checking

How do I: Balance my checking account?

Topic: CHECKING & SAVINGS
Who is affected: CONSUMERS AT EVERY STAGE OF LIFE
DEGREE OF DIFFICULTY: MEDIUM
What you'll need: RECEIPTS, CHECK REGISTER, BANK STATEMENT

What you need to know

Balancing your checkbook is an essential part of maintaining a sound budget. It has several benefits:
  1. It puts you in closer contact with your spending. Sitting down regularly with your receipts has a way of clarifying where your money is really going. This close connection to your finances is essential, especially if you're trying to adhere to a budget.
  2. It helps you confirm that the bank's numbers add up. If dollars go missing, a balanced checkbook will help you catch it. While discrepancies are often due to math errors on the account holder's part, balancing a checkbook helps uncover anything amiss due to a bank's error.
  3. You'll always have an up-to-date balance. Bouncing checks is expensive -- Bankrate's exclusive Checking Study shows that the average bank charges $34 every time you overdraw your account.
Step-by-step
1.Get your starting balance. Check the balance on your bank statement or online and record it in a check register.
2.Record all transactions in your check register. This includes paper checks, electronic checks, and debit and online bill pay transactions.
3.Subtract each transaction from your balance. This allows you to know, up to the minute, how much is in your account.
4.Compare your register to the next statement.
Online banking can help you keep better track of your checking account than traditional, once-a-month paper statements. Most banks now have online portals where you can check your balance 24 hours a day.
However, this access doesn't make balancing a checkbook obsolete, as it still takes time -- sometimes days -- for purchases to be reflected online. During that time, you could easily bounce several checks.

 

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