Checks and Balances - Easy Steps for Checkbook Balancing
When was the last
time you balanced your checkbook? Last month? Last year? Never? No matter, you
aren’t alone. There are an amazing amount of people who do not balance their
checkbooks on a regular basis. Their reasons are as varied as their balances.
“I don’t have time”, “It’s too much work”, “It’s too hard”, “Why bother, when I
need to know my balance I just check the ATM machine?” (more on that later), but
most often the reason is that people simply do not know how, and are too
embarrassed to ask.
Before we get to
how to balance the checkbook, I’d like to take a minute to explain why you
should. Without balancing your checkbook, you set yourself up for bounced checks
and overdrafts. In the process of balancing your checkbook you will not only
ensure that you have the money you think you have in your account, but you will
also have a better idea where you are spending your money. This will help
enormously in either keeping your budget on track, or even setting up one.
So, where to
begin? First you must have your bank account statement in hand, your checkbook
and either a calculator or adding machine (one with paper to print out works
best for checking for accuracy).
-
In your
checkbook locate each deposit listed by the bank on the statement, and check off
in the checkbook where that deposit appears.
-
Put circles
(or stars or some other symbol) next to all of the deposits that you have made
that do not appear on the bank’s statements (these deposits are considered
outstanding and will show up on next month’s statement).
-
Repeat the
process above with all of the debit transactions.
-
Repeat the
process above with all of the checks written.
-
In your
checkbook make sure to list any service charges or interest payments noted on
the statement, and deduct or add accordingly.
-
Locate the
bank’s ending balance and write this on a separate piece of paper.
-
To this amount
add all of the outstanding deposits from your checkbook (the deposits with the
circles next to them). This total now reflects all of the deposits made by you.
-
Now you will
need to deduct all of the outstanding debits and checks from steps #3 & #4
above.
-
The resulting
balance should equal the balance you have in your checkbook.
If you have never
attempted to balance your checkbook, you will have to go back a few months to
determine which checks might be still outstanding, but the result will be the
same.
Many financial
planners advise their clients against using ATM machines because people usually
do not stick to their budgets when they use them. They tend to use the cash for
frivolous items that are not in their budgets. Also, people do not often save
their receipts (or neglect to even ask for one), resulting in an unbalanced
checkbook at the end of the month, or bounce a check because they thought they
had more money in their account then they did. This is especially true when you
have more than one person using the account.
If you and your
spouse both use ATM cards you need to be in constant communication with each
other. Usually one partner will handle the bill paying and has charge of the
checkbook. It is imperative that the other partner immediately give him/her all
ATM receipts and/or debit receipts so that they may be deducted from the
checkbook immediately.
Now that you know
that you SHOULD balance your checkbook and you know HOW it’s time to get moving!
What have you got to lose (besides bank fees)?
