All you need to do is keep track of the money going in and out of your account. From there the ins and outs of how to balance a checkbook is just basic addition and subtraction. For instance, some government agencies or utility companies won’t accept electronic payments for property taxes or water bills at their offices. However, many use electronic payment services that charge you fees to avoid payment processor and other third-party fees.

  • References to products, offers, and rates from third party sites often change.
  • A balanced checkbook follows the same principles of a balanced budget.
  • Writing down transactions in a checkbook register is one way to keep track of them, but there are also options for balancing your checkbook digitally.
  • Basically, track any activity that has passed through your bank account for the month you are balancing.

Doing this can help you make sure you have enough funds to cover the checks you write, so you don’t inadvertently overdraw your bank account. Include tiny amounts of interest that your account may have earned and services fees the bank might have charged you. Making a practice of doing this consistently will help you avoid small discrepancies when reconciling your bank statements. Compare all check payments in your check register to those on your monthly statement.

How a Checkbook Works

If you’re using the checkbook register method and comparing transactions with your account statement, you should balance your checkbook every month. If you’re using online banking or mobile banking to track your accounts, you can log in daily to view new credit and debit transactions as well as balance information. Many people attempt to keep track of their checking account balances by checking the ATM or logging into their personal accounts on their mobile app or bank website. For example, you might have forgotten about an outstanding check or bank fees from a foreign debit transaction. It is a best practice to compare your personal financial records against the bank’s records.

  • Enter checks in as they occur or at the very least at the end of each day.
  • You need to know what your money is doing and make sure you compare your (or the aggregator’s) records with the bank’s records.
  • Additionally, the COVID-19 pandemic accelerated the adoption of touchless payment options.
  • You’ll also write down any debit card or bank transactions for the month.

Still, balancing a checkbook can be a valuable exercise if it helps you monitor your spending, allowing you to detect fraud and avoid overdrafts. To protect against losing track of your balance and getting hit with an overdraft fee, you need to balance your checkbook — sometimes called a check register. You do this by manually recording every transaction, whether it’s a debit card purchase, writing a check, an automated payment, or a deposit. You may prefer online and mobile banking for checkbook balancing if you don’t write paper checks or only write a few each month.

Step 1: Collect Your Bank Statement

To avoid making mathematical errors, buy a register cover with a built in calculator. Some even keep track of your balance for you, provided you enter all transactions. Starting with the first transaction you enter, subtract the amount from your available balance—in the case of a deposit, add it to the balance. It’s true that fintech can make managing your money easier but there are still very good reasons to make balancing your checkbook part of your financial routine. Our experts answer readers’ banking questions and write unbiased product reviews (here’s how we assess banking products). In some cases, we receive a commission from our partners; however, our opinions are our own.

Why Balance a Checkbook?

Compare your bank statements and your own records frequently to verify that you and your bank are on the same page. If you have online banking, you can get an up-to-date list of transactions online. Even if you do use online banking, you should still hold on to depreciation paper receipts in case of any dispute about online data. Hold onto any important transactions receipts until you’ve balanced your checkbook for the month. For more detail, review our guide to writing a check and entering transactions into the check register.

Find The Best Checking Accounts Of 2024

Writing down transactions in a checkbook register is one way to keep track of them, but there are also options for balancing your checkbook digitally. You add or subtract the corresponding amount to arrive at your new account balance. You can also use this column to jot down other types of transaction methods like, ATM, debit card, credit card, or deposit if the transaction didn’t include a check. Also called “reconciling your account,” the process involves tracking your credits and debits to ensure that the amount of money listed in your register matches what’s on your banking statement. Whether you handwrite your transactions or track them digitally, the steps to balancing your checking account are similar. You typically also will get a checkbook register when you receive your checkbook.

Definition of Balance a Checkbook

Understanding both the good and bad about checkbooks and how they work may help you gain better control of your checking account and spending habits. Avoid missing payments and incurring late fees by setting up payment notifications through your app, email or text. Enter checks in as they occur or at the very least at the end of each day.

One of the reasons why balancing your checkbook has become passé is because most people no longer carry a checkbook, or even paper and pencil. This means you have to remember to write down transactions when you get home, rather than record them as you make them, which is onerous and also a good way to forget transactions. If you struggle to get into this kind of habit, a number of modern banking conveniences can help remind you to check in once a day. For instance, the majority of modern banks offer smartphone apps that allow you to easily check your balance, see your transactions and even deposit checks via your phone. You also can sign up for email or text alerts that will let you know everything from when your transactions clear to what your current balance is. These amenities make it very easy to check your banking information each day.