What are 9 reasons I should still write checks?

[00:00:00] Ralph Estep, Jr.: So let me start with a question, and that's this: in today's digital age, why would anyone still write checks? Picture this: you're facing an IRS audit, your heart's racing, your palms are sweating. Now imagine if you had a secret weapon that could turn that nightmare into a walk in the park. Well, that's exactly what happened with one of my clients, and I can't wait to share their story with you today. So stick around. I'm going to talk about nine compelling reasons—and it might just surprise you—about why you might still want to write checks. I'm going to tell you a tale of two clients whose different approaches to financial record-keeping led to drastically different outcomes.

[00:00:40] Ralph Estep, Jr.: No, I'm not going back in time to talk about check writing, but on today's show, I'm going to tell you why you might still want to do that.

[00:00:51] Ralph Estep Jr.: Now, yesterday we had a great conversation with Karen Hackman. We talked about how to handle our finances effectively as a couple. If you missed it, I want to encourage you to go back and listen to her.

[00:01:01] Ralph Estep Jr.: She gave some practical advice on ways to transform a relationship, and also your bank accounts. So it's all about relationships and finance, and as always, you can find all of our episodes at askralph.com.

[00:01:17] Ralph Estep Jr.: Well, I've got a great message today. It comes to us from Kelly. Kelly writes this:

[00:01:21] Ralph Estep Jr.: "Ralph, I've been listening to your show for months now, and it's really helped me get a handle on my finances. But I got a question. In this age of digital payments and online banking, is there any reason to still use checks? I feel like I'm stuck in the past every time I pull out my checkbook. In fact, I was writing a check the other day, and my son asked me what I was even doing.

[00:01:41] Ralph Estep Jr.: He's almost 16, and he's never even written a check. I guess he just assumed all banking is now done online. Ralph, I value your opinion, and I look forward to hearing your response. God bless."

[00:01:52] Ralph Estep Jr.: Well, Kelly, thank you so much for your question. And it's a great one, and I'm excited to dig into it today. Hey, and listen, if you're listening right now, remember this show is all about answering your questions.

[00:02:03] Ralph Estep Jr.: That's why I call it Ask Ralph. So keep those questions coming. You can send them to me at my email address, that's ralph@askralph.com, or you can visit our website, click on the microphone icon, and just record what's on your mind. I will answer your question.

[00:02:22] Ralph Estep Jr.: I'm thrilled you're joining me today. If you're a longtime listener or this is your first time tuning in, I want to thank you, and I want you to know how much I appreciate you taking time out of your day to be here. I'm happy you're joining me on our journey. And if you're enjoying the show, I'd love for you to visit our website,

[00:02:37] Ralph Estep Jr.: that's at askralph.com. There, you can join our community, you can share the show with others who might find it helpful. And as a little bonus, when you join our email list, you'll get a free copy of my book. It's called Mastering Your Finances. Now, if you were to go buy this book on Amazon, it would cost you 10 bucks, but you get it absolutely free just by joining our community. Now, how about that for a deal?

[00:03:01] Ralph Estep Jr.: Well, let's ground ourselves today and start with our Bible verse. This one relates well to our discussion, and it comes to us from 1 Corinthians 14:40. This is what Paul writes: "But all things should be done decently and in order." You know, that's really a simple yet profound reminder about how we should maintain order and structure in all aspects of our lives, including our finances.

[00:03:27] Ralph Estep Jr.: So we're going to talk about the importance of thorough record-keeping and the benefits of writing checks, keeping in mind that organization—that financial organization—is not just practical, but it also is something that we can do to honor God in our stewardship.

[00:03:45] Ralph Estep Jr.: So you might say, "Ralph, why on earth would anyone still write checks in 2024?" Well, believe it or not, I've got nine solid reasons for you, and a couple of eye-opening stories that might just change your perspective. So let me tell you those stories. I'm going to tell you about two of my clients here, and their stories are vastly different, but it's important. Understanding the why and how we manage our finances can make or break us.

[00:04:09] Ralph Estep Jr.: That's really the truth. So let's start with my client Sammy. Sammy was old school. He ran a small construction business. And let me tell you right now, Sammy insisted on writing checks for everything. His wife Jane even used to tease him. She would say, "Sammy, we're in the 21st century, dude. There's this thing called online banking now." But no, Sammy would keep doing what he does—he'd smile, and he'd keep writing those checks. Well, fast forward to last year, 2023.

