Balancing a checkbook

 

So now that we know that banks are safe and how to manage a checking account, let's talk about how to balance a checkbook. Its important to know how much you should have in your account to avoid nasty fees that can eat away at your hard earned money.

 

Check out this article from Capital One on balancing your checkbook:

 

Balancing Your Checkbook

 

Even if you don’t carry a checkbook or write many checks, it’ still important to balance your checkbook.

 

Learning how to balance (or “reconcile”) your account is easy. It only takes a few extra minutes every month, and the dedication to developing and sticking to good money habits.

 

By writing down every transaction as it occurs (including any fees, such as ATM fees) in your check register, you will have a running tally of what your current bank account balance comes to. This can be useful when you want to write a check, or withdraw cash, and you need to know whether you have enough money in the account to cover it.

 

Balancing your checkbook every month helps you:

 

• Keep track of your money

• Catch mistakes

• Avoid overdrafts

• Tracking your transactions

 

Part of responsible financial management is good record keeping. Online Banking can always be your “go to” when it comes to monitoring your transaction history and knowing your current account balance, but it’s just as important for you to keep a hard copy of your finances for your own day-to-day records.

 

Record all transactions you make in your check register, including online bill payments and debit card purchases, as you make them. If pen and paper is a little old-fashioned for you, there are mobile check register applications available for some mobile devices. Whether you use the latest technology or go the traditional route, knowing how much money you have in the bank will help you stay on track and avoid any unnecessary fees.

 

HINT: The name “check register” can be slightly misleading—remember that it is not JUST a place to track the checks you write. In order to be a useful tool, you should ALSO record your other transactions in your check register—including debit card transactions, ATM withdrawals, bank deposits, and any fees.

 

Balancing your account

 

Once a month your bank account statement arrives in the mail or you get a notice that it’s available to you online. If you’ve tracked all of your transactions over the course of the month, you will find that they match up with what’s on the statement when you balance, or “reconcile,” the account.

 

Balancing your account only takes about 5–10 minutes and is one of the best money management habits you can have. Simply go through the statement, look at each transaction, and make sure everything on the statement matches what is in your check register. You can check off the items in your check register that match the statement.

 

If you find something on the statement that doesn’t match your check register, take a minute to try to figure out why. Did you forget to put something in your register? Did you mix up the numbers in one of your figures? Did the bank make an error? Although it’s rare, it can happen occasionally.

 

You may prefer to balance your checkbook electronically. Personal accounting programs have a “reconcile” function to assist you with balancing your accounts each month.

 

Whether you track your deposits and withdrawals in your checkbook register, or online, follow the same five steps to balance your account every month:

 

1. Enter all transactions into your checkbook register each day. This includes ATM withdrawals, online bill payments and debit card purchases.

2. Review your account statement as soon as it arrives. Compare the monthly statement to your checkbook register, and place a check mark next to all of the items that match.

3. Adjust your checkbook register if necessary. Add or subtract items on your register that appear on your statement but were overlooked when filling in your register.

4. If you find errors, double-check everything. It’s easy to make a mistake such as transposing numbers, so it’s a good idea to double-check every entry first. Then, if there are still errors, contact your bank.

5. Finish. When your statement’s ending balance matches the ending balance for that month on your check register, your account has been reconciled. Congratulations!

 

Let's try it 

 

Given the bank statement and check register provided, follow the directions in the worksheet below to practice balancing a checking account:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

When you are done, your documents should look like this:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

How did you do? Don't worry if that was not easy, it takes time to get comfortable with balancing a checkbook. See, math IS used in real life!

 

Lets try some more exercises to get more comfortable:

 

Your bank statement shows you have a balance of $268.93. All the checks you have written during this statement period are shown on the account statement. But there is a deposit missing. If your account register shows you have a balance of $302.43, how much is the missing deposit?

 

$33.50

 

Suppose the balance in your check register is $143.61. All the checks and all the deposits for this statement period match up with your account register, but the balance on the bank statement is $145.62, not $143.61. What will you do now?

 

There must be a computation error. You will have to review all the calculations in your check register since your last bank statement!

That’s a lot of work, and shows why it’s important to calculate carefully the first time!

 

Want to practice with an interactive checkbook calculator? Try this one at TheMint.org

 

Ready to try the Banking Trivia? Click here