and take immediate note of your checking account balance? Nope and nope.

In 1985, no one needed to know what their checking account balance was at any given moment. This was because someone’s current checking account balance wasn’t nearly as important as it’s perceived to be today. People checked their balance much less frequently than people do today, and this resulted in fewer transactions and less spending.

Case in point, in May of 1985 the personal savings rate in the United States was 10.3%. This is to also say that the spending rate (the inverse of the saving rate) was much lower in 1985. This is compared to a personal savings rate of 4.6% in 2013. What changed? The debit card and online banking.

The rise of the debit card and online banking dominated the 1990s. In 1998, debit card transactions outpaced transactions involving checks for the very first time. And all the while, the personal savings rate in the United States took a nose dive. Tool after tool was created for consumers to have a better, more convenient grip on their personal finances, yet savings continued to dive.

What if all of this newfound awareness was actually the problem? Could frequent balance inquiries via mobile, text, online, or other, actually induce more spending? Many experts think so. There is even a term for this. It’s called balance spending. The theory is the more often you look at your balance, the more money you will spend. It’s along the same lines of the idea that the more times you open your refrigerator or pantry, the more food you will eat.

Maybe this has happened to you. You log into your online banking account by entering your username and password. As you are waiting for your balances to appear, you mentally take a stab at what you think your balance will be. And if your clairvoyant hat is on straight, you nail the guess. If you are wrong because you underestimated the balance, then you celebrate with unjustified glee. But why celebrate? You were wrong. And in many cases, really wrong. Yet, it feels like a financial victory. Never mind the possibility your checks or debits simply haven’t cleared yet. Now, armed with your fortunate account balance, you march forward to the rest of your day with permission to spend a little bit more freely than you originally had planned on. This all happened because of your quest for awareness.

Sadly, real awareness has nothing to do with easily obtaining the balance of your checking account. Real awareness isn’t fickle. Your behavior shouldn’t change based on an incorrectly perceived checking account surplus. Online banking isn’t a financial tool. It’s a convenience tool—and convenience never really serves our financial lives well.

Stop focusing on your balance. Knowing your balance doesn’t make you aware. Focus on your spending. Know that you spend $130/week on food. Know that you spend $54/week on gas. Know your spending habits. This will help you make the changes you need to improve your financial life. Be aware, but be aware of the things that matter.

Peter Dunn, aka Pete the Planner, is an award-winning financial mind who has authored 5 books, hosts the popular Pete the Planner radio show and travels around the country offering financial education. His signature wit will have you laughing as you learn. You can learn more about him at

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