The foundation of a solid financial future starts with a clear understanding of proven money management techniques and strategies. Learning to balance a checkbook is a critical first step in developing spending discipline and achieving long term wealth building goals.

Checkbook Balancing Basics

Modern technology has provided a variety of choices in check transaction tracking. Regardless of the whether the method is manual or electronic, the essential elements of checkbook balancing remain constant.

Checking Account Essentials: When a new checking account is opened, the bank provides checks along with deposit slips and a ledger. It is important to record every deposit, issued check, and cash withdrawal in the ledger while maintaining a current and accurate balance. Pay special attention to business conducted with a debit card since it’s easy to forget to enter those transactions. With any banking activity that doesn’t involve an actual check, keeping a receipt is advisable. Since many banks and companies encourage automatic bill paying, also remember to enter these transactions when they are paid.

Reconcile Checks and Deposits: Upon receiving a monthly bank statement, it is important to reconcile your ledger with the bank’s records. Each statement will include the date and number for each cleared check as well a list of deposits and debit card withdrawals. Start by comparing each check on the statement against those in the ledger, and place a check mark next to each transaction that matches. Make a note on the statement to identify any amounts or check numbers that might be in error. Follow the same procedure for deposits and withdrawals.

Fees, Interest and Automatic Transactions: Compare and record automatic deposits and withdrawals in a similar manner, and then enter any monthly fees or earned interest into the ledger.

Neglected Transactions: After reconciling every item on the bank statement, transactions that were missed or neglected can now be entered. This usually is centered around debit card activity, but may involve missed or out of sequence checks. Any transactions that remain unresolved can be addressed with the bank. Speaking of debit cards, I highly recommend the PerkStreet FinancialSM Debit MasterCard® to help you manage your finances.

Balancing: The actual process of checkbook balancing takes place after all of the transactions listed on the bank statement have been reconciled with the ledger. Since deposits and withdrawals are ongoing, there will usually be outstanding checks and deposits listed in the ledger that have not cleared the bank.

On a bank provided worksheet or a separate piece of paper, write down the closing or ending balance from the bank statement. Add the amount of outstanding deposits that have not cleared the bank to this number. From the resulting total, subtract the dollar amount of outstanding checks and other withdrawals. The new total should equal the current balance in the check ledger.

Online, Call-in and Mobile Banking Tools

Regardless of their size, most banks offer extensive online and mobile banking applications that provide easy account access. This includes the ability to review current balances, retrieve account transaction history, receive low balance alerts and pay recurring bills online. Actual call-in service is also available, but account history retrieval is usually limited to the last five to seven transactions.

New mobile apps such as Mobile Checkbook make account balancing fast and easy from any mobile device. Advanced features include an electronic ledger, automatic reconciliation and immediate access to current account information. Similar apps are available from a variety of providers and many banks.

Independent online ledger and money management tools, such as and Wesabe, offer an extensive set of applications to help maintain accurate records while providing forecasts of expenditures, spending trends and savings suggestions. Balancing a checkbook is fast, easy and accurate with one click processing. Budgets are calculated automatically and timely alerts are provided for upcoming bills.

The Advantages of a Balanced Checkbook

Regardless of the chosen method, knowing how to balance a checkbook will result in better spending habits, peace of mind and an improved credit rating. For a small investment in time, the rewards can be substantial.


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