Balancing a Checkbook – The How and the Why of Tracking your Expenses

methods of balancing a checkbook

Balancing a checkbook is not a balancing act. It’s simple addition and subtraction, coupled with a few self-management skills. Recording your transactions on a checking account register will help you stay organized in the financial areas of your life. Don’t surrender them completely under the flag of your bank, because you might end up fighting bouncing checks, overdraft fees, bank errors, or even fraudulent billing.

balancing a checkbook runs back into the middle ages

The best thing is for you to take hold of your budget and, at the end of the month, when you receive that balance statement, to reconcile it with your own checkbook register. If you and your bank are in agreement over how much money is left in your account, then you can proudly add ‘self-appointed bookkeeper’ to your curriculum vitae.

Below you’ll find the instructions on how to balance a checkbook, both through traditional and electronic methods. What’s the purpose of investing time and a little effort in running a ledger on your financial transactions, and how to do so without the added weight of a mountain of bills and receipts?

Balancing a Checkbook – Less of a Balancing Act Than You Might Think

methods of balancing a checkbook

Remember when your brain couldn’t see the point in trudging through burdensome math at school? Unless you’ve chosen a career in banking – which would make this post light bedtime reading for you – those mathematical equations must now seem like a bad dream. Also, somewhat obsolete, in an age where everything is computerized and your smartphone will do all the thinking for you.

However, we have to insist that you brush up on those basic addition and subtraction skills to balance your checkbook. In order to achieve this, you need to record all the financial transactions coming and going: deposits, or additions made to your account and withdrawals, or subtractions.

Why to Balance a Checkbook?

Why keep a record on your spending if you’re practically paying the bank to do this in the form of commissions, interest, and let’s face it, patience.

The balance written in your bank statement is no more than a snapshot of the amount of money in your account. Checks, fees, deposits, or debits that have not yet been processed by the bank will not be there at the end of the month.

Man balancing a checkbook

The reason you’d be taking this task on you is: (1) to keep track of the actual amount of money in your account at any given time – so you don’t overdraw your balance, for example, and (2) to reconcile it with the monthly bank statement – while your bank is prone to errors from time to time, you also might have overlooked some transactions in your bookkeeping. Especially if you’re a newbie bookkeeper.

Also, (3) – you’ll probably get your wallet out less hastily when you see all that spending adding up. And (4) – If you know you usually slip on the lower side of your balance and, more often than not, get this nagging message from your ATM reading ‘Insufficient Funds’, then you wouldn’t want the bank to return a check because it’s worthless and the money in your account cannot cover it. A bounced check is not only embarrassing but costly as well. Most banks charge fees for bounced checks.

Warning Tip!

Don’t insert your hopes into the ATM, believing it will display an accurate read of your balance and spare you the math. It will not show, for example, any outstanding checks – unfortunately, the term doesn’t refer to ‘an impressive bank account’, rather checks that you’ve written but have not yet made it to the bank for payment.

Also, if you’re not the spendthrift kind and always keep extra money in your account for dark days ahead, you don’t have to worry about dropping to a balance on minus because you’ve lost track of all your debts and payments. Even so, balancing your checkbook has all to do with giving you a feeling of control over your hard earned money which, more often than not, tends to be slippery, elusive, and display great magician skills.

Money, a Great Vanishing Act – How to Keep Track of Your Finances with a Checkbook Register

If your money vanishes, try balancing a checkbook

Where did all my money go? Usually, where you tell it to go. However, spending comes in so many shapes and sizes, from buying a bagel from the corner shop to paying your Netflix subscription or renting that Airbnb house for your holiday in the Algarve.

That means it’s time you step in and take hold of the reins, otherwise those wild bucks will just scurry away in the nooks and crannies of everyday living expenses.

The easiest way to keep a record of your spending is to make do of the humble checking account register. Often overlooked for more modern apps and tools, a check register is like the vinyl record player you nostalgically turn to in search of that Apple-free, golden age of your childhood.

The metaphor is not as far-fetched as you might think. The check register, or ‘the ledger’ or ‘transaction register’, is similar to a journal recording your account’s activity. However, as opposed to your diary, you can’t skip on entering a day’s trials and tribulations just because you don’t feel like it. Every transaction has to be meticulously registered in this little booklet, from deposits to ATM withdrawals, from debit card payments to online credit shopping.

7 Steps in Balancing a Checkbook

  1. Get yourself a checkbook. Preferably the ‘duplicate’ kind that allows you to save a carbon copy of every check you write.
  2. Save all your receipts. This move can be quite a hassle, and if your nightmare is scraps of paper hoarding around the house, then you can skip it. While this may be optional, the following is not.
  3. Open and read your monthly bank statement or online banking history. Don’t ignore it, this is the test you needed to pass the ‘I am on my own accountant’ test. Compare transactions on your checkbook with the ones made by the bank, by checking each item off that is listed on your statement.
  4. Once you identify all of the unreconciled debits, such as automatic drafts, checks, and debit card transactions, list them all in one column. Also, write any remaining entries on the bank statement in your register. That includes service charges and bank fees.
  5. Fifth, you’ll notice transactions you’ve written in your register that don’t exist on the statement. That means you’ve done a good job at keeping records. List these debits in another column.
  6. Now it’s time to harness the mathematician in you! Start with taking your ending balance on your bank statement and add the total of your outstanding credits to it – remember, those bits of spending that didn’t make it on the bank statement. Then just subtract the total of your outstanding debits from that number. The number below the line should match the running balance on your account register.
  7. If the final numbers are not a perfect match, then you’ve missed on a transaction. Make a correction and try again next month.

Balance My Checkbook – The Ledger App

balancing a checkbook app

We are aware of how much we glorified the good old pen and paper ledger. Still, for the tech-addicted, here’s an app that is both easy to use and spares you doing all the math. Once you add transactions on the app, Balance My Checkbook will automatically sort them by date, register any last-second edits, and keep it all tidy and scribble-free.

Balancing a checkbook, or reconciling your account with the bank statements you receive on a monthly basis, may well prove to be a money-saver move on the long term. Money will probably stop disappearing into thin air. Once you see behind a magician’s trick, the awe makes room for understanding.

Image sources: 1, 2, 3, 4, 5


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