Balancing a Checking Account

It is tempting when you pay so many of your bills online to skip on balancing your paper checkbook. After all, balancing a checkbook is no one's idea of a good time. Also, with electronic banking now so popular, it is easy for most consumers to check their balances quickly online.

This does not mean, though that it is still not important to balance your checkbook on a regular basis. Yes, you can check your balances online if you are a fan of electronic banking. However, what if you've forgotten about that $350 car payment and your financing company has not cashed the check yet? You might mistakenly think you have more money in your account than you have.

That can lead to financial disaster: bounced checks and the fees that come with them.

Don't fear, however. Balancing your checkbook is not as bad a task as it seems. In fact, with some basic bookkeeping abilities, you can quickly and accurately balance your checkbook to make sure that you never accidentally drain your funds.

Be a good record keeper

Balancing your checkbook all starts with keeping good records. This means that you must track every time you use your debit card to fill up your gas tank, write a check to your mortgage company or withdraw $20 in spending money from the local ATM.

As soon as you return home after making these purchases, writing these checks or withdrawing that cash, write down the amounts you've removed from your checking account in your checkbook's paper ledger. Write down the amount accurately, down to the last cent. You need to know exactly how much money is in your checkbook if you hope to balance it.

Ask for your bank statement

Before balancing your checkbook, you'll need access to your most recent bank statement. This could be simple if your bank offers online checking. Just log onto your bank's Web site, type in your user name and password and call up your current account balance. The odds are your bank will list your current balance and your most recent statements.

If you do not have access to electronic banking, you'll either have to stop in or call your bank to request your last bank statement. Your bank might also send you your account statements on a regular basis, usually once a month. You can use that statement, but the older the statement is, the more non-listed transactions you might have to track.

What's cleared?

Next, you need to check your checkbook ledger to determine which of your payments have not yet cleared. For instance, if you mailed a check to your daughter's preschool for $500 and the school has not yet cashed it, you'll need to note this when balancing your checkbook. Your account might have $4,000 in it. However, you'll need to subtract that $500 preschool payment from this balance to have an accurate record of where you stand financially.

You'll need to do the same if you've made deposits to your checking account that haven't yet cleared. For instance, a client may have sent you $500 through PayPal. Deposits made through PayPal usually take up to three business days to get into your checking account. When balancing your checkbook, make sure to account for these deposits, too.

Remember, you do not have to be an accountant to balance your checkbook. You just need to be willing to take a small amount of time on a regular basis -- once a week or once a month, perhaps -- to track what you've spent and what you've earned.