how to balance checkbook

Reconcile it against the information that’s listed in your check register. This simply means going through your statement and your checkbook register line by line and matching up transactions. Balancing your checkbook is one of those crucial life skills that you need to know. It will give you a clear sense of not only how much money is in your bank account, but where your money goes. It can also help prevent you from bouncing checks, stick to your budget, help you avoid fees, and detect errors from your bank or even fraudulent billing.

How to balance your checkbook

how to balance checkbook

It’s a chance to see how your money came into the account and where it went. You can also see if you missed accounting for any of your expenses in your budget. In this case, compare all your canceled checks and receipts to your check register to find the transposed number. This can happen due to a math error, a transposed number, an unrecorded transaction, or possibly a misapplied debit or credit. 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. Make note of the dates, descriptions, and amounts of any deposits showing in your check register but not on your statement.

How to Balance a Checkbook

Plus, with the addition of digital banking services like automatic bill payments and mobile deposits, it’s critical to know when your money is in motion. Nearly 40% of Americans rely on mobile banking to manage their money. If your bank offers online banking and/or mobile banking, balancing your checkbook may be as simple as logging in to your account.

  1. Checkbooks come with a carbon copy, which is paper behind your check that leaves behind a copy of what you write on it.
  2. GOBankingRates‘ editorial team is committed to bringing you unbiased reviews and information.
  3. Transactions you don’t recognize, duplicate transactions, or incorrect charge amounts can all raise red flags.
  4. You accidentally added it when you should have subtracted it or the other way around.
  5. You will have fewer transactions to comb through if you balance once a week or once every two weeks.
  6. Before debit cards, these transactions were usually made in the form of paper checks.

How Often Should You Balance Your Checkbook?

Expenses should be subtracted from your total, and payments should be added. If you use your checkbook, you’ll go line by line and either subtract or add each check. You’ll also write down any debit card or bank transactions for the month. When someone balances a checkbook, it means they’re comparing a checkbook to a bank statement and reviewing bank transactions.

Otherwise, you might forget about a transaction, which would result in an incorrect balance. You may prefer using a budgeting app if you have multiple bank accounts or credit cards, as it’s easier to see them all in one place. Relying on these apps alone to balance your checkbook can be problematic, however, if you’re not keeping a close eye on each account individually.

You can also turn to specific budgeting and balancing apps or platforms, such as Mint, You Need a Budget (YNAB), Goodbudget, and even Quicken. Some of these charge a fee while others may be able to meet your balancing and budgeting needs with a free service. If you find a discrepancy here, make the necessary changes and rebalance your checkbook. Balancing your checkbook in today’s digital world may seem redundant, but it’s critical for two reasons.

Then, set aside a little extra time every month to balance your checkbook. If you bank online, you’ll have easy access to your account and statement. As you grow comfortable balancing your checkbook, it might be easier to think ahead. Would you like a transaction to be made every month that deposits some of your income into a savings account? Now, though, banking customers have many different options for spending money.

You also will be able to access your spreadsheet from your laptop when you’re ready to balance it. Setting up text or email notifications can make it easier to keep track of new credit and debit transactions without having to log in to your account. Assuming all the transactions from your statement and your register match, the end balance showing for each one should also be the same. If not, you need to go back and check the register for any transactions that may not have been posted to your account yet. Keeping a running log ensures the money earned stays in your account where it belongs. Balancing your checkbook, and having an easily accessible list of charges you’ve made, can aid in finding fraud charges before they do any damage.

how to balance checkbook

An up-to-date check register will always tell you exactly where you stand at any time, without surprises or needing to rely on a mobile app. 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. Writing checks used to be done more frequently so it was easy for you to just write the total down in the checkbook register and add it up. From deposits to withdrawals, the deductions and additions made throughout the life of the account were recorded in real time.

For example, a small deposit of a few cents or a $1 debit transaction could be evidence of a scammer testing the waters before launching a larger-scale attack on your account. Taking time to balance your checkbook could help you avoid financial headaches caused by fraud. It’s useful for paying bills, depositing paychecks, sending money, and making accounts receivable ledger purchases using a linked debit card. If you’re one of them, it’s important to understand how to balance a checkbook to keep track of debit and credit transactions. If you find that gas station purchases or your morning coffee are throwing off your numbers, consider “checking in” with your tracked transactions on a daily or weekly basis.

When balancing a checkbook, it can be useful to start with some definitions. Starting with the first transaction you enter, subtract the amount from your available balance—in the case of a deposit, add it to the balance. Balancing your checkbook is one of the most basic habits for good money management, yet millions of Americans don’t do it on a regular basis. If the result is a standard dollar and cent number, such as 2.95 — not 2.956 — then search for that number in your checkbook register. You accidentally added it when you should have subtracted it or the other way around. For more detail, review our guide to writing a check and entering transactions into the check register.

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. Be aware that previous transactions may roll in that hadn’t yet been processed, so you may need to keep a close eye on your mobile app or online statement for any surprises. In this case, you can usually spot the issue by going through your online transaction history and locating the missed charge.

You can keep this booklet in your purse, wallet, or checkbook case and write down both paper and electronic transactions as you go. You can avoid all the balancing at the end of the month by logging in to your online banking every day and clearing transactions from your check register. Does all this writing and manually adding and subtracting seem excessive in today’s digital world? Fortunately, there are ways around all this checkbook balancing using various apps and software that link directly to your bank account and help you track your balance.