Balancing a checkbook lesson: Part 1

Balancing a checkbook lesson: here is a step-by-step guide in using your check register book to keep an accurate record of your cash flow.

This is the first section of a comprehensive, four-part balancing a checkbook lesson. In order to balance a checkbook, you will need the following items:

  • Your check register
  • Your bank statement
  • A pencil
  • A calculator or paper for calculations

(If you would prefer an overview of balancing a checkbook, head to this article.)

Step one: review the back of your bank statement.

On one of the pages of the statement, you will find a form for reconciling your account. It will look something like this bank statement form (Exhibit A).

Step two: in order to balance your checkbook, you must first compare your bank statement and your check register to make sure they match.

Be sure all of the transactions and amounts from the statement are listed correctly in your check register book. When comparing your statement with your check register, there are a few things to remember:

  • You must balance your account each month in order to proceed with the most recent month. If you have not balanced previous months, you must pull out your statements and start at the beginning. (If you have never balanced your account and/or you do not have the statements to start from the beginning, do not despair. Please follow this link to get a fresh start in balancing your checkbook.)
  • Your bank statement usually will arrive some time shortly after the end of each month. At this point, you are only interested in the transactions that occurred during the timeframe of this statement. In the example, that timeframe will be January 1, 2010 thru January 31, 2010.
  • When you are checking off the items, please use a pencil and not a pen. It is easier to erase mistakes when they are in pencil.

Step three: looking at your bank statement, you will note several things:

  • The statement totals all of the transactions for the month starting with the beginning balance, adding total deposits, and subtracting the total withdrawals to arrive at the ending balance (Exhibit B; see 3A). [p.2][p.3]
  • The statement will usually list the monthly fees that will have to be entered on your check register in order to balance your checking account for the month. In this example, the monthly service charge is $55.00, which we will add to your register in step 13 (Exhibit B; see 3B). [p.2][p.3]
  • Your statement then totals your transactions by group.* It usually gives you the number of transactions and the total dollar amount of the transactions. For example, in January you had 14 manual deposit transactions totaling $7,573.86. This actual transaction count can be helpful in identifying missing transactions should you have a discrepancy (Exhibit B; see 3C). [p.2][p.3]
  • Your statement will then list the individual transactions that make up each group.* On our example you will find: manual deposits, electronic deposits and other deposits that make up the total deposits and checks presented, plus electronic withdrawals and other withdrawals that make up the total withdrawals (Exhibit B; see 3D). [p.2][p.3]
  • Finally, your statement will give you a balance summary that shows you the daily balance of your account for each business day of the month. This daily accounting can be helpful in the event you overdraw your account. You can use it to check the fees your bank will charge you for covering a negative balance (Exhibit B; see 3E on image 3). [p.2][p.3] Read more about the problems that could arise if you overdraw your checking account balance.

*Your bank may use group names that differ from our example.

Keep reading to find more step by step tips on balancing a checkbook lesson.

Struggling with cash flow problems? Apply online today for your cash flow management solution.

Would you prefer a quick overview of balancing a checkbook? Here is the perfect article for you.

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