How to Balance Your Checkbook

You may not need to balance your checkbook manually once a month anymore, but knowing how you spend your money is as important as ever. Understanding how to balance a checkbook, also known as bank reconciliation, might not be as important today as it once was. A poll from the Statistics Brain Research Institute in 2015 found that 69% of people never balance their checkbook.

The biggest reason not to balance your checkbook is because there are easier ways to do almost all the things balancing your checkbook does. But if you don’t, there are plenty of online banks you can rely on. If your bank account balance doesn’t match up with the cleared charges on your checkbook register, don’t panic. If you’re looking for an alternative to paper and pen, take advantage of technology. Budgeting apps, such as You Need a Budget or Mint, let you download your account transactions and view your register on your mobile device — and they can help you track expenses.

But there are wa-a-ay easier and more profitable ways for them to take your money than a dollar here and there from your account. They’re already investing it and (mostly) not sharing the proceeds. You can get many of the benefits of balancing a checkbook some other way. There’s this persistent myth that banks make errors left and right. Play often enough and you’re sure to get a bank error in your favor. Or maybe it’s just that no one ever wants to admit they made a mistake.

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Our partners cannot pay us to guarantee favorable reviews of their products or services. There are also many third-party check services that offer personalized check designs and unique options. After all, you’re handing over very sensitive financial information as part of the ordering process.

  • After all, you’re handing over very sensitive financial information as part of the ordering process.
  • It can also help prevent you from bouncing checks, stick to your budget, help you avoid fees, and detect errors from your bank or even fraudulent billing.
  • In this case, you can usually spot the issue by going through your online transaction history and locating the missed charge.
  • The biggest inaccuracy you are protecting yourself against by balancing your checkbook is fraudulent activity on your account.
  • The steps below assume you are using a paper checkbook register, but if you prefer, you can follow the same steps using a digital spreadsheet application, such as Microsoft Excel or Google Sheets.

Also called “reconciling your account,” the process involves tracking your credits and debits to ensure that the amount of money listed in your register matches what’s on your banking statement. When you learn how to balance a checkbook, you might find it easier to not overdraft on your checking account balance. It is still in your best interest to review account activity once a month to help you keep track of what you’re spending and identify errors or incorrect charges. Comparing your checkbook register with your bank statement is known as balancing your checkbook. After the items in the above lists of adjustments are considered, the adjusted checking account balance in the bank’s records should agree to the adjusted checking account balance in the company’s records.

Daily Check-Ins

If the ending balance there matches what you have in your checkbook, once all deposits and withdrawals have been factored in, then your checkbook is balanced. Those fees can easily eat into your balance, potentially putting you in the red — and in debt to the bank. Though both parts of the word “checkbook” are quickly becoming meaningless, being able to reconcile your accounts will always be an important part of financial health. Plus, with the addition of digital banking services like automatic bill payments and mobile deposits, it’s critical to know when your money is in motion. However, there are a couple of downsides to using a daily check-in as an alternative to checkbook balancing. For one, if you still use paper checks, this method does not account for them.

Staying on Top of Transactions is Easier

When you learn how to balance a checkbook, you’ll be able to keep careful track of both deposits and withdrawals. A transaction register isn’t just for tracking debit card purchases or whenever you’re writing a check. This column helps to keep track of your total bank account balance at all times. This then helps keep budgeters from accidentally overspending your bank balance and paying overdraft fees.

But long story short, checks have to go through snail mail at least twice after you submit them — and three trips through the post if you mail the check to the recipient in the first place. Tessa has experience in finance, as she worked in the film industry in the accounting department for 10 years. Tessa is currently based out of Montreal, QC Canada with eyes set on a move across the globe in the near future.

If you always keep more money in your account than you spend every month, you’ll be safe. But if your balance is usually low by the end of the month the more careful you have to be in making sure you know how much money you actually have. Compare your statement balance to your checkbook balance and subtract the smaller one from the larger one to get the difference.

Why Should You Balance Your Checkbook?

If your bank offers online banking and/or mobile banking, balancing your checkbook may be as simple as logging in to your account. But if you’re being held hostage by late adopters and only have what is manufacturing resource planningmrp ii a checkbook to pay rent or just don’t use checks at all anymore, you can probably stop balancing. If you “write checks” through your online bank account, you can most likely skip it too.

Recording Your Income and Transactions

You’ll also write down any debit card or bank transactions for the month. When you’re done reconciling your transactions, add up the cleared charges on your checkbook register or spending tracker. If you’re using a paper checkbook register, there’ll be a little column with a checkbox in it to mark cleared charges. If you’re using a spending tracker, it’ll look a bit different depending on the program you use.

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Start with your most recent statement and use that as a guide for reconciling transactions. Commit to balancing your checkbook on a weekly basis, which may be easier than trying to do it once a month or less often. Recording transactions daily, then balancing at the end of the week, can help keep the system as simple and error-free as possible. If there is a problem at some point, it’s much more difficult to wade through months of transactions to figure it out. If you’ve balanced your checkbook every month, the most you’ll ever have to do is look at the most recent month’s transactions. Sometimes people make such a mess of their checkbook by not regularly balancing that they have to close out their account and open another one.

It is the way you ensure that you and the bank agree on what your current account balance should be. A checkbook register, notebook or spreadsheet on your computer can all work as a register. Your list should include purchases, withdrawals, deposits and bank charges. Basically, track any activity that has passed through your bank account for the month you are balancing. Pick a time of the day when you’re free every day and log into your online banking.

You still need to be diligent in your efforts of maintaining a balanced checkbook. Track all unclaimed checks and transactions that are still pending in there as well – you don’t want them messing your math up before you even start, just because you overlooked them. The question on how to balance a checkbook ends up on everyone’s mind at one point or another, whether it’s on a daily, monthly, or even annual basis. These checkmark boxes are used to check off when a check or transaction has “cleared” or finished processing and can be used for check or debit transactions.