What do you think of when you hear the words balance a checkbook? Maybe you’ve heard it from someone who is older. You probably heard it from someone in Generation X or a Baby Boomer, as this was the method of keeping track of money in their checking account. They had to keep track of cash on hand and cash in their checking account. In today’s times, there are more ways to spend money than just cash and checks. There are debit cards and credit cards as well. Instead of just going to a physical bank branch, you can bank online and via a mobile device. Because there are more ways to spend money and more options with regards to tracking money, balancing a checkbook is much more involved today than it was in the past.
It’s always good to know how to balance your checking account, even if you plan to use software online to manage your personal finances. Computers, as smart as they are, are susceptible to error and downtime. And in most cases that are bank error, a human is behind that computer. So you must keep an eye on your money. But with some addition and subtraction skills, and your handy calculator, you’ll always have an idea of what your checking account balance is.
The first thing to keep in mind when you’re starting to balance your checkbook is to record everything. That means every cent that leaves your account and every cent that goes into it. It seems tedious, but it’s the only way to stay as accurate as possible.
In your check register, you’ll want to know every deposit, withdrawal, transfer, bill payment, or any other activity, down to the change. Rounding up or down can confuse in the long run, so it’s best to write your numbers down in exactly as you see them. If your food cost you $27.37, write that down. If you deposited a check for $204.93, write that down.
The best way to record everything exactly is to make these notes right after they happen. Receipts can get lost and your memory can fail you, so it’s best to write your activity in your checkbook immediately after it happens.
Monitor Your Bank Statement
Bank statements should be sent to you monthly, either via snail mail or e-mail, depending on your preference. Your bank statement will give you an overview of your account activity. Don’t just store them somewhere; look over your statements! Make sure that your checkbook and bank statements mirror each other, showing the same transactions and balances. Being a few cents off is not necessarily a bad thing, but it could mean that you missed one or a few transactions. Also, if the balance on your bank statement is dollars away from the balance in your checkbook, then you need to see why there’s such a big difference. You could have forgotten a transaction, or there’s a chance your account could have been compromised.
Consider Pending Transactions
Pending transactions show up in your account when you swiped your debit card but the transaction hasn’t posted yet. It may show up in your online banking transaction log, but your balance will not reflect the new total right away. Allow a few days for purchases, withdrawals, and deposits to completely post and reflect your true balance. Sometimes transactions will post on the same day. In other cases, you may have to wait 3-5 business days before your transaction clears. Consider this when you’re viewing your balance in your checkbook compared to the balance on your bank statement.
Make Clear Notes
Check registers don’t give a lot of room, so be brief. However, don’t be so brief that when you’re looking at your checkbook, you don’t know what you spent your money on. If needed, come up with a key so you can abbreviate, but still understand the note when you are looking over your checkbook. It’s also important to make it clear whether a record is a deposit, withdrawal, transfer, or bill payment. This can make the difference between adding or subtracting a transaction. Making a careless mistake in this calculation can throw you off completely.
How to Balance a Checking Account the Easy Way
If you know me by now, you know that I’m all about simplifying and working smarter not harder. Mint.com is the ultimate free software to balance a checkbook. Instead of writing down every transaction, each debit card swipe is automatically pulled into the transaction log. Just wrote a check? Use the Mint smartphone app to log the check number and amount and your balance will immediately reflect the new total. Mint will include pending transactions and you can even make notes on old transactions or tag them as tax-related for easy tax time accounting. As a back up for this online software, I keep all of my receipts until they have cleared in my account. But I constantly use Mint to keep an eye on my checking account balance.
Balancing a checkbook may seem intimidating, but it’s really not hard. It also may seem tedious, but it’s nice to have a paper trail of where your money is going, especially if you are setting up a budget. Checkbooks may have been replaced by many people, but they will still be around for those who prefer a hard copy of their finances.
Do you make a point to balance your checking account?