With online banking and spending tracking tools, it may be easier to record all your transactions digitally. If your spending tracker has a smartphone app, you can enter the info there, just like with a pen-and-paper register. You can balance your own checkbook by keeping a paper or digital log of bank account transactions that you can compare against your bank statement each month.
What are the different types of checking accounts?
Good old-fashioned Microsoft Excel or paper and pen could be enough to help you keep track of where your hard-earned money is going so you can make sure it’s being spent in the right place. Try your best to note every time you make a payment, even if it’s for a small amount. Once you’re used to the recording process, pay attention to how you’re spending your money. Balancing a checkbook consists of checking that your records match up with what the bank has for your account. It’s a chance to see how your money came into the account and where it went.
Benefits of Balancing Your Checkbook Regularly
With online and mobile banking apps, you may be able to get real-time access to your accounts and get notifications when your bank account is at risk. But even with access to digital tools, balancing your checkbook monthly will help you ensure that your spending records align with your bank’s. If you’re using the checkbook register method and comparing transactions with your account statement, you should balance your checkbook every month. If you’re using online banking or mobile banking to track your accounts, you can log in daily to view new credit and debit transactions as well as balance information.
Add Each Account Transaction
Figure out your current balance in checking, which your bank may list as your available or ending balance. You should be able to find this amount by checking using your online or mobile banking app. Log this amount at the top of your checkbook register in the space indicated. Keep track of your transactions in a register — a checkbook register, a notebook or a spreadsheet on your computer can all work equally well.
It’s useful for paying bills, depositing paychecks, sending money, and making purchases using a linked debit card. If you’re one of them, it’s important to understand how to balance a checkbook to keep track of debit and credit transactions. Balancing your checkbook helps you track your cash flow and identify any errors or signs of fraud.
A poll from the Statistics Brain Research Institute in 2015 found that 69% of people never balance their checkbook. If you’d like the accountability of recording your own transactions but need a little more structure, you might consider using an accounting program, such as Quicken or YNAB. These programs may automatically populate some transactions, but there is still plenty of manual recording you can do with them, both on your computer and your phone. The benefit of a program like this is that it often will nudge you to complete your necessary tasks, and it will walk you through the process of balancing your records. If you’ve tried all these and the balances still aren’t matching up, try taking a break for a while.
You also will be able to access your spreadsheet from your laptop when you’re ready to balance it. Aggregators can be a great tool for anyone who wants to get a big-picture sense of their money. However, they can lull some people into believing that they are staying on top of their money chores because the aggregator does so much for you.
Or you can keep receipts and then enter them all in when you get home, or at the end of the day. Remember to enter in every transaction that’ll go through your bank account, including ATM withdrawals, automatic payments and online purchases. The rise of digital tools has helped make checkbook balancing a lot easier than the old pen-and-checkbook-register process. If you’ve combed through your account statements and still can’t get your checkbook to balance, you should call your bank to ask about any pending debit or credit charges you may have overlooked.
This usually lists the balance from the previous month’s statement, along with deposits, other credits, debits and checks that have cleared the bank. It will also include your ending account balance on the date the statement was generated. The old-school method of checkbook balancing assumed that you would carry a paper check register with you everywhere you went, and that you would record your transactions by hand.
To balance a checkbook, you’ll need to choose your recording method, log your beginning balance, add account transactions and compare your check register to your bank statement. When you’re checking your account statements and transaction history regularly, it’s more likely that you’ll be able to spot any suspicious transactions. For example, a small deposit of a few cents or a $1 debit transaction could be evidence of a scammer testing the waters before launching a larger-scale attack on your account. Taking time to balance your checkbook could help you avoid financial headaches caused by fraud. Then, set aside a little extra time every month to balance your checkbook. If you bank online, you’ll have easy access to your account and statement.
You will have fewer transactions to comb through if you balance once a week or once every two weeks. This is one area where digital tools have a big advantage over the pen-and-paper method. You’ll need to be pretty good at math on the fly or use a calculator if you prefer the checkbook register method. Each time you enter in a new transaction, make sure to update your balance. This will be your actual balance, which is a better picture of how much you have to spend because it includes payments that might not have hit your bank account yet.
- Still, sitting down and going through your account activity once a month will help you keep track of what you’re spending and uncover any errors or incorrect charges.
- She is the author of four books, including End Financial Stress Now and The Five Years Before You Retire.
- Recording transactions daily, then balancing at the end of the week, can help keep the system as simple and error-free as possible.
- Keep track of your transactions in a register — a checkbook register, a notebook or a spreadsheet on your computer can all work equally well.
- When balancing a checkbook, it can be useful to start with some definitions.
- For instance, some people may choose not to record the pennies on the checks they write.
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. If your bank or credit union offers online banking, you can see an up-to-date list of your transactions online. Keep your receipts even if you go this route; you’ll need proof of your spending in case of a dispute over a transaction you see online.
The term “balancing your checkbook” sounds like it might only mean tracking check payments, but it involves tracking every bank transaction and double-checking them against your monthly bank statement. Maybe you checked your bank account balance on your mobile banking app as you walked into the department store. Record any pending transactions in your checkbook register, including both debits and credits, as well as checks you’ve written that have not cleared yet. Include the date of the transaction, a description of the transaction, and the amount. Some people like to use duplicate copy checks so they always have a record of who they issued a check to and for what amount.
Balancing your checkbook is one of those crucial life skills that you need to know. It will give you a clear sense of not only how much money is in your bank account, but where your money goes. 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. So what do you do if your numbers and the bank’s numbers don’t align? That’s when it’s time to backtrack through your records and the bank’s transaction history to see where the discrepancy is. Perhaps you forgot to record a transaction or you transposed a couple of numbers.
With a spreadsheet, you can record deposits and withdrawals while creating formulas that automatically repopulate your current account balance. The key to this approach is making sure that you enter new credits and debits in a timely manner. Otherwise, you might forget about a transaction, which would result in an incorrect balance. Those fees can easily eat into your balance, potentially putting you in the red — and in debt to the bank. However, even though the paper-and-pencil aspect of checkbook balancing has mostly gone the way of the dodo, the process is still a necessary part of maintaining your checking account. But whether you were a master checkbook balancer in the time of paper or are a digital native who didn’t realize paper statements were once a thing, you may not know exactly how to reconcile your accounts.
