I’m talking about personal finance. As an INTJ, I’m proud of the fact that I can design a system that works very well for me and quite possibly nobody else in the world. Let me explain a little about how my system works.

First, a little backstory.

I was taught (by my mom; thanks, mom) to keep track of my finances and reconcile my bank account at the end of each cycle (month) when I received the statement. My bank even had a form on the back of the statement that you could use to reconcile your checking register with their statement. I would cross them out or highlight them as appropriate and most of the time I got pretty close (but I never used their form). My mom still does it this way, I think (and I’m pretty sure she doesn’t use their form, either).

Then I moved on to Quicken and did the same actions with the digital analog (yes, I see the wordplay in that statement): I typed my transactions into my account and reconciled my bank statements at the end of each month. Quicken made the math automatic, and it even had a “reconcile” function (which, again, I didn’t use much, if at all).

But then something interesting happened: the banks allowed Quicken to connect to them directly and retrieve transaction details whenever I wanted. This meant I could satisfy my need to reconcile my account whenever I darn well pleased, and in my spirit of increasing efficiency, I spread out what was a monthly hour-long session into a few minutes every couple of days or so. This is when the Continuous Reconciliation started to happen. As soon as a transaction cleared the bank, I could check to make sure they got it right (or that I didn’t get it wrong). Reconciliation of the financial variety is based on mutual distrust: I don’t trust my bank to get it right, and they definitely don’t trust me to tell them how much money I have in my account. So there’s this system of checks-and-balances (is that a pun or is that actually where that expression came from?) where I check to make sure they entered the numbers correctly into my account, and that I did so myself. Frequently I caught math errors on my part and had to go back to the receipts to see, “oh yes, that was 83 cents and not 38 cents” (I juxtapose or misread numbers occasionally).

I eventually moved off of Quicken to something free, but the process has remained the same. I do not automatically import transactions from my financial institution without first entering them myself, manually, each and every time, because of the principal of mutual distrust which has lead to the intentional disconnect: I cannot create references to transactions in my accounting software from the very source that I want to cross-check and verify, because that’s the whole purpose of doing continuous reconciliation: two parties keeping each other in check. Where I do automatically import the transactions is using my software’s “Reconcile” feature (yes, I finally use it now ‘cause it’s functionally more useful now) to import the transactions and compare the two records of account: mine and theirs. And I’m very happy when we’re both spot-on to the penny. I remember the first time I reconciled and we both matched. It wasn’t like flipping a switch: I messed up subsequent to that, but the frequency at which I was able to do a perfect reconciliation gradually increased to the point so now it’s unusual if I don’t reconcile perfectly.

This has been a long journey and it’s not over – not by a long shot. I’ve added complex formulas for automatically generating entries for loan repayments that include factors like interest rates and compounding. I’m also adding recurring payments with and without reminders and/or flagging for manual review, and basically exploring any and all functions that my financial management software give me. But the core principal remains the same: do not blindly accept what the bank tells you, because they may be wrong. I’ve caught them once or twice over the years. Objectively was the amount I recovered worth all of the hours I’ve put into mastering this system? No. But it’s been fun, I’ve become intimately familiar with all aspects of my finances, and I have the opportunity for continuous process improvement. All things I enjoy.

P.S. I should mention that my process is very good at catching fraud. And since most – if not all – banks assign the responsibility for catching fraud to their customers, it’s that much more important. Banks give us a limited time window to dispute the charge. I certainly can’t go back a few months and say to them, “Hey – wait a minute! When did I use my credit card at a vending machine and a Home Depot in Florida?” (Actual example, by the way.) It’s part of my agreement with them that I have to stay vigilant. They will, of course, use their automatic fraud detection algorithms to do what they can, but they make no promises: the onus is on me. Anyway, I like my system, it makes sense to me, and it makes me happy. But I am not above improving it and, in fact, I continually seek out and evaluate different ways of doing things to see if they’re better for me according to my guiding principals.

P.P.S. I’m aware it should really be called “Continual Reconciliation” but I’m borrowing/adapting an IT/software development term, “Continuous Integration.” Perhaps the linguistically more correct definition/interpretation of “Continuous Reconciliation” is a longer-term technological goal. :)