Yes, you can balance your checkbook every month to the last penny with a minimal amount of time and effort. It is very important to do so in today’s world to avoid being a victim of fraud and identity theft.
There are a few points to keep in mind when balancing your checkbook. First, the ending balance in your checkbook and the ending balance on your bank statement will not match due to timing. You are currently balancing your checkbook, the bank statement has a closing date that is usually printed at the top of the statement. Second, the only differences between your bank statement and your checkbook are deposits in transit, unregistered deposits, outstanding checks, transfers, and adjustments. And finally, remember that the bank is always right.
When you receive your bank statement, take your checkbook register and place them side by side. Start with the ending balance on the bank statement. The bank statement will then list all the deposits made to your account during the time period for which you are reconciling. Compare the deposits on your bank statement with what you have recorded in your checkbook register. A deposit in transit is an amount that you have in your checkbook but that is not on your bank statement due to the date of the statement. Add these amounts, if any, to the ending balance on the bank statement. An unrecorded deposit is an amount that the bank shows but is not on your checkbook register. Add these amounts, if any, to your checkbook register. This section is usually the easiest to balance, as there are no magic amounts of money appearing in your account. These amounts result from real money you take to the bank, deposit transfers between accounts, or direct payroll deposits.
Next, you’ll want to see which checks the bank you wrote from your account cleared. These are listed on your bank statement in numerical order. Follow this order and place a check mark next to the check listed in your check book register that was cleared by the bank. Checks in your register that do not have marks next to them, also known as outstanding checks, should be subtracted from the balance on the bank statement. Be alert because the check may clear for a different amount than the one it was written for. Either the writing on the check was not clear or the numbers were transposed.
Other withdrawals that may occur during the statement period are debit card purchases, automatic debit payment, and ATM withdrawals. Make sure all reductions on your bank statement are posted to your check register. It is important to refer to this section on your bank statement and make sure it matches your checkbook, as this is the area where fraud is rampant. If you know where you bought and used your debit card or when and where you stopped and made an ATM withdrawal, those transactions are the only ones that should appear on your bank statement. If there are other withdrawals on your statement that you cannot justify, contact your bank immediately.
There may be adjustments to your account, such as interest, service fees, and occasional bank adjustments. Yes, I realize that I said that the bank is always right. Well, it is. Each and every bank employee who comes into contact with money must maintain the balance at the end of the day. Believe me, they will find their mistake. And they often find your mistakes too! Remember to subtract your fees and add the interest to your checkbook register.
The ending balance on your statement should now match the ending balance in your checkbook register. If the amounts are not the same, I find that it is usually in the withdrawals. Specifically, review cleared checks and the amounts they cleared.
You work hard for your money! By following these simple guidelines, you can have less frustration and a better understanding of where that money is going, and you can protect yourself from the many instances of fraud in today’s society.