[00:04:36] Ralph Estep Jr.: Sammy gets a letter from the IRS. They're auditing his business for the past three years. Now, most people would panic, but not Sammy. If you know Sammy, Sammy doesn’t panic about much. But this didn’t panic him. Why didn’t it panic him, you might ask? Because of those checks he’d been writing for all those years.

[00:04:55] Ralph Estep Jr.: So Sammy came to me for help for the audit. He showed me the letter, and I said to him, "Well, Sammy, we're going to need to document all of your information." He said, "Ralph, that is no problem because look what I brought with me. Here’s my check registers, here’s my bank statements, here’s all my canceled checks." And I was like, "Wow, that's like an accountant's dream." So in a matter of hours, I was able to recreate every expense, I could recreate every payment. We were able to look at every transaction right there in black and white. And when it came time for the audit, the auditor was impressed, and Sammy flew through that audit with flying colors. And what's even funnier about this whole thing is the IRS ended up owing him money. So Sammy even got a small refund. Well, let me tell you about my client Benny. Now, Benny was a cool guy, but he was all about technology. Benny had an app on his phone for everything—I’m talking about everything. He comes in to meet with me, and he’s like, "Ralph, check out this app. Check out this app." So he uses his phone or a credit card for everything. And the other thing about Benny you need to know is Benny thought cash was king. He liked to keep things sort of off the books. Not good if you get audited. Well, guess what?

[00:06:10] Ralph Estep, Jr.: Benny got audited. So when it came time to talk about his audit, he came to me. It was a completely different story than Sammy. Benny had these fragmented digital records, there was a bunch of them. Now, he did have bank statements, and we were able to get those from the bank, although he didn’t keep them. We were able to download those from the bank.

[00:06:28] Ralph Estep, Jr.: I started looking at his statements, and there were cash withdrawals—cash withdrawals. I called them the "mystery cash withdrawals." And I would ask Benny, "Hey, dude, what are these?" And he'd say, "I don't know, Ralph. That was two years ago." So his audit was a nightmare. And because it was a nightmare, the auditor wasn't happy with Benny. Benny ended up owing thousands in back taxes and penalties because the auditor basically said, "Look, if you can't prove these things, I'm not going to allow you to deduct them." So the unfortunate part of this situation was the bank statements were great at documenting what his deposits were—so that was sales—but the expenses were so fragmented with credit card transactions and cash withdrawals, it was a disaster.

[00:07:11] Ralph Estep, Jr.: So you might be asking, "Ralph, what's the moral of the story?" The truth is this—and my grandfather used to say this—you know, sometimes the old ways have merit. And that brings me to nine reasons why you might want to keep that checkbook handy.

[00:07:24] Ralph Estep Jr.: So I'm not going to leave you hanging here. I'm going to tell you exactly why you might want to do that, and I think I've illustrated this with Sammy: detailed records. That's the first thing. These checks provide an excellent paper trail. It's sort of like a mini financial record. It's got the date, it's got the payee, it's got the amount. And often in the memo line, especially with Sammy, he would put in there what this was for.

[00:07:47] Ralph Estep Jr.: Checks are also a great hedge against fraud. It's a great fraud protection. It's much harder for someone to forge a check than to steal your credit card info online. And the truth is you've got more time to catch and stop fraudulent check writing. Another great thing—a lot of people miss this one—with writing checks, you have control over the timing. When you write a check, you control exactly when the money leaves your account, which is huge for cash management. And if you've listened to my show for any amount of time, you know the biggest thing that small businesses face is managing cash. That's just another reason for writing checks.

[00:08:24] Ralph Estep Jr.: And here's a big one: maybe you're not a tech person. I've got a lot of clients who are into tech, and I've got a lot of clients who aren't. Well, the cool thing about writing checks is there is no technology required. If you can take a pen and make a mark on paper, you can write a check, which a lot of people have said to me, "Ralph, when I'm out working in the field, that's great. I don't have to have my phone with me." And here's something you may not have thought about: when the power's out or the internet's down, you can always count on writing a check. You can't always do that with your phone.

[00:08:53] Ralph Estep Jr.: Another great thing, as we learned in the audits, is that writing a check is fantastic proof of payment. That canceled check is solid proof that you paid someone. That was huge for Sammy, but it was a big, big problem for Benny.

