Nowadays, most people have online banking to help them evaluate their checking account balance. From a basic standpoint, this may be all you need when trying to get a fast ideal of how much money is available in your account.
While online banking is a useful tool to give you a quick look at your transaction information and current balance, it’s still important to understand how to balance your checkbook. Though it may seem like an antiquated practice, balancing your checkbook can help you organize your transactions and monitor your spending more closely. Learning how to balance your checkbook will help you to keep a record of your regular transactions, and how to balance that record.
Why is it important to balance my checkbook?
The goal of balancing your checkbook is to ensure the records you are keeping regarding your transactions are reflected in your bank statement. Keeping these records will help you to keep track of checks you’ve written to ensure they clear with adequate money in your account, and any automatic payments you may have set up on your account. Additionally, you will be able to determine any errors in transactions from your account. These errors can include errors on your bank statement, or vendor errors.
In the past, balancing your checkbook was more of an undertaking that required a few hours and a good deal of organization to complete. Until recently, you would have to take your paper bank statement and go through each transaction to compare to the transactions in your checkbook. Today, online banking has simplified this process, making it easier than ever before to access your bank statements and information. To balance your checkbook, you will need to access your online banking account, and take note of your transaction records in your checkbook.
What transactions affect my account balance?
To understand the process of balancing your checkbook, you will first need to understand the types of transactions: deposits and withdrawals. Deposits are reflected as additions to your account balance, such as paychecks, or having money transferred into your account. Withdrawals are reflected as subtractions in your account. This can include any purchases you have made, or any money you may have taken out at an ATM. By balancing your checkbook, you will be able to calculate these transactions to reflect how much money you have in your checking balance.
Additionally, it is important to take note of any fees you may be charged for your account. Depending on your bank or credit union, there are often fees associated with holding particular accounts that depend on your deposit statements, transfer frequency and other details unique to your bank. If you are confused about any of the fees you see on your bank statement, you should contact your bank as soon as possible to get more information about what you are being charged for, and understand whether or not you may be able to avoid some of these fees.
How do I balance my checkbook?
To begin the process of balancing your checkbook, you will have to record each transaction made in your checkbook register. If you have written any checks, you will want to record the check number, date, a brief description of what the check was for, and the amount of the check. Next, you will list any withdrawals you have made over that period. This will reflect all transactions that have occurred or are still pending in your account. You can subtract these from your opening balance for the period you are balancing your checkbook.
After you have recorded all checks and withdrawals, it’s time to add to your balance. Record all deposits you may have received, including paychecks, monetary gifts, money transferred from a savings account, etc. When you have added these deposits together, you can add them to your overall records.
Once you have completed these steps, you will then have your current available balance. To simplify this process, it is a good idea to keep track on your transactions on an ongoing basis to ensure you aren’t missing anything when you sit down to balance your checkbook. Once you receive your bank statement, you will have the opportunity to compare your beginning balance and available balance. Your available balance should reflect the balance you calculated when you balanced your checkbook. Compare transaction dates to the period the bank statement reflects to ensure everything is correct!
How can balancing my checkbook help me financially?
Balancing your checkbook can help you keep track of your spending habits and understand where you and how are spending your money on a monthly basis. By keeping an active record of your transactions, you will have a better idea of where your money is going each month, and what your balance typically is at the end of every month. This can in turn help you to establish long-term goals when it comes to your spending and saving habits, and ensure you are being responsible about your financial decisions on a regular basis.
It is extremely important to ensure that you are spending less money than is held in your checking each month to avoid any bounced checks, failed transactions, or overdraft fees. These issues occur when you spend more money than what is currently available in your balance.
Is It Worth It?
Although balancing your checkbook can be a tedious and detailed process, overall, it is well worth your time and energy. Keeping track of your transactions and fees can help streamline the process and make it easier month after month. Once you have gotten used to the process, you will find it gets easier with time and practice. After all, everyone used to have to balance their checkbook!
Having a full understanding of your spending habits and expectations when it comes to saving can help you establish strong financial independence. Coupled with your bank statement and online banking platform, you can make balancing your checkbook part of your regular routine to maintain successful spending habits and saving strategies.
