Preparing a check register and balancing a checkbook are two skills everyone should have. Financial institutions make errors so it’s vital we have a record of transactions made to compare against the banks record. Balancing a checkbook also gives us an accurate number as to what amount we actually have to spend and save.
By following these simple steps anyone can prepare a check register and balance a checkbook efficiently.
Foundation, build check register
1. Before you can balance a checkbook your check register must be up to date. The first step is to obtain the ending balance from last months bank statement. This amount will be your beginning balance on your check register.
2. Enter a debit for each withdrawal/debit that you make. This may include ATM withdrawals, debit card transactions, automatic deductions such as monthly membership dues, electricity bills, bank fees like NSF or foreign ATM fees, checks, and deposits. In today’s busy world the vast majority of us swipe our debit cards for virtually everything including morning coffee or the Sunday paper. All the more reason to gather receipts daily and make an entry into our check register for each receipt. At the end of each day every deposit and charge made throughout the day should be entered in your check register. Before completing the next step – balancing your checkbook – you will add and subtract every entry and enter the ending balance.
Next step, balance checkbook
1. The first step is to obtain your latest bank statement.
2. Next, simply cross-reference between the bank statement and your check register. The easiest way to do this is to go down your check register and see if each item appears on your bank statement. As you confirm each item place a check mark in your register. Do this to every item that is on your register. While doing this, verify the amounts are identical to what the bank shows for each entry. Additionally, take note of any items on your statement but not on your check register. Then simply verify the transactions and add them to the bottom of your check register with a check mark to signify the entry was on your bank statement. If you didn’t make the transaction you can call your bank to discuss the difference. Once your check register and your bank statement both have identical entries go onto the next step.
3. Now look over your check register for entries with no check mark next to them. These are items that have not yet cleared your bank and must be reconciled during this process. Lets us start by getting a blank sheet up paper and writing the ending balance from your bank statement. Next, deduct every item that was not checked off and add any deposit that was not checked off. The ending balance should be the ending balance that you have on your check register.
4. If you have a difference of just a few cents between the two balances, it may be a transposed number. An easy way to determine if it simply a transposed number is to ask yourself if the difference is divisible by nine and if it is then it is a transposed number.
Now, you’re a checkbook balancing pro!
The two processes explained above can save you from incurring exorbitant bank fees. Having these skills can also save you money if a financial institution has erroneously made a mistake with your money. Keeping your check register up to date can be extremely helpful when budgeting and keeping a tight reign on your spending. Awareness is the key to cutting back on frivolous spending.
This article was included in the 1st Get Out Of Debt Carnival.
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