How to Balance Your Checking Account
Do you have a checking account? Are you mystified by where your money goes each week? If you answered yes, then maybe it's time to actually use your check register. Remember that little booklet with all the lines in it that came with your box of checks? That little booklet is the key to getting your finances back on track.
All joking aside, you're probably not the only one who avoids recording your checking account transactions in your register. Many people try to keep a running mental tab on their accounts. That unfortunately is what keeps many of them in financial trouble. Some of us conduct a number of debit card transactions each day. There's no way that you can keep track of all of those transactions mentally. Save yourself the trouble. Break out that magical little booklet and start making it work for you.
Get back on track by doing what you should have done when you received that shiny, new debit card... start balancing your checking account. Here are some steps from About.com that could help get you on the road to recovery:
- The first step is to make sure you're logging all of your financial transactions in your checking account ledger. This is the booklet of lined pages that accompanies your checks. Each and every time you write a check or use your ATM card, record the date, payee (person/establishment receiving your money), and the amount. Don't forget to include those times when you use your ATM card at the grocery store. To make this easier, get into the habit of storing all of your ATM receipts in your wallet, and recording them in the ledger at least once a week.
- When your bank statement arrives, take the time to make sure that the transactions noted by your bank match the transactions you have recorded in your checkbook ledger. Some banks will return to you the original checks (which you wrote) that were paid during the month. Others will provide a computer printout of the images of each check you wrote. Go through these and check off each item – on both the bank statement and your checkbook ledger – to indicate that it is accounted for.
- Do the same thing with the ATM withdrawals. On both your checkbook ledger and the bank statement, check off each ATM withdrawal to indicate that it is accounted for.
- Now you're ready to add to your ledger any checks or ATM withdrawals that you originally neglected to record. These will be the checks and transactions on the bank statement that have not been checked off already.
- Next, you need to record any fees on your checkbook ledger. These include the fees associated with returned checks, ATM withdrawals, and applicable monthly bank account charges.
- If your account earns interest, add that to your checkbook ledger as well.
- Now you're ready to crunch those numbers and see if they add up! If you're lucky, your bank has provided a great form on the back of your statement to help you do this. If not, you can use a regular piece of paper to record the numbers. At the top of the page, record your checkbook ledger's current balance (after completing steps 1-5). We'll call this "Figure A."
- Notice whether you've recorded on your checkbook ledger any deposits that the bank did not include on the statement. (For instance, you might have made a deposit the day after the bank statement was printed.) If so, subtract those deposits from "Figure A."
- Notice whether you've written any checks which have not yet cleared. Add those to "Figure A."
- Notice whether you've used your ATM card for any transactions which were not noted on the bank statement. (For example, if you used your ATM card the day after the bank statement was printed.) Add those to "Figure A." as well.
- The figure you get as a result of steps 7-10 is "Figure B."
- Now compare "Figure B" to the final figure provided in the bank statement. If they match, you've just balanced your checkbook! If they don't, repeat the previous steps several times to see if you can locate an error. If you can't, contact your bank to report the discrepancy.
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