Living on the edge

Photo by Ashley Jurius on Unsplash

If your checkbook is not balanced, you are living on the edge. Not knowing how much money you actually have in your checking account can and will cause you to go off the edge. You need to balance your checkbook. 

Every month, you need to balance your checkbook. There might be some of you who do not know how to balance your checkbooks. There’s no shame in that. People are not taught how to balance their checkbooks.

A balanced checkbook keeps things in order and most importantly it prevents overdrafts on your account. When you have overdrafts, it means that you are not being financially responsible. You are in crisis living. When you have overdrafts, you incur bank fees. Banks are getting rich from “overdraft” and “overdraft protection” fees. In a single year, banks earned $10.3 billion in overdraft fees, according to the Center for Responsible Lending. This means that banks are earning the equivalent of 833% on 30-day loans and 1,667% on fifteen-day loans. Those percent figures are not typos. The only overdraft protection you need is a balanced checkbook.

Once a month your bank is either going to mail you a bank statement or allow you to download your monthly statement. To reconcile means that the balance you are showing on your check register matches the balance on the bank’s statement. (Note: The bank refers to deposits, including interest earned, as credits. Checks and other withdrawals, e.g. ATM, or other electronic withdrawals are referred to as debits by the bank.)

The easiest way to reconcile your checkbook is to download the Reconciliation spreadsheet from the Downloads page. 

For those of you who want to do it by hand, you will need your current bank statement and your checkbook register.

You want to create something like the table below:

*Note: There are no figures shown on the table.
Bank statement balance  
   Add outstanding deposits  
Subtotal                     –  
   Subtract outstanding checks                     –  
Adjusted bank balance  $                 –  
Your balance checkbook balance             
   Add deposits not in checkbook  
   Add interest earned  
   Subtract bank charges not in checkbook  
Adjusted checkbook balance   $        

Next, enter the bank’s balance where you wrote down, “Bank statement balance”.

Then, go through your register and check off all the checks that have cleared the bank. Enter any checks s or other charges that are still outstanding in a table like the one below:

Check #: Amount
   $            –  

Next, total the amounts of all the outstanding checks or other charges you entered. Then, enter that figure where you wrote, “Subtract outstanding checks”. 

Then, look at your register and check off all the deposits that have cleared the bank. Add those up and enter the figure where you wrote, “Add outstanding deposits”. 

Then, do the math. Add the outstanding deposits and subtract the outstanding checks to the bank statement balance. The result is your adjusted/correct bank balance.

If there are any deposits that you have not recorded in your register, add those up and write the result where you wrote, “Add deposits not in checkbook”. Do the same for any interest you did not record and any bank charges not in your checkbook. Enter the totals in the appropriate lines. Then, do the math. The result is your adjusted checkbook balance. This balance should be the same as the Adjusted Bank Balance. If they are not, go back through and ensure that you have entered the amounts correctly and that you have added correctly. 

When the two balances match, you are done. You have reconciled your checkbook!


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