Some of your most recent transactions might end up on your next month’s statement. Make sure you note those transactions in your personal record to avoid any surprises. Whatever the reason, there’s a strong case to be made for keeping an eye on what’s coming in and going out of your checking account. Knowing how to balance your checkbook, even if you don’t write a lot of checks, or any at all, is an important skill to master. 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.
- Keep track of your transactions in a register — a checkbook register, a notebook or a spreadsheet on your computer can all work equally well.
- Hold onto any important transactions receipts until you’ve balanced your checkbook for the month.
- In addition, each paper check in a checkbook is preprinted with your name, address, and your financial institution’s information.
- Reconcile it against the information that’s listed in your check register.
- Enter checks in as they occur or at the very least at the end of each day.
Her background in education allows her to make complex financial topics relatable and easily understood by the layperson. She is the author of four books, including https://www.quick-bookkeeping.net/best-invoicing-software-for-small-businesses-2021/ End Financial Stress Now and The Five Years Before You Retire. It happens, and you can end up with the wrong amount of money if you don’t keep track.
It helps you with your spending habits
And there are also people who only balance their checkbook once a year when they do their taxes. There are a number of programs available that will automatically track your banking information for you, such as Mint.com and Personal Capital. These aggregators allow you to see an overview of all of your financial accounts in a single place, from your checking and savings accounts, to your loans, to your college savings account. Such an aggregator will do the tracking and recording for you, so all you’ll have to do is check it regularly and compare it to your banking information to make sure everything balances.
Once you’ve checked that all the transactions in your checkbook match the ones in the statement and the checkbook and account balances are the same, you’re all done. Knowing your current balance will give you a place to start from. Knowing how to balance a checkbook will help you make sure you have enough money in your account to cover all of your withdrawals and payments. Balancing your checkbook or reconciling your records with the bank’s records can help you spot any financial fraud.
Balancing your checkbook is one of the most basic habits for good money management, yet millions of Americans don’t do it on a regular basis. Understanding how to balance a checkbook, also known as bank reconciliation, might not be as important today as it once was. A poll from the Statistics Brain Research Institute in 2015 found that 69% of people never balance their checkbook.
How To Balance a Checkbook Without a Check Register
You add or subtract the corresponding amount to arrive at your new account balance. This can help with balancing your checkbook at the end of the month. The deposit slips are preprinted with the same information as your paper checks. You usually give them to the bank when you’re depositing any cash or checks you have received. Using your bank records, update your check register with any transactions that you did not previously record. If the amounts and balance in your register are not the same as your bank account, you will want to double-check every deposit, credit, debit, and withdrawal to confirm the amounts are the same.
What you probably have at all times, however, is your cell phone. You can create your own transaction register on an open-source spreadsheet platform, such as Google Sheets. This will mean you can access it from your phone, allowing you to make note of your transactions while you’re out and about. You also will be able to access your spreadsheet from your laptop when you’re ready to balance it. For instance, some government agencies or utility companies won’t accept electronic payments for property taxes or water bills at their offices. However, many use electronic payment services that charge you fees to avoid payment processor and other third-party fees.
Avoid missing payments and incurring late fees by setting up payment notifications through your app, email or text. Make notes on your desktop calendar of when your payments are due. See NerdWallet’s picks for the best high-yield online savings accounts.
What if your checkbook does not balance?
Though both parts of the word “checkbook” are quickly becoming meaningless, being able to reconcile your accounts will always be an important part of financial health. 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. If the amounts don’t match, double check the numbers you have inputted to verify the amounts. Look out for unfamiliar charges, such as overdraft fees, on your statement that you hadn’t accounted for in your register. If you still can’t balance the numbers on your register to your statement, you can ask your bank for an extensive review of your transactions. This review may cause your bank to charge an account research fee of about $25 an hour.
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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. A checkbook pad contains identical checks with sequential numbering. In addition, each paper check in a checkbook is preprinted with your name, address, and your financial institution’s information. Looking at your bank records is also a way to keep track of those forgotten subscriptions or fees.
The paper checks in a checkbook are legal documents in that they represent an agreement to pay a specific amount of money to whomever you’re making it out. Additionally, the last few sheets in a checkbook typically include several what does xero deposit slips. You might be surprised, but people do still use checks for things like paying bills and giving to charity. And knowing how to balance a checkbook is an important aspect of keeping track of your financial health.