How to Balance Your Checkbook and Other Bank Accounts
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How to Balance Your Checkbook and Other Bank Accounts

Managing your account and keeping track of your balance on a regular basis will keep you protected from over drawing your account and incurring costly fees. By taking a few extra precautionary measures, you can know what your account balance is at any given time and never have to worry about bouncing a check or over drawing your account again.

Keeping track of your expenses can seem like a daunting task, but once you set yourself up initially, maintaining your accounts becomes relatively easy. It’s the getting started part that many seem to struggle with. If you’ve never maintained your account balance with a check register, then the “how to” aspect behind it may seem a bit foreign, but it is very simple to do and easy to learn.

This writer admittedly learned the hard way the importance of balancing and reconciling your account on a regular basis. I thought that by keeping a mental ledger that I would be fine since I always seemed to have an idea of what was in my account. On one occasion though, I made a mental math error that cost me HUNDREDS of dollars in the long run due to the multitude of fees my banking institution had hit me with once the account went overdrawn. It was a tough lesson to learn, but I vowed to never put myself in that situation again, especially since it could have been so easily avoided to begin with.

To begin maintaining your balance, you will need two things: 1. Most banks now offer free online banking. This gives you access to your accounts with the ability to view your balances, view individual transactions, make transfers and pay your bills. If you do not have an online banking account, I highly suggest signing up for one. Online access will become your best friend in this process. 2. You need a way to track your expenses. This can be done a few different ways. Depending on what suits your needs best, you can either use a program like QuickBooks to manage your account or you can create a basic Excel spreadsheet with columns for the date, transaction description, debits, credits and the balance. I utilize Excel for various parts of my book and record keeping, but when it comes to maintaining a ledger, I personally prefer a hand written one. This is, of course, a personal preference. I simply find it to be more convenient to jot down my transactions in a composition book. You can definitely get one of those pre-lined ledger books to use, but they aren’t always inexpensive.

Once you have your online access to your account established and you have a method of bookkeeping set up, it’s time to make your first entry. Obviously the easiest point to start tracking your balance would be the day your bank account is opened and your first entry contains your starting balance (either $0 or whatever amount of money was deposited when the account opened) If you have an established account already though, don’t fret. There will be a little extra monitoring involved in the beginning, but once you reconcile fully the first time, you won’t have to worry about it after. To get your starting balance, simply log in to your online account and pull what the current balance is showing. This will be your “starting balance.” In some instances, you may have two balance figures – a current balance and an available balance. If these two numbers are not the same, then you most likely have some pending transactions. In this case you would use your “available balance” as your starting balance figure and then simply view your transaction history to see what the pending transactions are. Record any pending transactions in your ledger and then your ledger balance should match what your current balance will be (available balance plus or minus the pending transactions).

Example: Available balance is $1,805.50   Current Balance is: $1,950.00   Pending Transactions: “Refund from Target” for $144.50

Your starting ledger balance would be: $1,805.50

Record the pending credit amount: + $144.50

New ledger balance: $1,950.00

If you have any receipts from prior transactions or know of any automatic postings to your account, compare them to your transaction history. If they have already posted to your account, then there is nothing else you need to do with them. For the ones that have not yet hit the bank, record them in your ledger to get a more accurate balance. From this point, you are pretty much set up and ready to go. I would recommend watching your account transactions closely for the first few weeks. Be sure to record anything new that hits your account that you didn’t have previously recorded. Going forward, you just need to record your receipts, checks and deposits as they happen. At least once a month I would recommend reconciling your account balance with your ledger balance. If after accounting for all transactions you find that you have a discrepancy, you will need to go back and verify the transactions online and be sure to check your math in your ledger.

To make things easier on yourself, I would recommend keeping a checklist (whether it be monthly, or semi-monthly) of all of your regular bills and automatic withdrawals that you will need to pay and record each month. Doing so will ensure that you won’t miss any payments and all of your transactions can be accounted for. To see how to make a checklist, check out my article here: How to Manage Your Monthly Bills Easily

In these economic times, being off on your account balance and accidentally over drafting  can be a costly mistake that isn’t necessarily affordable. Protect yourself by maintaining and reconciling your balance on a regular basis. It doesn’t take too much work and effort and it is worth it in the long run, I promise.

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