How do you keep track of the money in your checking account? Or are you like most other adults today who don't bother with this important task? Think of all the different ways you can now access your money - with ATM cards, point of sale (POS) purchases, and automated deposits and debits. Now think about it again - wouldn't you be more at ease if you had your finger on your check account balance at all times? Do you see why it's crucial to take the time to balance your checkbook?
And yet, despite these advances, balancing one's checkbook remains an important financial task. It's important to note that the ATM printout will not show you checks that have been written but not yet deducted from your account. It will not show you trends or help you to manage your finances accurately.
To balance one's checkbook one needs to understand some basic principles of bookkeeping, and follow a few easy steps.
The first key is to record all your spending. Every time you use your ATM card for a withdrawal or point of sale (POS) transaction, you need to make a note of it in your checkbook register, or in a little book kept just for this purpose.
Secondly, when writing checks, it is imperative that you record the amount and who the check was made out to. By the time you receive your monthly statement, several checks could still be outstanding. If you haven't kept accurate records it is nigh impossible to remember the details. Another option is to use duplicate checks - you can then record the purchases at a more convenient time, with all the details at your fingertips.
But what of the ATM statement? This fits perfectly as our third step: In today's day and age you can check your balance online or at an ATM (depending on fees incurred) several times a week to avoid potential surprises, especially if your spouse is not as diligent at capturing purchases as you are. If sharing a checking account, you could even designate a place at home for receipts, such as an inbox on your desk or kitchen counter, with one person capturing the data as often as possible.
Finally, we need to look at income. Record your bank deposits and any other income in much the same way as your expenditure.
If you follow these guidelines, your balance should agree closely with the bank's at the end of the month. They will also help when checking for any incorrect entries in your bank statement every month. If you don't know what you've spent, how can you possibly check for inconsistencies? So, how does one go about balancing one's checkbook? Begin with the ending balance of your last statement; add the deposits and other credits from the month; from this amount deduct your debit, POS and checks written since the last statement. Deduct any recurring bank charges, such as standard monthly account fees and automatic monthly debits (like mortgage, health plans or auto loan payments). Remember, though, that if you have outstanding checks - those written, but not yet submitted for payment - you must consider this as money spent. Together, these four steps should give you an accurate indication of your bank balance.
To sum up - the most difficult part of balancing your checkbook is to be an accurate recorder. The formula to bear in mind is a simple one: one's ending balance plus deposits and credits; minus checks, debit/POS transactions, automatic debits and bank fees. By being consistent in your bookkeeping you will find that balancing your checkbook is as simple as counting from one to four.
And yet, despite these advances, balancing one's checkbook remains an important financial task. It's important to note that the ATM printout will not show you checks that have been written but not yet deducted from your account. It will not show you trends or help you to manage your finances accurately.
To balance one's checkbook one needs to understand some basic principles of bookkeeping, and follow a few easy steps.
The first key is to record all your spending. Every time you use your ATM card for a withdrawal or point of sale (POS) transaction, you need to make a note of it in your checkbook register, or in a little book kept just for this purpose.
Secondly, when writing checks, it is imperative that you record the amount and who the check was made out to. By the time you receive your monthly statement, several checks could still be outstanding. If you haven't kept accurate records it is nigh impossible to remember the details. Another option is to use duplicate checks - you can then record the purchases at a more convenient time, with all the details at your fingertips.
But what of the ATM statement? This fits perfectly as our third step: In today's day and age you can check your balance online or at an ATM (depending on fees incurred) several times a week to avoid potential surprises, especially if your spouse is not as diligent at capturing purchases as you are. If sharing a checking account, you could even designate a place at home for receipts, such as an inbox on your desk or kitchen counter, with one person capturing the data as often as possible.
Finally, we need to look at income. Record your bank deposits and any other income in much the same way as your expenditure.
If you follow these guidelines, your balance should agree closely with the bank's at the end of the month. They will also help when checking for any incorrect entries in your bank statement every month. If you don't know what you've spent, how can you possibly check for inconsistencies? So, how does one go about balancing one's checkbook? Begin with the ending balance of your last statement; add the deposits and other credits from the month; from this amount deduct your debit, POS and checks written since the last statement. Deduct any recurring bank charges, such as standard monthly account fees and automatic monthly debits (like mortgage, health plans or auto loan payments). Remember, though, that if you have outstanding checks - those written, but not yet submitted for payment - you must consider this as money spent. Together, these four steps should give you an accurate indication of your bank balance.
To sum up - the most difficult part of balancing your checkbook is to be an accurate recorder. The formula to bear in mind is a simple one: one's ending balance plus deposits and credits; minus checks, debit/POS transactions, automatic debits and bank fees. By being consistent in your bookkeeping you will find that balancing your checkbook is as simple as counting from one to four.
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