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The lost art of balancing your checkbook

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I grew up watching my mother balance her checkbook regularly. Fascinated by the orderly columns of numbers I was excited when I got my first job and my first checking account. Frustration soon set in as I am not the most organized person.

When the numbers in my checkbook and the numbers on the bank statement didn’t add up at the end of the month, I could feel the tension set in. Gradually my organization and math skills improved and I found fewer and fewer mistakes.

Losing the knack

Later in adulthood, as debit cards, and later, credit cards replaced checks and cash for most of my transactions, and online banking became the norm, I lost the motivation to keep track of my checkbook balance.

Glancing at my bank balances online and roughly subtracting my remaining bills became my new norm. I skated along this way for quite a while, chiding myself when the occasional miscalculation left me scrambling for funds at the end of the month.

Then I moved to a new apartment. The owners were lax about cashing rental checks and one month I didn’t notice that my rent had not been deducted from my account. I was shocked…I really thought I’d done an excellent job of conserving my money. Nope. Not at all.

Why balancing your checkbook is important

After paying overdraft fees and nearly emptying my meager savings account to catch up, I reinstated the lost habit of balancing my checkbook every week.

Besides saving you from overdraft fees, keeping track of your account balance can help you catch bank errors in time to report them. Despite being largely automated and usually error-free, banks can and do occasionally make mistakes. It’s important to catch any mistakes as soon as possible as there is usually a time limit for reporting such errors.

Online banking may seem to be taking place in real-time, but not all transactions are recorded immediately or in full. For example, if you see the transaction from a restaurant, say, it may only show the amount the meal cost and not show the gratuity amount until the payment has cleared.

If you’ve written down the transaction in your checkbook, tip included, you don’t have that problem. The same is true if you’ve written a check that hasn’t been cashed yet, as happened with me and my rent.

Balancing your checkbook will make you more aware of your spending habits in general. It’s easy for me to think that this or that small expenditure (coffee shops, a trip to the used book store) doesn’t make an impact on my monthly budget.

But, boy, those “little” things add up fast.

The extra attention given to your bank account as you start balancing your checkbook every week could help you catch spending by someone other than yourself. Identity theft is a common reality in our digital world, and catching it early is vital in straightening things out.

Here’s how to balance your checkbook

  1. Record the current balance from your bank statement.
  2. Write down each deduction and deposit as they are made. Save your receipts so you can accurately record each transaction. A list of automatically deducted bills and direct deposits can be super helpful here.
  3. Each week make time to sit down and add/subtract the transactions for the week and bring your balance up to date.
  4. When you receive your monthly bank statement it’s time to reconcile your checkbook balance with your bank statement. Check off each transaction that matches one another.
  5. Check for items that don’t match. Perhaps your bank statement includes an interest deposit or a fee that you’ve forgotten to include.
  6. Total amounts of deposits and withdrawals you’ve made since the date of your bank statement. Add or subtract these from your bank statement total and make sure the amounts match.

Story by Nikki Nelson

Augusta Health Augusta Free Press Kris McMackin CPA
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