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How to Balance Your Checkbook

how to balance a checkbook

Once you’ve decided how to log transactions, put your starting bank account balance at the top right of your table. If you pull your balance from an online banking dashboard, use your “available balance” because this figure should include pending transactions. Maybe you checked your bank account balance on your mobile banking app as you walked into the department store.

  1. Below are some scenarios that may cause your bank balance to be off and what to do next.
  2. Many nonprofits and community organizations also offer free financial coaching and mentoring, which can be another handy option as well.
  3. For example, fintech Chime is known for its award-winning app and budgeting tools that alert you to your daily balance, help track your budget, and even automatically add to your savings account.
  4. This simply means going through your statement and your checkbook register line by line and matching up transactions.
  5. Now you know that you have $950 left to spend from your account, rather than what shows as your current bank account balance of $1,000.
  6. The key to this approach is making sure that you enter new credits and debits in a timely manner.

Next steps: Tips for remembering to balance your checkbook

If there is a problem at some point, it’s much more difficult to wade through months of transactions to figure it out. 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. Many of us use automatic payments to take care of monthly bills without the risk of missed or late payments. If you forget that an automatic payment is scheduled, though—or don’t realize how much will be taken out—you might not account for that transaction in your checkbook ledger.

Compare Your Check Register to Your Bank Statement

While some people really enjoy putting pen to paper, others fiercely prefer the convenience and ease that technology offers. If you think a transaction is unauthorized or contains an error, look for instructions on your bank statement for how to get it corrected. 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. There is also no shortage of financial apps and software to help with balancing your checkbook.

Step 6: Check for Previous Months’ Outstanding Items

Make note of the dates, descriptions, and amounts of any check, debit, or ACH payments listed in your check register but not on your statement — the ones without checkmarks. If an outstanding transaction california gas guzzler tax hasn’t cleared your statement in 60 days, contact the person or company you paid to see if there is an issue. If the person or company lost or never received the check, call your bank to stop payment.

Financial stress keeping you up at night?

The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials. Transactions that are listed in your checkbook register may not show up on your account statement if they’re still marked as pending with the bank. There are plenty of robust financial apps that can help you create a ledger of transactions if you don’t want to do this task by hand—but you don’t need anything fancy to get started. Good old-fashioned Microsoft Excel or paper and pen could be enough to help you keep track of where your hard-earned money is going so you can make sure it’s being spent in the right place. Balancing a checkbook consists of checking that your records match up with what the bank has for your account.

how to balance a checkbook

This means you accidentally mixed up the order of your numbers. If you find a discrepancy here, make the necessary changes and rebalance your checkbook. Offer pros and cons are determined by our editorial team, based on independent research. The banks, lenders, and credit card companies are not responsible for any content posted on this site and do not endorse or guarantee any reviews. Banks may hold checks to verify funds or bounce a check entirely if the check writer’s account has insufficient funds.

If your account offers interest on the balance held, this added deposit could throw off your checkbook balance. Or, you might also find that your balance is less than expected due to checking account fees you incur, such as monthly maintenance, non-sufficient funds, or wire transfer fees. To manage your checkbook, you must enter all your transactions into the check register so you can come back to them later for review. A well-maintained check register makes it easier to balance your checkbook and spot errors. Some banks still mail out monthly bank statements around the end of the month, but many have switched to online statements only. If you no longer receive paper statements, log on to your online banking system and print out the current statement.

Now, though, banking customers have many different options for spending money. To protect against losing track of your balance and getting hit with an overdraft fee, you need to balance your checkbook — sometimes called a check register. You do this by manually recording every transaction, whether it’s a debit card purchase, writing a check, an automated payment, or a deposit. If your bank account balance doesn’t match up with the cleared charges on your checkbook register, don’t panic.

If you are charged a recurring monthly maintenance fee, you can note this in your checkbook register each month. Interest deposits will vary according to your balance, so keep an eye out for these at the end of each statement cycle. One of the biggest benefits to balancing your checkbook is that you can quickly spot potential fraud and mistakes.

If you’re one of them, it’s important to understand how to balance a checkbook to keep track of debit and credit transactions. In decades past, “balancing your checkbook” was a much more literal term. It involved writing down individual transactions in a check register as you spent and deposited funds throughout the month, tracking your ending balance at all times. Before debit cards, these transactions were usually made in the form of paper checks. Along with allowing you to easily record lots of different types of transactions, these digital tools also can help you budget and do the math for you — things a checkbook register can’t do. Balancing your checkbook helps you track your cash flow and identify any errors or signs of fraud.

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