Balancing Account Balances

You might think that the skill of balancing a check book—or double checking account balances—is no longer useful, but you’d be putting your hard-earned money at risk.

Whether you balance an actual check book or simply review your checking account balance at the end of every month, this habit is essential to managing your money.

You’re looking to see that your records and the bank or credit unions records match. This gives you the chance to fix any mistakes. You can look at your debit and credit card statements or at receipts and match each payment or withdrawal from your account with the financial institution’s records. With the exception of looking at printed receipts, all of this can be done online and/or via apps on your phone.pen

Although it requires physically writing out transactions, balancing a checkbook offers use of a checkbook register “This register should record every transaction that you have completed during the month. If you are using money management software, you can do this on your computer program. Here is a step-by-step guide on how to balance your checkbook.

1. Keep Track

To start, you’ll need to keep track of all of your deposits and withdrawals from your checking account for a month. You can do this in the back of your check book in the check register or in a personal finance software program (there are lots of options for these, even some free ones).

2. Review Your Checking Account Statement

Whether you’re using a physical check register or computer software, your first step is to print out or view online your checking account statement for the past month. This will show the starting and ending balance, deposits, automatic drafts (automated online payments), debits (payments made with your debit card), and checks (payments made by writing checks). Add any interest earned and monthly service fees to your check register or appropriate field in the computer program.

3. Check Off Items in Your Register That Are Listed on Your Statement

Now, go through your register and check off each item that’s also listed on your account statement. In the register book or computer program, put the check mark in the column labeled “c” or “cleared” (meaning the transaction has cleared through the banking system and is not still pending, in which case the money may still be in your account although you’ve already spent it). It’s helpful to also put a corresponding check mark next to the cleared item on the printed account statement.

4. Find Items on Your Statement That You Forgot to Record

After step three, you should easily see any items on your statement that aren’t also listed in your register. If you recognize the transition(s) but don’t have them in your register, you should add them—you probably just forgot to record them. If you do not recognize any transaction(s), report them to your bank or credit union so the discrepancies can be resolved—including any unfamiliar deposits.

5. List Debits That Were Not Reconciled

Next, list all of the unreconciled debits (checks, debit card transactions, automatic drafts) in one column. These are items without a check mark next to them on your register. Add the column’s amounts together and write the total of outstanding debits. If you’re using a computer program, it will most likely complete steps five through seven for you automatically.

6. List Credits That Were Not Reconciled

In another column, follow the same steps for all unreconciled credits (deposits) made to your account.

7. Add Your Statement Balance to the List of Credits and Subtract the Debits

Take the ending balance from your account statement and add the total of your outstanding credits to it. Next, subtract the total of outstanding debits from that number. The resulting number should match the amount listed in your check register as your current balance.

8. Find Discrepancies in Your Account

Sometimes, those numbers don’t match, and you’ll need to find out why. Check your math first. Next, look to make sure all transactions are accounted for.

9. Correct Any Errors

If you’ve checked your math and there are still unaccounted or mystery transactions on your account, you’ll want to talk to a bank or credit union representative to discover the problem.

As you practice this habit, the process with go faster, and you’ll maintain an accurate idea of how much money you have at any given time and how you’re spending your money.