How to Balance a Checkbook A Step-by-Step Guide
The total you calculate should match the current balance of your checkbook. Your bank account balance at month’s end may end up being lower than expected if someone is making unauthorized purchases. It’s important to let your bank know about fraudulent charges right away because reporting it quickly can limit your liability for unauthorized charges. Balancing your checkbook might feel like an archaic practice since the use of paper checks is falling out of style, but it still serves a purpose. The practice is a way to get a solid handle on how much money is going in and out of your account each month, which can help you identify fraud and keep tabs on how much money you have. If your checkbook doesn’t balance and your math isn’t the issue, check your bank statement to see if there are any bills that haven’t been processed yet.
Step 1: Double-Check Your Outstanding Transactions
If your bank reimburses ATM fees, find these reimbursements on your statement and enter them as deposits in your check register. 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. The only way to discover the error is to go back to the last time your checkbook was balanced and work your way forward.
What are the different types of checking accounts?
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 2021 tax return preparation and deduction checklist in 2022 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. This list should include your purchases, withdrawals, deposits and bank charges.
You know where your money is going
You can avoid all the balancing at the end of the month by logging in to your online banking every day and clearing transactions from your check register. Does all this writing and manually adding and subtracting seem excessive in today’s digital world? Fortunately, there are ways around all this checkbook balancing using various apps and software that link directly to your bank account and help you track your balance. Compare all check payments in your check register to those on your monthly statement.
What Is Balancing Your Checkbook?
If that still doesn’t work, try having a trusted friend or family member look over your numbers for you. Many nonprofits and community organizations also offer free financial coaching and mentoring, which can be another handy option as well. Thankfully, we have more modern methods to accomplish this today.
If there’s a mismatch, it may take some work to figure out what the cause is. If you don’t regularly write checks, balancing a checkbook may not be necessary. That Gomez, Gomez recommends reviewing your spending consistently through a spreadsheet or budgeting app, even if you don’t write physical checks.
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.
Pull out previous statements with uncleared outstanding transactions, such as checks and deposits. Look through your statement to see if these outstanding items cleared on this statement. Make note of the dates, descriptions, and amounts of any deposits showing in your check register but not on your statement.
Run through your outstanding payments and debits and verify they are accurate. Maybe you missed a cleared transaction on your statement or thought best freelance services in 2021 you saw one clear your statement that actually hadn’t. This interest payment is usually one of the last transactions on the statement.
If you miss this transaction and fail to balance your checkbook at the end of the month, you could overdraft your bank account and end up with a large overdraft fee. Apps like Mint, Personal Capital, You Need A Budget (YNAB), and others link with your checking account and track your transactions. You often must log in and categorize these transactions, which will be the perfect time to also check these transactions off in your check register. First, keeping a balanced checkbook means you know where your money is going each month and how much is coming in. More important, tracking your balance can help you avoid the possibility of having an overdraft in your account.
Compare the total amounts of withdrawals and deposits on your register to the information available from your online or mobile banking app. If the ending balance there matches what you have in your checkbook, once all deposits and https://www.quick-bookkeeping.net/am-i-still-responsible-for-paying-a-debt-if-i/ withdrawals have been factored in, then your checkbook is balanced. Although your bank processes thousands of transactions accurately, it can make mistakes, and you typically have only 60 days to inform the bank of the error.
Nearly 40% of Americans rely on mobile banking to manage their money. If your bank offers online banking and/or mobile banking, balancing your checkbook may be as simple as logging in to your account. If your bank account balance doesn’t match up with the cleared charges on your checkbook register, don’t panic. 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.
Relying on these apps alone to balance your checkbook can be problematic, however, if you’re not keeping a close eye on each account individually. You may prefer online and mobile banking for checkbook balancing if you don’t write paper checks or only write a few each month. Keep in mind that checks won’t show up in your transaction history until the transaction has been https://www.quick-bookkeeping.net/ posted, so you still need to keep track of those amounts when calculating your current balance. Pick a time of the day when you’re free every day and log into your online banking. Compare your checkbook register to the day’s transactions and check off those that show as completed in your account. Leave and uncleared transactions in your check register unchecked.
- With today’s smartphones, we basically carry computers everywhere we go, so checking our checking account balance is as easy as logging onto our bank’s mobile app or online banking website.
- You can also sign up to receive alerts when your account balance falls below a designated amount.
- 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.
- Balancing your checkbook is a method of verifying that your records (your checkbook register) match the bank’s records, as shown on your monthly bank statement.
- Reviewing your account activity online can help you catch any errors and keep an eye on your finances.
For instance, some people may choose not to record the pennies on the checks they write. And there are also people who only balance their checkbook once a year when they do their taxes. Be careful of unfamiliar charges, such as overdraft fees, on your statement that you hadn’t noted in your register. If you still can’t balance the figures, you can ask your bank for an extensive review of your transactions — but note that it may charge an account research fee of about $25 an hour. Though we live in a world where so much is automated, there’s still a need for manual work to ensure everything is correct.