How to balance a checkbook

how to balance a checkbook


One day I’ll sit my children down around the fire and tell them about the olden days before the internet, when you had to go to the bank to withdraw or deposit money and keep track of your balance on a funny little thing called a “register.” And yes, we used to pay with things with dirty little pieces of paper called “cash” – not debit cards.

Even now you might wonder why you need to balance your checkbook and keep a register when you can access this online or from your phone. There’s a few reasons you should have this skill. First, even banks make mistakes. Wait, let me rephrase that: especially banks make mistakes. If you keep your own records, while it’s not totally solid or legal proof of your case, it will help you more quickly pinpoint the problem if something goes wrong. Second, most banks have delays of several business days until credit and debit transactions are posted, so when you check your balance, you may think it reflects purchases you’ve already made when it doesn’t. And finally, if you record your spending, you’re less likely to make unnecessary spending and you’ll have a better idea where your money goes when you’re ready to put together a realistic budget.

I learned this lesson the hard way a few years ago when I got lazy and just checked by available balance occasionally withouth keeping tabs on my own. I overdrafted myself because I didn’t notice a paycheck bounced when my company switched payroll accounts. Had I been keeping track like I should have, I would have noticed the mistake earlier and I wouldn’t have incurred so many fees.

What you’ll need:
A pen
A calculator
A register (These usually come with your checks. If you don’t have any, you can get them for free from your bank.)
Your bank statements (Either online or in print. Keep in mind that online statements will be more up-to-date.)

What to do:
You can reconcile your account daily, weekly, or monthly. I usually do it weekly because doing it one month at a time makes the process longer and more difficult. And doing it daily is a tad obsessive.

Every time you use your debit card, make a withdrawal at an ATM or a bank branch, or buy something online, write it down immediately in your register. If you wait, you’ll forget or lose receipts. From left to right, enter the type of transaction (a debit or credit purchase, check number, deposit, withdrawal, or ATM transaction), the date, what the money went to or where it was from, the amount, and your running balance after the transaction.

checkbook register

At the end of the week or the period you choose, go through your statements and make sure each transaction matches up with what’s in your register. Make sure the balances are the same and you’ve accounted for any fees your bank charges.

If there’s a discrepancy:

  • Make sure it’s not math or human error. Start from the beginning and check all of your work. Run the numbers again through a calculator, not in your head or by hand.
  • See if you missed a transaction. Maybe in the craziness of your day-to-day life you forgot to record something.
  • Again, make sure you took into account transaction fees that stores or banks charge for using your debit card, ATM fees, checking account fees, or charges for online transactions.
  • If there’s a charge on your official bank statement you have no record of and can’t account for, call your bank immediately. The longer you wait, the harder it’s going to be to contest.
  • If the numbers in your records and the numbers on your statements sync up and everything is accounted for, you’re set! See? It’s not as painful as you thought, so don’t bother putting it off next time. You’ll be a lot more in control of your finances and on time with your bills if you keep this basic habit.


    posted by Manda in Finances say something

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