5 steps for a balanced checkbook

By Jennifer Rose Hale

Add it to the list of tasks that whether you do or don't, you know you should: flossing twice a day, checking your tire pressure when you stop at the gas station…and balancing your checkbook each month.

Just like the other two, balancing or reconciling your checkbook is critical, though many don't do it. Good dental habits minimize your time in the dentist's chair; maintaining your car helps its gas efficiency and helps keep you safe. What about balancing your checkbook? It ensures you know just how much money you have in your checking account--and, in some cases, how much you don't have.

The good news is, with online banking, keeping your bank check register updated and accurate is easier than ever.

A balanced checkbook: confidence, and fewer fees

Balancing your checkbook is more than just entering your deposits, withdrawals and checks. When you balance your checkbook, you're confirming that you and the bank agree on what money is going into and out of your account. If you're tracking your spending, knowing where the money is going--and when it's gone--is critical to financial health and minimum fees.

The main reason to double-check is to be sure you've accounted for every one of your transactions. Let's face it, it's easy to forget all the times you swing by the ATM on the fly to get an extra $20 before going into the movies. Those withdrawals add up, and if you think you have more money than you do, you run the risk of writing a bad check and paying overdraft fees. If you're on top of your account activity, you'll have the confidence in knowing exactly what you can afford to pay for.

5 steps to a balanced checkbook

Balancing your checkbook is pretty simple:

  1. Get your most recent bank statement, either online or paper copy.
  2. Go line by line through the bank statement and mark off the corresponding items in your check register.
  3. If an item doesn't appear in your checkbook, add it, and mark it off.
  4. When you reach the end of the bank statement, there's a bit of basic math:
    • Go to the ending balance in your bank statement.
    • Add any deposits that you've recorded in your register but haven't marked off, meaning the bank hasn't posted them yet.
    • Now subtract any checks or withdrawals that you've recorded in your register but haven't marked off.
  5. Compare the result with the ending balance in your checkbook.

On a good day, the two amounts will match, and you're done. On others, you may need to double-check your math to find out why your accounting is $17.49 off what the bank says you have.

Online banking makes the task easier

Add "checkbook balancing" to the list of things made easier by the rise of online services. Online account access turns what used to be a once-a-month slog-a-thon into a brief task you can complete whenever you have five free minutes. With only a few debit card transactions to confirm, you can be confident once a week--or even every day--that you know exactly how much money you have. Are your bank's online services not cutting the mustard? Learn how to choose the best checking account.

And, with that done, you may even find time to floss twice a day and check your tire pressure!