A calculator

A pencil

One or two months worth of your most recent bank statements

Your checkbook (with checkbook ledger included)

The first time: 60 minutes. The subsequent balances: 30 minutes, once a month

Use a pencil

Use your bank statement as a resource, not a rule

Get used to keeping your ATM records in one place in your wallet or in an envelope tacked up your wall

Pay attention to the date on the bank statement

Don't loan out your checkbook

If you're still not convinced that you're equal to this task, ask your bank about overdraft protection. Most banks charge a reasonable fee to cover your account when you over-spend.

2torial #0433: Learn2 Balance Your Checkbook "Get to the (decimal) point!" Tired of assessing your net worth from an ATM printout? Bouncing checks because you're "not an accountant?" Account balancing was difficult enough before the onslaught of ATM withdrawals swept the nation. So let's get those growing piles of bank statements under control; the effective handling of your finances will eliminate considerable stress and confusion from your life. As this 2torial shows, it's really not too hard once you assemble the necessary elements. To clear up any misconceptions, balancing your checkbook is not the same as keeping a daily balance. The objective of this 2torial is to find the discrepancies between your daily record and the monthly bank statement. Once these differences are accounted for, your records and the bank's records will match. Next month, if you want to make this easier on yourself, keep track of your transactions: checks, deposits, ATM withdrawals, debit card withdrawals (if you have a debit card), and earned interest. Set aside an evening, turn on some smooth tunes, and settle into a comfortable, tidy work area. Only a few minutes will put you well on your way to a balanced checkbook. Calm yourself for the task at hand. Although it might seem distasteful, focus on doing it carefully with as few errors as possible. Try to scrape up your ATM, debit card and deposit receipts, and have your checkbook ready. Pick your financial type First of all, classify yourself into one of the following categories: Mostly: This means you actually register your checks and deposits in your checkbook ledger, but can never put together all the pieces. Sort of: You have a few receipts, some things written down, and can sometimes keep up with your finances. Nope: Your idea of record keeping is finding receipts in the laundry. Regardless of what type you are, the objective is the same: to understand the balancing process. Assess the situation Believe it or not, most checkbook discrepancies are easy find and fix. The first step is to get a hold of the pieces necessary to complete the puzzle. Unbalanced accounts are usually the result of a combination of five factors: Uncleared checks: These are checks written but not yet cashed by the recipient. They are the arch-enemy of the checkbook-balancer. Unregistered ATM or debit card withdrawals: Although banks are very tidy with their records, the average person is not. Money seems to slip out of ATMs unnoticed. Uncleared deposits: Deposits will usually clear the bank immediately, but it also takes a few days for your statement to arrive. Interest earned or bank fees due: these have their own line record on the statement. Note: ATM or debit card fees will show up under withdrawals. Human error! An error in carrying a number can throw off your initial estimate by hundreds of dollars. Keep track of debits   Sort your canceled checks (the ones returned to you) in numerical order. Then compare your canceled checks to those entered in your checkbook ledger. If you are a Nope and have trouble entering these items, write them down now--in pencil. In the future, try writing in the ledger before you write the check. Make sure the ledger entries correspond to the canceled checks. Watch for the transposing of digits, an easy error to make (like $23.21 to $21.23). As the checks in your ledger match the canceled checks, put a check mark next to them in the ledger to indicate they've cleared. Arrange ATM withdrawals receipts by date. Compare these to your records. Add any you've missed (the amount, date, and location) on the corresponding place in the ledger. If you don't have any receipts, start a system in which you place them in a certain pocket in your wallet or in a large envelope tacked to your wall. Pull them out and register them every Sunday night. You may have to consult the bank statement for these withdrawals if you haven't kept the receipt. As with the checks, put a check mark when the ATM withdrawals correspond in your ledger. Look under the "Checks" section for any additional fees you may have accrued such as returned (read: bounced) check charges or monthly fees. If you were charged for anything you feel was a mistake, call your bank and inquire. Note your deposits and earned interest Compare your deposit records (ATM and bank visits) with those from the bank statement, making any amendments necessary in your ledger. Since deposits clear almost immediately (unlike that check you gave to Uncle Harvey for his 8-track player) you should contact your bank about any discrepancies. Also check and record the interest paid to your account. Work the ledger Now calculate all of your transactions. If this is your first month of balancing, start with your bank statement's "beginning balance" and work through all the transactions to the "ending balance." By now you should have each transaction tracked down and accounted for. So here goes. Work on the back of your statement (use the worksheet if provided): Write down your checkbook's current balance. Add any uncleared checks or earned interest to your checkbook's balance. Perhaps you're asking, why add uncleared checks when you subtract them from your daily balance? Because this is a discrepancy between your records and the bank's records, and the goal of balancing is to reconcile them. If there are any bank charges or uncleared deposits, subtract them from your balance. Check for any errors you may have made, i.e., misplaced or miscalculated deposits or withdrawals (ATMs!). Adjust your balance accordingly. Use a calculator or add on paper, depending on your preferences, the figures from #1 to #4. Your final balance should match your bank statement. Don't worry if it doesn't match. Step 6 will give a few ways to check your work. But if it does match, you've done it! you're balanced. Find the culprit(s) If your numbers are not adding up, don't be frustrated; here's some steps to follow: Recheck your ledger calculations: did you account for everything? Even the most scrupulous accountants miss a number or two. Recalculate your checkbook ledger from the beginning of the month: you will quickly learn the value of keeping up on your checks, and the virtue of using a pencil. Is your "beginning balance" the same as last month's "ending balance?" Still haven't found anything? Take a break and come back to it later. No reason to drive yourself into the ground. -end- Learn More!