I just realized that I never balanced a checkbook nor do I even know what balancing a checkbook is. I always heard that it was very important to balance my checkbook but I never bothered to figure out what the difference was between my checking account and my credit card transaction list since I can log onto both online and see all the transactions.
Therefore, I did a bit of research on the topic and here’s what I found:
- Balancing a checkbook is to make sure our records matches the banks since they can make mistakes
- It is to also make sure our records are correct so we don’t write a check with money we don’t have as bounced checks means a $25 or more fee from the bank
So, the next question is – How do I write one? Here’s the answer.
- Record all deposits and checks (the accounting term is reconcile but let’s just keep it in simple terms)
- Make sure to do the same with ATM and debit card purchases as well as ACH and wire transfers. Basically, record all transactions related to the checking account including interest payments if there are any.
- Calculate the balance.
Note: When I was reading different articles, I also saw authors mention about outstanding checks, ATM and debit card purchases. In this day and age, all we need to worry about is the outstanding checks since all electronic transactions are recorded to our accounts instantaneously.
Okay, I’ve never done any of this but everything has been fine. Here’s my version of balancing my checkbook and explains why I don’t need to balance my checkbook.
- Stop writing so many checks. There’s almost no more reasons to write checks anymore with electronic bill pay. The less paper is used, the easier it is to keep track of our accounts.
- Look up the transaction history and make sure the records are correct. Look at every transaction and make sure it is accounted for.
- I control my checking balance extremely tight because it doesn’t provide any interest. Therefore, it almost forces me to look at the balance and transactions on a regular basis so I don’t fall behind.
So, now I know what balancing a checkbook is and so do you.