How to Balance a Checkbook? | Banking Advice 2022
How to Balance a Checkbook? A checkbook balance is simply adding up your credit and debit transactions for the month to determine how much money you have available. HDBank Career will show you easy steps to balance your Checkbook.
Balancing your checking account sounds like an old-fashioned and unnecessary chore when you can quickly and easily access your balance online or with a mobile app.
However, balancing is a smart habit that can help you keep track of your deposits and withdrawals and make sure the balance matches the bank records for your account.
Balancing your account offers a number of benefits. You can:
- Find fraud by identifying transactions in accounts that aren’t yours.
- Save money by avoiding overdrafts and associated fees.
- Detect errors to ensure that your account records are correct.
- Track spending to improve your budget and cut or cancel expenses.
“Regularly balancing your checking account allows you to fight fraud if you notice a discrepancy between your bank statement and the amount you expect. It also makes you more cautious about your spending and can possibly (helps you) try to keep your spending under control,” says Justin Nabity, founder and CEO at Physicians Thrive, a financial planning firm with headquarters in Omaha, Nebraska.
You don’t need to balance your account every day. Weekly can be a good habit. Monthly is usually enough.
Before you have a balance, you must record your transactions
The first step in balancing your account is to update the records of every transaction in your account.
Transactions may include:
- Direct deposit;
- Debit card fees;
- Paper checks;
- Cash withdrawals;
- Overdraft, ATM or other bank fees;
- And, for some account types, the interest you earn.
You can record your transactions in a checkbook, notebook, or banking application. Keeping receipts from deposits, withdrawals and other transactions can help you keep your records up to date.
“This matching with your bank tells you that your records match the bank’s records,” says Bryan. This (helps you) spot mistakes and omissions, such as a payment you forgot to note or bank error, such as a missing deposit” R. Routledge, associate professor of finance at Carnegie Mellon University’s Tepper School of Business.
How to Balance Your Checkbook
After you have recorded all your transactions, the next step is to check each transaction that is on your record and shown on your bank statement. These transactions have been processed or “deleted” through your account.
Usually you will have some unprocessed transactions. Three examples are an unposted debit card transaction, a check you wrote to someone who hasn’t sent it, and a check you sent that had your bank withheld all or part of the amount.
You then adjust the bank balance for your account to reflect the outstanding amounts you didn’t check.
To do this, start with your bank balance, then add or subtract outstanding amounts. Once done, the bank’s record of your account balance and your own personal record of your balance should match.
Here are 8 simple ways to help you balance:
1. Keep Track of Earned Interest
2. Keep track of service fees, etc.
- Monthly service fees
- Charges per check
- ATM transaction fees
- Fees for insufficient funds
Subtract these fees from your total register balance.
3. Confirm Deposit Amounts
| Date | Outstanding Deposits |
Amount |
| Total: | ||
4. Compare All Check Entries
Compare the transactions on your statement to the entries in your register. Check all checks written for check numbers, dates, and dollar amounts. If these items match, mark the transaction with a check “” mark in both your register and on the statement.
If they don’t match, circle the item in both places so you can go back and repair the issue after you’ve checked off all of the transactions.
If the transactions do not match,
Examine your checkbook register for one of three errors: the item was recorded improperly, the item was paid or credited to your account for the incorrect amount, or your check numbers were reported incorrectly.
To Fix the Mistakes
Examine and/or review your canceled checks or check pictures, deposit receipts, and/or ATM receipts.
Keep in mind that some items will not be marked off. These are referred to as “excellent items.”
Note: If you did not receive any cancelled checks or photos with your statement, contact your branch and request a copy of the item in question. There may be fees.
5. Examine previous statements for any outstanding items.
6. Check Other Debits on the Statement
7. Make a list of all outstanding checks
8. Stability
| Statement Ending Balance | |
| ADD (+) Deposits Shown in Checkbook Register But Not on Statement | |
| Subtotal | |
| MINUS (-) Total Outstanding Checks | |
| Total | $ |
Compare this total to the balance at the end of your checkbook register. They ought to be the same. If not, there is an error. Don’t freak out! This is a simple fix. Congratulations if they are the same! You’ve successfully balanced your bank account.
Your Amounts Don’t Match: What’s Wrong?
If the two balances don’t match, you’ll need to repeat these steps to try to find and correct your mistake. Common errors include transactions you forgot to record, errors in addition or subtraction, or erroneous dollar (or pesky) amounts.
“Most of the time, the error is in your profile or you added it,” says Routledge. “An old accounting trick (that is) if your difference is divisible by 9, it’s probably a transcription error. For example, the amount is $1.45, but you wrote it down as 1.54 dollars.”
If you discover new, unusual or suspicious charges that you don’t recognize in your account, notify your bank as soon as possible.
If you receive a bank statement with an unauthorized debit and you do not notify your bank within 60 days, you may be liable for further unauthorized transactions your bank has Could have been prevented if you had notified earlier.
You can notify your bank using an online form, email or phone call. If the amount is large, you can go to one of your bank branches and talk to someone directly about the amount.
FAQs: How to Balance a Checkbook?
What is the first step in balancing a checkbook?
The first step in balancing a checkbook is to keep track of each transaction as it happens. This includes every check and deposit you make, as well as all debit card swipes, ATM withdrawals, and bank fees. Always keep a running balance by subtracting withdrawals from credits.
How do you balance a checkbook and reconcile a bank statement?
Once you’ve finished reconciling your transactions, total the cleared charges in your checkbook register or spending tracker. The cleared charges from your checkbook register will exactly match the balance on your bank statement. That is, your cleared charges will be the same on your register and your bank statement.
How do I balance my checkbook after a month?
If checks have been outstanding for three months or more, contact the person or business to whom the checks were written and inquire about the check’s current status. Has the individual/business misplaced or forgotten the check? Encourage them to cash it right away.
Overall, we hope you found this article on How to Balance a Checkbook to be informative. You can learn more about “Where should you order paychecks?” by clicking here. or read related topics in banking.