[00:09:09] Ralph Estep Jr.: Another thing—and this one a lot of people don't think about either—is that checks really are a personal touch. Maybe you're writing a check for a graduation gift or a wedding present. It certainly feels a lot more personal than, you know, using those cash apps. And now I'm going to go on a bit of a rant here. Ralph hates those cash apps for gifts. You know, my sons are getting older—one is 23, the other is 27—and a lot of times my wife will say to me, "You know, what did you get such-and-such for their birthday?" "Well, you can just send them a Venmo." How impersonal is that? And it was the coolest thing I remember as a kid: you know, you went out to the mailbox around your birthday, and you started getting those birthday cards with checks from your grandparents or your aunts and uncles. Now, I had some that just threw cash in there, which was cool too, but I just think it gives you that personal touch.

[00:09:53] Ralph Estep Jr.: Another reason for writing checks is no transaction fees. You know, sometimes banks will charge you a per-transaction fee to use your credit card, but generally, with checks, they don't do that.

[00:10:03] Ralph Estep Jr.: Checks are also easier for some bills. I know a lot of landlords, small businesses, or even individuals still prefer only accepting checks. And I think that's kind of changing, to be very honest. We're seeing more people carrying around their phones with these cash apps. And I'll do a show about that in the future—I’ve already done a little bit of talk about that before—but that can be a real problem.

[00:10:23] Ralph Estep Jr.: Another thing with checks, and this is the final thing on my list of nine, is it's a budgeting tool. It's a great budgeting tool because writing checks can make you more aware of your spending. When you're just putting that credit or debit card down, sometimes it's not as physically obvious to you. So writing that check makes you think about it twice.

[00:10:42] Ralph Estep Jr.: Now listen, I'm not saying you should ditch your online banking or stop using your credit cards. But here's the thing I'm going to say: consider keeping that checkbook around. It might just save you one day, like it did for Sammy. And remember, whether you're writing checks or using the latest fintech app, the key is to keep detailed, accurate records. I'm not saying you can't do this without writing checks; there are ways to do it, but your future self will thank you, especially if the IRS comes knocking at your door.

[00:11:09] Ralph Estep Jr.: So what can you do today to improve your financial record-keeping? I'm going to give you three quick actionable steps. And that's the first one: review your current situation. Ask yourself, is it thorough? Would it stand up to scrutiny? If I were audited like Sammy or Benny, what would happen? So that's the first question. The second thing I want you to think about is considering incorporating check writing for major expenses or regular bills. At least with those, you're going to have that systemic paper trail that's going to be there. It's going to be easy to recreate. And number three: set up a simple filing system for your financial documents. If you don't hear anything else I say to you, I deal with these audits, I deal with recreating things so we can do tax returns every day. The more organized you are, the better off you're going to be.

[00:11:54] Ralph Estep Jr.: Even if you don't get audited, just putting together the information that we need to do your tax return will help. Remember, it's not about choosing between old school and no school. You can live in both worlds, but it's about finding that right mix that gives you the best control and visibility over your finances.

[00:12:10] Ralph Estep Jr.: So let's do a quick recap. Today we explored nine solid reasons why checks are still relevant in our digital age, and we've even seen how good record-keeping can be a lifesaver in an audit situation. Look, don't be Benny. You want to be Sammy. So whether you prefer paper or pixels—as I said, the latest thing now—it's always important to stay on top of your finances, and more so than anything, you've got to keep those clear records.

[00:12:34] Ralph Estep Jr.: So tomorrow, I'm going to talk about a subject that a lot of people don't want to talk about. I mentioned the other day there are two certainties in life, and that's death and taxes. Well, tomorrow we're going to talk about what happens to your debts after you die. Now, I know it's not the happiest subject, but it's one that affects all of us because there is a certainty: we are all going to die, and we're going to leave behind loved ones who are going to have to pick up the pieces from that.

[00:12:57] Ralph Estep Jr.: So that's a show you don't want to miss. Now, if you're thinking about your own financial management and you're thinking, "You know, Ralph, I've got so many things spinning around. I just don't know what to do. What is the next step?" What I'm going to tell you to do is I want you to contact me, and let's set up a personalized consultation.

[00:13:15] Ralph Estep Jr.: I want to help you better manage your financial life. So what you can do is go to my website, that's askralphpodcast.com/store. You can pay me $150—that's our consultation fee because I don't work for free—and I will help you improve your personal finances. Maybe it's your business you need help with.

[00:13:34] Ralph Estep Jr.: I can help you boost your business; I can help you achieve all of your financial goals. So again, just head over to askralphpodcast.com/store and schedule your appointment. Why don't you do it right now before you forget? And I will create a personalized plan that will set you on the path to financial freedom. And hey, don't we all want that financial freedom? Well, thank you for tuning into the Ask Ralph show.

[00:13:56] Ralph Estep Jr.: Remember, as I always say, stay financially savvy, and God bless you abundantly.