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:
- 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.
- 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.
- 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.
|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.